“They” say that accounting software is typically replaced every seven years. As I searched the web and could find nothing that really supported this general
statement that I have been hearing for years, I am not really sure who “they” are. I am sure, however, the thought of replacing accounting or operational
software can be overwhelming for most companies.
Even when gaps in the current software affect daily operations, firms continue to plug the holes with many manual processes, spreadsheets, emails, and duct tape rather than face a system replacement. Why do firms continue to operate with inefficiencies that are costing more than the cost to solve? Software should be replaced, not based on a timeline or what “they” say, but on your business needs.
The following are the top three reasons why businesses may delay a critical decision:
- 1. Budget – Keep in mind the true cost of software is not the amount of the quote from the vendor. The cash outlay has to be reduced by the amount of expected savings when all the manual processes are automated and the inefficiencies are resolved. The cost savings should pay for the investment in software within the first 36 months. The initial cash outlay will be quickly recovered.
- 2. Comfort – “Better the devil you know” is a scary reason to stay on any software! It is a devil. Yes, it may be uncomfortable to change software, learn new tools and new processes, but in a matter of weeks after implementation, the new solution will be the “angel you know.”
- 3. Priorities – There are always many projects in an organization that are fighting for time and money. Many firms look only at the money investment and overlook the amount of time that staff is wasting with outdated or ill-fitting software.
I recently came across a great article by Chad Barr called Keep It or Ditch It. What questions should you ask yourself in order to determine if you should keep your software or if it is possibly time to replace it? Barr provided twelve critical questions that he suggests you consider. I am adding items 1 and 2 that I believe are even more crucial and should be moved to the top of his list! (I have highlighted item 13 in his list, as I think this is the most important one that Barr identified).
Once the decision has been made to replace software, it is important to avoid the following pitfalls during the selection. This will insure the best software is selected and the implementation is successful.
- 1. Does my software embrace current technology? Do I have a management dashboard that displays relevant KPI’s on a real-time basis that truly allows me and my managers to guide our business? Does my software notify me via email/phone when crucial events have occurred (i.e. inventory outage, new customer added, vendor’s invoices that exceed a specified dollar amount)?
- 2. How accessible is critical data to my staff? How easy is it to generate a report on the fly? Exactly how much training does it take for an employee to create a report or data view?
- 3. How stable is our software and how much downtime do I experience each day, month or year?
- 4. When the software does experience downtime, how long does it take to get it resolved and how responsive is my business partner?
- 5. How often does my software partner improve the software and how significant are these changes to my business?
- 6. How often do we get these software enhancements and do I have to pay for them?
- 7. How am I notified of these enhancements and their potential impact to my business?
- 8. How do we train our staff and invest in their knowledge; how often do we do it?
- 9. How do we communicate our individual software needs to our business partner, how do they implement those needs and how do they incorporate those unique requests into their future development?
- 10. Can multiple users access all of the software modules at the same time, and when needed, can multiple users access the same identical record while protecting data integrity? (Imagine several users in your organization needing to access or change the same customer record for various reasons).
- 11. How long does it take us to train a new user?
- 12. Do all our modules integrate with each other while reducing data redundancy issues? (Now, I know this is a loaded question, but make sure your software requires data to be entered only once. An example may be the integration between your business software and your Internet site. Are you required to setup customers and inventory items once in your financial business software and once again on the web? Are you required to change and duplicate your item prices and customer information in several places? This obviously takes precious time and increases the potential for human error and corporate embarrassment. The proper integrated software requires these entries only once).
- 13. Are we able to make critical decisions using the software? This applies to decisions that require research as well as instantaneous ones.
- 14. How much do we invest in fine-tuning and improving our software vs. fixing problems?
- Lack of knowledge – Most organizations have no idea how to properly select the right software, nor do they know what questions to ask.
- Unreasonable budget and time frame – Investing in mediocre software just to meet a budget has the risk of being a costly mistake and
rushing through an unreasonable implementation schedule always leads to failure.
- Minimal management involvement and support – I find that many CEO’s spend more time researching, selecting, and purchasing their vacations, cars and homes than they do for their business software.
- No blueprint to implement and measure - When planning on building a home, the first steps are to outline the objectives and develop a blueprint. Selecting the proper business software is no different and not having the proper blueprint is a recipe for disaster.
- Fear and uncertainty of change - Most organizations prefer to remain in their mediocre comfort zone rather than challenge themselves. They fear pushing the envelope and selecting the best possible tools to control, improve and grow their business.
Timing is everything, especially with critical business decisions. Providing strong tools for the organization to make accurate and timely decisions is the first responsibility of any business owner.
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