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The frustration of new accounting systems
NOTE: Chaim Yudkowsky, CPA, CITP, is an MACPA member and president of Byte of Success Inc., a technology consulting company specializing in helping small and mid-size business grow using technology.
By Chaim Yudkowsky, CPA, CITP
The corporate accounting system is charged with presenting the complete current condition of any business. This is the sum of smaller elements of organizational activity that, by themselves, may present the promise of the future or the harbingering of disaster. Transactional activity with vendors or customers may indicate volume and trends. The bank account balance may reflect the liquidity necessary to stay in business. It is the entire system, integrating these pieces of critical information, that conveys the complete picture of corporate health.
Sometimes the accounting system is inadequate to capture all of the pieces of data moving about an organization or requires processes that are skirted for the sake of efficiencies. Or simply operations change, businesses grow and contract, technology changes and forces greater change. After carefully reviewing the present, you may find that a new system is the only solution. This decision begins the hunt for the better alternative to the way we are doing things now.
Buying accounting systems can be frustrating for many reasons. Let's spend the rest of the column examining a few of those reasons.
Terminology
Understanding the words vendors may use as they sell their product is confusing. For example, ERP (enterprise resource planning) is an overused acronym with many definitions. Indeed, when Googling ERP defined, I discovered 371,000 results. Each of those that I looked at was slightly different!
Still, understanding some of these vendor-used code words is crucial. They are expressing important business management concepts in these acronyms. Though these concepts may sometimes have high implementation price tags, they represent goals that most of us, even in the smallest businesses, would like to achieve.
- ERP: The goal of such a system is, as Mr. Koch wrote for CIO magazine, "to integrate the all departments and functions across a company onto a single computer system that can serve all those different departments' particular needs."
- SCM (supply chain management): This subset of ERP functionality is expanded beyond the folds of your company and into working with those systems of customers and vendors. The most succinct definition that I found on the Web was "the systematic oversight of materials, information and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer."
- CRM (customer relationship management): This subset of ERP is specifically to quantify and capture all customer-centric activity and integrate it into the larger system. Commerce-Database.com states, "CRM is defined as finding, getting, and retaining customers. CRM is also defined as tracking customer behavior in order to develop marketing and relationship-building programs that bond consumers to a brand."
Industry consolidation
In the past, vendors had one product line. Thus, they were forced to articulate both the future direction of product development to those committed to installing and using the software as well as the differentiation and superiority of their product for a specific set of circumstances.
As the number of vendors has decreased through mergers and the functionality of all software has increased, it is increasingly difficult for a vendor to articulate and a customer to perceive differences in value among potential solutions, especially among those offered by the same vendor. Instead, in some cases, it creates confusing price posturing or worse.
Who is selling?
The blurring of lines has intensified as vendors who traditionally sold to Fortune 5000 or above are moving downstream and vendors for very small companies have moved upstream. Cost and consulting access and quality, especially to small and mid-size businesses, can be substantially different. The lengths of typical software implementation can vary. Finally, some vendors sell direct, some only through a VAR network, and some through both. Implementation consulting services may be through a third party from the selling vendor. More confusion!
Vendors are not listening
Too often we get the sales pitch from a vendor who is seemingly on a divinely authorized mission — the mission to proselytize the infidel to the product. Instead of listening to needs and what is motivating us to consider the pain of change, the vendor has THE solution. In some cases, the vendor believed universality and lack of complexity in our environments is deceiving. Are they prophets or consultants?
Setting expectations
In the throes of sales passion, the vendors frequently neglect to realistically set expectations of absorption of the changes into the organization. They can be overly ambitious or even ignorant of likely bad outcomes, especially when insisting on a solution without listening!
This rosy outlook of how their solution will improve our organizational prospect is not peppered with a dose of reality. The client satisfaction curve showing hopeful grand success peaking at sales close time or just into implementation is not shared. This leads to post-sales close disappointment that can be exaggerated by the frustration of the buy decision.
Doing it right
The right system can provide access to timely enterprise information for reacting and planning. The right vendor and implementation can lead down the path of expectations of a project's outcome. Conversely, making the wrong choice or improper implementation planning can lead to the tortuous experience that even large organizations like Hershey and the IRS have had. Success requires:
- an articulate staging of reasons for change and opportunities for process improvement;
- good internal project management;
- that you check vendor references extensively and try to leverage their experiences;
- that you visit the references;
- that if you are locked in project analysis paralysis or frustrated panic, you engage an impartial third party to help determine which solutions to consider and to manage the project.
Make your accounting system one of your most important business assets!
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