Funding the overlap: the cost of running old and new side by side

Ask a simple question at the next review of a system change, a premises move or a supplier switch: who is paying for the weeks when the old and the new are both running? The answers usually come in a predictable order. The project budget, someone says, runs to go-live, and go-live will be behind us by then. The operating budget, someone else says, was built on one system, one set of premises, one supplier. Nobody is being evasive. Each is describing their own budget accurately, and the overlap appears in none of them.

That gap matters more than it seems. A cost nobody funded is a cost nobody has authority to extend. When the overlap needs another two weeks because the data will not reconcile or the new premises is not quite ready, there is no budget line to draw on and no one who can say yes. The decision drifts down to whoever is standing at the changeover, with the most information and the least authority, and they can settle it only one way: switch off the old way early and absorb the consequences into normal operations, where they show up later as errors, complaints and overtime.

This article explains why the overlap between old and new is a distinct operating state with its own costs, why it is usually cut short, and how to fund and govern it so the business decides deliberately when to let the old way go. It is general information for owners and managers planning any significant changeover.

The overlap is a third state

Most changeovers involve a period in which both the old and the new are live:

A system change across a billing or accounting cycle: accounts opened under the old system must be finished under it, while new ones start in the new system.
A premises move: two leases, two sets of utilities and insurance, staff and stock split between sites, freight between them.
A supplier switch: old stock still in the system, open orders with the old supplier, the new supplier’s first deliveries being checked.
A process change: staff learning the new way while the old one keeps customers served.

That period is not a gap between two funded states. It is a third state with its own cost profile:

Both cost bases at once: two licences, two leases, two contracts.
Reconciliation work: people whose job, for now, is keeping two versions of the same reality in agreement. It is usually described as temporary and done by people who already have full jobs.
Errors that exist only in the overlap: the customer, order or stock item that appears in both systems or in neither.
Frozen change: other improvements to that part of the business are put on hold while two versions are live.

Treating the overlap as a moment, a go-live date or a moving day, rather than a period with a cost, is comfortable and expensive.

Why the overlap gets cut short

Because the overlap has no funded length, it has no defended length. Pressure to end it comes from everyone who can see a cost: the owner watching two invoices, the bookkeeper watching contingency disappear, the sales team keen to promote the new arrangement. Pressure to extend it comes mainly from the people doing the reconciliation, who can see the errors piling up. They are usually the most junior people involved.

So one of the least reversible decisions in the whole change, switching off the old way, is often made by the least senior people, under pressure, without agreed criteria. The learn before you commit article covers why decisions that cannot easily be undone deserve more care, not less.

An overlap funding line

Give the overlap its own budget line, set up when the changeover plan is approved, with five parts:

A rate. What a week (or a day) of running both costs: both sets of fixed costs, the extra reconciliation labour and any backfill, and an allowance for the delay to frozen work. This is simple arithmetic.
A funded duration, stated as a number of weeks or days rather than a date. Dates absorb slippage silently; a count of funded weeks does not.
A named owner who can approve another week from the line without convening a meeting. If two people must agree, nobody owns it.
A pre-approved extension allowance, released when a stated test is met, such as evidence that the reconciliation backlog is shrinking fast enough to clear within the extension. An extension released by argument is not an allowance.
A switch-off test for the old way, written before the overlap starts by the people who will run the new way, stating what must be demonstrably true before the old is turned off.

Four questions check whether a changeover is properly funded: what does a week of overlap cost, how many weeks are funded, who can buy the next one, and what evidence buys it? A plan that answers three of the four is not three-quarters ready. The unanswered question is where the trouble will start.

Writing the switch-off test

The switch-off test should be specific and observable, for example:

Records reconcile: two consecutive stock counts match within an agreed tolerance.
A full cycle has run: one complete month-end or billing cycle has closed in the new system.
Open items are cleared: all open invoices, orders or bookings have been migrated or completed.
People are ready: staff on every shift have used the new way unassisted for a set period.
A fallback exists: there is a way to recover data or service if a problem appears in the first weeks.

Write it with the people who will live with the result, not just those delivering the change. They know which failures would hurt most. The delivered is not adopted article covers making sure the new way is genuinely in use before the old one disappears.

Negotiate the overlap when you sign

The cheapest time to arrange an overlap is before anyone needs it. When signing with a new supplier, landlord or software provider, ask for a flexible start date or a trial period. Before giving notice to the old one, check whether a month-to-month extension or a holdover period is available, and on what terms. For software, ask for read-only access to the old system, or a full export in a usable format, for a period after switch-off. Each of these is a small request at signing and an expensive favour once the deadline has arrived.

Keep the old records reachable

Switching off the old way should not mean losing access to its history. Customer histories, past invoices, stock movements and staff records may be needed for queries, disputes and audits long after a changeover. Tax and business records generally have to be kept for set periods, so check the ATO’s record-keeping requirements and any industry rules before the old system is decommissioned, and make sure the records are kept in a form someone can actually open and search.

