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Which approach is CORRECT when applying the guiding principle 'keep it simple and practical'?
Don't start from scratch and build something new without considering what you already have. It's almost always better to improve what you currently have than to throw it all away and start again, although you must also be able to recognise when a complete replacement is, in fact, needed.
Not only is this approach less wasteful than starting from scratch -- because it preserves value that you already have -- but it also helps you to keep your people on board. They're much more likely to support the changes you need if their previous contributions have been appropriately valued.
Don't rely on metrics and reports to tell you what the current situation is. When you carry out an assessment you should observe what is happening for yourself, and just use the metrics to support your observations.