Common mistakes businesses make when buying an Accounting solution
Evaluating and purchasing accounting software can be a daunting task. There are so many options to choose from, that often the choices seem endless. However the benefits of upgrading or installing a new system could mean the end of countless headaches, fewer hours stuck in the office and less time spent sifting through a barrage of Excel spreadsheets used to keep track of what’s really going on in your business.
Many business owners are sick of playing ‘risk roulette’ and want to free themselves from systems that are painfully slow or outdated or they are tired of having to rely on shadow systems and a ton of spreadsheets, but many are afraid to take the next step. Here are a few things to consider so that you can avoid some of the key mistakes made when buying accounting software.
1. Lack of clarity regarding business requirements.
Lacking a clear understanding of what your business needs from an accounting or Enterprise Resource Planning (ERP) system will make the selection process longer and more complicated.
Before a business begins researching sophisticated Accounting Software and ERP solutions, they should first understand what they actually need from their accounting solution. Sounds reasonable right? However it is surprising to see how many people jump straight into the process of gathering information about various Accounting packages without taking stock of how their current software works and identifying where their current system comes up short. Once you have taken stock, then you can prepare a comprehensive list of the software functionality that you would ideally like the new system to have. To help get this process started ask yourself; what does the software need to do for my business today? What sorts of features might / or will my business need in the future?.
2. Purchasing a solution that has an inflexible or proprietary database.
An open robust database is a very important feature of a good accounting system. An accounting system built on a robust and flexible database such as best of breed or industry leading database like Microsoft SQL means that you have a secure platform where downtime is minimised, speed is increased and your business performance is elevated.
Proprietary database architecture can be too rigid and may not be easily accessed by other products or applications. For instance, if the database tables and fields can’t be easily accessed by commonly used desktop applications such as Microsoft Excel or Word, Crystal reports or other reporting programs you may find that your system is not flexible enough to easily meet your day-to-day needs. Try to avoid purchasing a solution that is difficult to interrogate or extract data from and instead look for solutions that allow for information sharing and collaboration.
Flexibility must also to be considered when assessing the reporting features of your software. It’s very likely that your business will need a specific set of reports to be run on a regular basis. Some of these reports might be included out-of-the-box as standard reports, however in most cases you will need specific reports to be customised especially for your business. Be aware that this may mean that you need a consultant to help write or build these for you particularly if the reporting tools within your software are difficult to use. Ask yourself, can you easily customise or write these reports if they are not standard reports within your software package? If not, make sure you include the cost involved in getting a consultant to help you in your budget.
3. Buying a solution that is not scalable.
Scalable means that if your business doubled or tripled in size overnight your accounting software would be able to cope and could continue to grow along side your business. Does the system provide the same features and functions for a single user on a desktop as it does for hundreds of concurrent users? If the solution is scalable this means that you do not need to invest in a different solution as your business grows. It can handle significant increases in users, transactions or data storage. Being scalable means you won’t have to purchase a new system or re-train staff on a new application as your organisation grows.
4. Getting stuck with a system that is difficult to integrate, not agile enough.
Make sure that the accounting solution you select integrates easily with other systems. Beware of systems that are not agile enough to integrate with other applications. It is rare for an accounting system to stand-alone and it is often required to integrate with a sales solution such as a Customer Relationship Management (CRM) system, Warehousing system or Business Intelligence system so you want to ensure that the Accounting or ERP solution can easily integrate with a third-party application where required. Accounting systems often need to ‘talk’ to other systems to provide businesses with an end to end solution.
Consider whether your system can accommodate the ‘real’ business needs that you have. For example, can you sell or invoice stock physically received but not entered into the system? Or do you have unique inventory requirements like the timber or steel industries where multiple lengths and multiple dimensions need to be recorded? Can your system meet your specific needs, or at a minimum be easily customised to do what you need it to do? Are the system parameters set up so they can be easily switched ‘on’ or ‘off’ to make the system behave in a particular way? Remember the solution that you select should be flexible enough to work well with your current internal systems and processes.
Cloud offerings, a few points to consider
Cloud computing put very simply can be thought of as computing being offered as a service, rather than a product. These services are usually offered for a monthly fee rather than a large upfront sum. However there are some pros and cons that you need to be aware of with this type of offering in order to determine whether it is the right choice for you.
A few points to note include:
1. Reduced maintenance- With a cloud offering end users don’t need to worry about hardware and software maintenance as the service provider is responsible for software and hardware maintenance.
2. Remote Access – Information can be accessed from anywhere at any time, provided you have an internet connection. The cloud provides lots of flexibility when it comes to accessing your data from various locations.
3. Automatic updates are made to the software- With a cloud offering the next time you log on to your instance of the software; your software has been updated. Therefore there will no time consuming upgrades or issues with out of date software.
4. Independent of device – Cloud offerings mean that you are not bound to a particular computer or network, you can change computers and your cloud application will flow through to the new computer.
Sounds pretty good right, there are some clear benefits; however there are also a few points that a more security conscious consumer would be interested in considering.
1. Privacy and Security – Stored data could potentially be accessed by unauthorized users. Although cloud computing service providers maintain that their offerings are secure, it may be possible for hackers to potentially access your financial data and business information.
2. A constant internet connection is needed – If you are offline you can’t access the cloud which means that you don’t have access to your data. You also need to be mindful of service outages because it is highly likely you will not be able to access your data during an outage.
3. Stored data can be lost – Your data will be stored outside of your control on large servers somewhere out in ‘the cloud’. For most businesses it’s difficult enough to protect data that doesn’t leave their control as part of ordinary business, but in the cloud you need to be mindful that you surrender that control.
3. Longevity of the cloud provider – Will the cloud provider be around for as long as your business needs it to be? Will your financial data be stored and accessible to you for as long as you and the Tax department need it?
Choosing the right accounting software and the right service or product offering can improve your cash flow, lead to better decision making, reduce costs and make it easier to identify opportunities for sales and growth. This can ultimately bring in more dollars into your business and improve your bottom line. Remember to put first things first and begin by taking stock of what’s going on in your business today. This will be a solid foundation for making an informed decision that meets your needs.