Is it time for a change in your accounting ERP Software? A question that most business owners and executives may dread asking. Most of us have been through at least one accounting ERP implementation and know that it can cause a strain on an organization; thus, it's not something to take lightly. One of the first questions we ask stakeholders in an organization considering a change in ERP software is to identify the pains that the organization is experiencing that they hope will be resolved by implementing a new system. Next, we ask, do those pains outweigh the cost of doing nothing? If they do, then we identify how a new system can resolve those pains. Here, we discuss the top 10 reasons that organizations decide to implement new accounting ERP software.
1. Functionality is Limited
The first and foremost reason that companies look for a new accounting ERP system is that the business functionality they require is not available in their current software. Maybe your business has grown or changed, and you require new functionality, or perhaps you are using outside processes that are causing errors and customer dissatisfaction. Either way, if the functionality your business needs is not available in your current ERP or Accounting software, it may be time to make a change.
2. Current System is not Scalable
More often than not, the reason a customer may begin to look at a new accounting ERP system is that they are growing and are not confident that their current software will grow with them, or it's too costly for the system to grow with them. For instance, many systems allow you to add users as you grow, but at a cost. With Acumatica Cloud ERP, you receive unlimited users, so as you grow and add users, you incur no additional costs.
It can also be difficult and costly in old ERP systems to add additional locations and warehouses. Modern ERP software should allow you to add locations or branches, warehouses, and users seamlessly without disrupting your business operations.
3. Outdated Technology
Performance-related issues are one of the first things users start to notice. Typically, older databases are not as equipped to handle many years' worth of data, but what does that mean for your company? Often it means your data must be archived, which makes it less accessible. Some smaller, entry-level systems will even crash when the database gets too large, and these crashes cost time and productivity.
Older technology is often not compatible with newer Windows operating systems, and sometimes incompatibilities with antivirus programs cause errors and bugs in the legacy ERP programs.
I worked with a client recently whose Payroll was in a legacy environment, and the updated antivirus was not compatible with the way the payroll database processed information, causing lost data and constant rebuilds.
When you need an understanding of the database structure and how to rebuild and make corrections, you are left reliant on a support representative from the software publisher or local consultant.
4. Disparate Systems Causing Data Silos
Older technologies and systems that don't communicate with one another, running across various departments within the organization. Sound familiar? Maybe your Human Resources Department is using one program for Payroll, and your sales staff is using Customer Relationship Management Software, perhaps a separate system for Order Management and Inventory Tracking, and yet another software solution for Accounting. Maybe they talk to each other, or maybe there is little to no integration. We call all these data silos, where we are not capable of pulling all of our data together to provide us with a reliable output. Often data silos result in duplicate entry and keep departments working separately. A fully integrated modern Cloud ERP system brings all of these functions together to provide one unified system or a single version of the truth.
5. Remote Workforce and Operations
Even before the COVID-19 outbreak, the desire to provide a flexible remote work environment has become more prevalent. Allowing employees to work remotely expands our talent pool and provides flexibility for employees juggling a work/life balance. It will also enable employees who travel to have anytime/anywhere access to the Accounting ERP system for various tasks such as order entry, document approvals, reporting analysis, and expense recording.
Now, with the pandemic forcing many businesses to close their doors and provide employees with a remote workspace, cloud-based ERP systems offer this option in a way that on-premise programs do not. To work remotely with an on-premise system that is not web-enabled, companies must rely on costly terminal services or Citrix licenses. Alternatively, they can utilize programs such as LogMeIn or TeamViewer to set up unattended access, but this comes with additional security concerns. Cloud-based and web-enabled systems allow the employee to simply log in to the ERP system through a web browser.
One client that utilizes a legacy system recently shared with me that the pandemic will force them to start looking for a solution that would allow their employees to work remotely in the future. Another client who just implemented a cloud-based ERP said that the solution allowed them to seamlessly transition from working in the office to working at home without any business disruption.
6. Discontent in the Workforce
Beyond providing a remote work environment, the expectation of a modern workforce is modern technology. Millennials make up over 38% of today's workforce, and Generation Z is entering the workforce as well. It's essential to recognize that these two generations have lived their entire lives using technology for almost everything, and 24/7 connectivity is the norm.
