I work with logistic in a small firm in Jutland. Yesterday our management called us together to inform us that the owners will seek retirement and the various activities will be sold off. The reason is that our present ERP-system and various other IT-systems vital for our daily operations have grown too old and the costs of upgrading will be too huge for the firm to continue.
Our management gave us all a report for the history of our IT-systems and the raise of costs over the last 20 years which have led them to the conclusion that it is over.
Most of our systems are Microsoft system.
The center of our system is a 5 year old Microsoft Dynamics C5. We are 30 users who can be on this system at the same time.
Over the years there have been a number of adjustments to the system. A rather expensive module for our sales representatives were purchases some years ago for DKK 25,000. They have struggled with this system. It was far more expensive than our old system which was a Sirkel Data system costing only DKK 8,000. The Sales people had to run faster so they could compensate for the increased costs.
Also C5 has a great system for salaries. Costly compared to the old C4 system but very good.
We started to use C5 when the old C4 was no longer supported. I remember that it was one of first systems we started to use when I came to the company. It did cost a lot but when made the use possible and profitable was the low maintaining cost allowing us to receive upgrades for our 30 users system for about DKK 5,000. That was a price level where the profit you can generate in our business could cover the costs.
During our time with C5 these costs began to increase. It became difficult for us to generate profit. An ERP-system might be important but it must also not cost that much due to the high tax system in Denmark.
Microsoft retired the old C5 product this year. They replaced it with a product with the same name but with a NAV core which is a bigger system. Too big in fact for about 70 percent of Danish companies like us!
Most Danish firms will never outgrow either the old C5 or the new C5. So when we so to say are forced out of the old C5 there is no alternative.
We were thinking of one the Competitors to Microsoft – E-conomis. But our management heard that they adjusted or rather doubled their prices last month shutting themselves off the market. We customers have memory. We learned the hard way that costs of ERP-programs can explode over the years. By doubling their prices they have stopped an expansion before it started.
There are other systems on the market but when they are hosted like most systems today what kind of guarantees do we have to protect us against these exploding costs?
To keep up with all these new products we would have to invest in a time where the world is in crisis. Our management would not go that far. I totally understand them. It is the biggest crisis worldwide since the 1930’s. The only path of survival is to downsize and wait for better times. It is really important to sit on your wallet and wait!
The classic C5 was a golden egg for Microsoft and for all the local IT-specialists who supported the product. The new kind of software is not made for modern firms. It has a lot of potential but with no money allocated to local businesses who could aid us too pricy curses in NAV there is no option to upgrade.
Our management has introduce a long term place where we would terminate people as orders dry out and the C5 will be kept running by one of the present employees where others will seek new jobs. I have spoken with them and they will try to find a new work as soon as possible but it would not be easy as education in newer systems like NAV is too expensive or any person outside the IT-industry to participate in.
Microsoft slaughtered the Goose which laid the Golden Eggs because they never really understood the Danish business structure with small firms and the stationary workforce, who don’t like to travel far to get help.