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How is Cost of Inaction affecting Companies in their IT Roadmap


By Vikas Bhonsle, CEO, Crayon Software Experts India

It is a known human tendency to avoid a problem unless it starts causing discomfort. This applies even to the delayed adoption of newer technologies like cloud solutions. Some decision-makers delay digital transformation or spend too much time weighing the pros and cons of cloud computing, thinking their current systems can last for a few more years.

Understandably, making a big move like adopting a completely new process shall involve huge amounts of investments, and hence ROI is a great concern.

However, taking little or no action towards changing trends can cause a high Cost of Inaction (COI) in the longer run. COI is the indirect damage or loss of opportunity that companies face when they fail to make the right decisions of change or investments in their businesses at the right time.

COI are at times difficult to quantify, as they usually come in the form of lost time, lost productivity, and frustrating processes due to outdated technology.

However, the cost of doing nothing and staying on legacy systems is much riskier in this new age of cloud-based solutions.

Why Do Organizations Delay Digital Transformation?

No one can stop progress from happening. Hence, companies who assume that making no change is the safest way, may end up becoming counterproductive and even obsolete in this new reality of cloud-based infrastructure. Moving to the cloud means a company can quickly scale and modify its business models or processes to adapt to changing conditions in its industry.

Following are some of the major areas that suffer from inaction to adopt newer technologies.

1. Struggle with Customer Retention

Customers today are ready to make any purchase with the tip of their fingers, but they also expect agile customer service and enhanced customer experience. Companies who cannot provide faster processes and services shall be standing far behind the race, thereby losing out customers.

According to a Gartner report, “The Customer Service Experience,” – Great service experiences may stem attrition, but only “value-enhancing” service experiences drive retention and growth. Organizations should focus less on the marginal improvements to the quality of the customer service experience itself and more on how service interactions can help customers derive more value from the product or service offering.

For instance, there should be a seamless experience for the customers to buy, exchange, and return products. But since legacy systems don’t easily communicate with systems like CRM and other customer service applications, companies using dated systems often run into problems, hence losing customers or failing to retain.

2. Loss of Time

One factor that sets digital solutions apart from legacy ones is the speed of delivery. Forrester’s Total Economic Impact study for Microsoft Dynamics 365 found that companies that implemented the D365 solutions improved operations efficiency by $39 million. When you add in automation, better user experience, reduced rework and enhanced forecasting, employee productivity increases by $20.6 million.

Companies usually spend a lot of time fixing and maintaining legacy solutions rather than growing their businesses. By running a dated process, companies not only lose money and businesses, but they also lose talented employees.

3. High Attrition

Old fashion workplaces today cannot attract fresh young talent. The early millennials are now getting into their forties, and Gen Z was already born in a digital world. To prevent the best employees today from getting lured away to work on new and exciting technology projects, companies must plan better to upgrade their current processes.

After all, no one wants to be on a sinking ship.

Other key metrics:

  • Lost Opportunity – With technology constantly evolving, lagging behind in adoption of technologies can push away business opportunities.
  • Loss of Revenue – Whether it is reimbursable or fixed, an inefficient system leads to missed items, transactions, or progress.
  • Cost of Quality – There will be gaps in quality with reporting, decision making, and information management.
  • Cost increases over time – Cost of keeping legacy systems up and the lost opportunity for growth, when a large chunk of IT budget is spent on operations and maintenance

Beyond ROI
ROI is always a good first step towards determining value, but it can’t be the only step. ROI alone cannot sufficiently cover everything. To avoid COI, it is advisable to get into partnerships with trusted advisors, who come with decades of experience and relationships.

The right partner can help the company adopt the right product solutions – for the workflow, people, technologies, and processes – to ensure you’re always keeping up and your market position is growing, not stagnating.

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