A Modern accounting ERP system allows anytime/anywhere access from any device. This on-demand access provides flexibility in the way we use ERP and related systems. Providing team members with a positive experience can depend on an efficient, easily navigated, and configurable user interface. And providing communication within the system is key. Using push notifications, task and event management, and using email from within the system are ways your workforce can communicate in the system.
Modern ERP and Cloud-based ERP systems also provide flexible training options. You don't have to rely on extensive training manuals anymore. Cloud-based accounting ERP systems allow you to embed workflows right into the system, provide the workforce with training videos, and edit the help documentation to reflect your business processes.
7. IT Budget is Overextended
Let's face it, maintaining the hardware that is required to run an on-premise ERP system is both costly and cumbersome. Either you are relying on an outside firm to manage and monitor your hardware and security infrastructure, which is typically expensive, or you have an in-house IT staff whose talents could shift toward revenue-generating technological opportunities. And to remain compliant and secure, you must continually upgrade both servers and workstations.
The cost of maintaining an on-premise accounting or ERP software is also something to consider. You typically pay an annual fee to receive the latest and greatest updates from the software publisher. You also pay support and upgrade costs directly to the publisher or a Value Added Reseller (VAR) to keep your software current and address software issues.
8. Overreliance on Excel and Manual Processes
We all love Excel, but it shouldn't replace functionality, its a tool that should support it. As accounting and ERP software consultants, we have even used Excel as a band-aid to fill the gaps and maximize customers' investment in their legacy systems.
Some of the disadvantages of using excel as an accounting program include user error, and one mis-typed number can throw off many different calculations in the spreadsheet. More complex spreadsheets typically mean they can only be managed by a few expert users – having to rely on someone with advanced technical knowledge. This reliance is costly, but can also be devastating if that person is unavailable or leaves the organization.
With legacy systems, we often see a reliance on Excel to complete month and year-end financial reports. Even if data is pulled directly from the accounting system, it's still a more manual process. It often requires accountants to do some additional slicing and dicing to get the information they need to provide managers and stakeholders.
Other manual processes include saving month-end reports and other related information in PDF on a file server. Also, converting Quotes, Orders, and Invoices to PDF, keeping them on a file server, and then emailing them manually to customers. Another example is creating a check request on paper, stapling the bill or invoice to that check request, and physically taking it to a department for approval.
The processes mentioned above can and should be features available in a modern Accounting ERP system, right out of the box.
9. Legacy System is being Sunsetted
Over the years, more and more Accounting ERP software products have been purchased through acquisition by larger publishers. At some point, the larger publishers have slowly decreased support and updates for some of those programs. If your product is one that has been retired or will soon be retired, it's time to start looking at a replacement. Why? The main reason is that a Value Added Reseller (VAR) can only support you for so long after the publisher has discontinued support. The worst-case scenario is your system crashing, and you cannot get your data back because your older version or product is no longer supported.
10. Integrations are Difficult
Another warning sign that it's time to look at your ERP accounting system is how it handles integrations. Many legacy systems provide some sort of import/export tool. Still, more often than not, you need a technical consultant who understands the ins and outs of the database to perform a simple integration. Often the imports will take a great deal of time to run only to error out after a long process. Then you have to figure out what record caused the error.
If you are not able to use an import or export scenario to integrate disparate systems, you are likely working with multiple data silos, where information entered numerous times, resulting in potential user errors. It's also challenging to compile data from these silos into meaningful reports that will give us the necessary information to make business decisions.
If multiple 3rd part integrations exist, we run into the issue, who maintains what? Who do we call when something breaks? It's challenging for all parties involved as vendors don't want to step on one anothers' toes, don't have the ability to provide support for all of the products, and ultimately the customer loses.
With cloud-based systems, we can use REST APIs to make two systems seamlessly talk to one another. The key to integrating with modern accounting ERP software is it's flexibility. Imports and exports that can run in the background and are triggered by business events, without a user having to "push a button."
Check out our other blogs on How to plan for new ERP software and Warning Signs that your Accounting System may be failing. or Contact us Today for more information.