Tell customers what to expect

Customers often feel the overlap first: a delayed invoice, a missed delivery, a booking that appears twice. Tell key customers in advance what is changing, when, and who to contact if something looks wrong. A short, honest message before the changeover usually prevents more complaints than any amount of fixing afterwards, and it turns customers into an early warning system for errors the business has not yet spotted.

Count overlaps across the business

A business running several changes at once may have more than one overlap running at the same time: a new system, a new supplier and a move, each with two of everything. The same people often do the reconciliation for all of them. Add up the funded overlap weeks and the people they depend on, and treat that total as a real limit on how many changes can be in flight together. The how much change a business can carry article covers the wider capacity question.

A worked example

This is an illustration. A 25-person wholesale distributor is replacing its inventory and invoicing system. The changeover plan says go-live is on the first of the month. The supplier’s project ends at go-live, and the operating budget from that month includes only the new system’s subscription.

The operations manager points out that the old system will be needed for at least one month-end close and until stock records reconcile, probably about six weeks. The owner asks for an overlap funding line:

Rate: the old system’s licence, about $1,200 a month or roughly $280 a week; two staff spending an extra 15 hours a week each on reconciliation at about $45 an hour, about $1,350 a week; and a temporary worker backfilling their normal duties at about $1,100 a week. In total, about $2,700 a week.
Funded duration: six weeks, about $16,000.
Owner: the operations manager, who can approve another week without returning to the owner.
Extension allowance: up to two further weeks, released if the number of unmatched stock lines is falling by at least a fifth each week.
Switch-off test, written by the warehouse manager and the accounts manager: two consecutive weekly stock counts reconcile within 0.5% of stock value, all open invoices are in the new system, and one month-end close is completed in the new system.

In week five, reconciliation stalls. Some products are sold by the carton in one system and by the unit in the other, and a conversion error affects several hundred lines. Because the plan has an owner and a test, the decision is quick: the unmatched lines are falling by more than a fifth a week once the conversion is fixed, so the operations manager releases one extension week. The old system is switched off at the end of week seven, after the switch-off test is met. A planned price list update, frozen during the overlap, goes ahead the following week.

Without the funding line, the most likely outcome would have been switching off the old system at week four to save the licence fee, leaving several hundred stock lines wrong in the new system and weeks of customer complaints about incorrect orders.

How this applies to a small Australian business

Plan the overlap as a period, not a date.
Work out what a week of running both costs.
Fund a number of weeks, not a target date.
Name one owner who can approve more time.
Agree an extension test in advance.
Write the switch-off test with the people who will run the new way.
Count overlaps across all current changes.
Plan frozen work so it restarts promptly afterwards.
Keep old records accessible for as long as you may need them.

Signals worth watching

Go-live dates with no plan for running both.
Reconciliation done in people’s spare time.
Old systems or premises switched off to save a fee.
Errors that appear only in the weeks after a changeover.
Several changes overlapping at once, sharing the same people.
Nobody able to say who can extend the overlap.

Common mistakes

Treating changeover as a single day.
Funding the project and the new operation, but not the gap between.
Letting cost pressure decide when to switch off.
Writing the switch-off test after the overlap begins, or not at all.
Ignoring the reconciliation workload.
Running too many overlaps at once.

Frequently asked questions

How long should an overlap be? At least long enough to complete one full cycle of the work affected, such as a month-end or a billing period, plus time to reconcile.

Isn’t running both just a waste of money? It is a cost, but usually far smaller than the cost of errors, lost data or unhappy customers from switching too early.

What if the old supplier or landlord will not extend? Negotiate the overlap terms when you sign the new arrangement, or before you give notice. It is much harder to arrange afterwards.

Who should own the overlap? The person who will run the new way, or the manager accountable for the operation, rather than the project lead whose work ends at go-live.

Does this apply to small changes? Scale it. For a small change, a short overlap with a simple switch-off test may take an hour to plan and save days of problems. Even swapping one key supplier benefits from a short overlap.

Questions to ask

When both old and new are running, who pays?
What does a week of overlap cost?
How many weeks have we funded, and who can approve more?
What must be true before we switch off the old way?
Who wrote that test, and will they run the new way?
How many overlaps are we running at once?

Bringing it together

Every significant changeover has a period when old and new run side by side, and that period has its own costs, its own work and its own errors. It usually belongs to no budget, so it is cut short by whoever can see the bill. Give the overlap a funding line: a weekly rate, a number of funded weeks, a named owner, an extension test and a switch-off test written by the people who will run the new way. Then the business, not the pressure of the moment, decides when the old way goes.

Source: KEVOS notes, drawing on teaching material on project closure, transition and handover, and staged changeovers. Examples and figures in this article are illustrations. This article is general information.