"Sometimes the users had valid reasons for keeping the customizations, like labor contracts that required things to be done a certain way," Smith says. "But we found nine and a half times out of 10 we could change the way we do business because it wasn’t that critical; it was just habit. You just unfreeze the organization and rearrange the way people do things, and now you just do them a slightly different way and that’s OK."

The steering committee tended to shoot down the requests for customizations, says Smith, because they were invariably more expensive than the no-technology options. "When someone from HR came to them and said, ’We have to do it this way,’ the committee would say, ’No you don’t?change your process. I’d rather spend this money in my business.’"

Strategy No. 3: Do It Yourself (Forget Consultants)

Having a continuous internal planning system for upgrades makes it easier for CIOs to limit the number of outside consultants they need to bring in to help with upgrades. An AMR study found that companies that handed over responsibility for their upgrade projects to outside consultants spent twice as much ($2.3 million versus $1.5 million) and took longer (10 months versus six) than those that kept the project leadership and as much of the work as possible in-house. "The costs skyrocket because you will have people on the project who don’t know your business," says Judy Bijesse, an analyst at AMR Research, "and you’ll have a lot of consultants who are being trained while you’re paying them."

By retaining leadership yourself and tracking the fortunes of colleagues who are upgrading, "you can avoid being the one that bleeds on that first release," says Nextel’s LeFave. Indeed, most enterprise software is so bug-ridden in its first release that CIOs can wind up installing the upgrade all over again when the vendor comes out with a "point release" to fix the initial bugs. Manish Khadepau waited until Oracle was on the second point release of Oracle 11i before implementing it at Infogrames, a New York City-based video game publisher. (There have been six point releases of 11i since it was first introduced in 2000?each requiring a complete reinstall if the customer has customized it.) But it was still bleeding edge at the time, Khadepau says, and full of bugs.

Each time Oracle would send Khadepau a new bug fix, the fix would destabilize the rest of his system and require him to rewrite the customizations his company had made. "Oracle 11i is so big and so interconnected that when they fixed one piece, three others would break somewhere else in the system," he says. The earlier version of Infogrames’ ERP software was so heavily customized that the upgrade wound up costing as much as a new installation?between $400,000 and $500,000, according to Khadepau.