Sorting Out a Software Dilemma: To Replace or Add On?

Last Updated: November 1st, 2018
Researched and Written by: Luke Wagner

Every company is looking to save some money. And, the right software solution can undoubtedly save you money by creating efficiencies. But is it better to add on to your current system by purchasing third party modules or is it better to replace the whole system with a new, integrated solution?

Considering a New System Versus Add-on Functionality

There are a few key factors to look at when reviewing software solutions:

  • Are you looking for a solution that can manage all aspects of the business in one integrated solution?
  • Could you benefit from a whole new program to add more functionality and create better efficiencies?
  • Are you satisfied with the majority of your software systems and just looking for additional functionality?
  • If it is just additional functionality, do you need it to integrate with your current systems or are you looking for a program that will stand alone?

The point is, you have options to consider when purchasing a new software solution.

The Replacement System Approach

So, you have determined you need new software to meet one need, such as new financial reporting or, maybe you are looking to add inventory control. Your current system has some inventory control functionality, however, it can not meet your specific needs. So you start looking around for solutions that can “add-on” to your current system. While there are many stand alone inventory solutions available, you should also look at your current setup.

What many people fail to look at when searching for software is improving efficiencies. Sure, the new inventory software is going to make tracking your inventory better, however, if that software doesn’t interface with your order entry software and accounting software, you are actually creating more work, requiring you to transfer data between the different programs manually.

Often it is worth at least considering a full replacement system and doing a head-to-head comparison of upfront costs and expected return. If your current program hasn’t been updated recently or you are experiencing other “minor” issues with your current software, it may make more sense to invest in an integrated software solution to replace all of your current systems. Yes, you will spend more money on a whole new solution but finding a solution that can meet all of your needs in one program can also significantly improve the upside for a return on the investment.

The cost of software isn’t the only thing to consider when looking at options. Reduce the number of hours you spend on administrative tasks can create major savings. Very often even small companies can find enough efficiencies to reduce administrative labor processing costs. What’s the value of paying for labor on 10, 100, or 100 hours of revenue generating activity instead of spending it on the labor for administrative processing activities?

Considering Add-on Functionality

We talk to companies daily that are looking for additional functionality to add to their current system. For many companies, their current software is working very well, however, it is either insufficient in one area or lacking in one area, so companies will come to us to help find solutions that they can “bolt” on to their current system.

The market for add-on software is quite large. Changing technology is making it easier to integrate add on software solutions with existing programs, however, the existing programs typically need to be current as integrating a new software with a ten year old software program that has not been updated is very difficult.

Positives of Add-on Software

  • Software Price. Add on software will likely be less expensive upfront than replacing your entire system, at least in the initial purchase price, implementation and training on the software.
  • Quick Implementation. Implementing an add-on software can be done in a fraction of the time it would take to replace a whole system, thus allowing you access to the software much sooner.
  • Training - No need to train your entire staff on a whole new software program, rather focus the training on the select few that will be using the software.
  • Unique - Able to find software that is a perfect fit or even have a solution customized to meet your needs.

Negatives of Add-on Software

  • Lack of full integration. Finding a software solution that seamlessly and fully integrates with your current financial management system can prove to be difficult. While creating API’s is possible, some programs will require you to transfer information into an .xml or .csv file which opens up the possibilities of errors.
  • Does not address other issues. Add-on solutions are often good fixes for temporary problems. As your business continues to grow, the chances that you need to upgrade your current financial system increases. While you have the integration now between your current financial solution and the add-on software, the next upgrade to your financial software may not allow for that integration, thus, leaving you to manually transfer data, or worse yet, to find new solutions.
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