In part one of this series, I identified the considerations you should keep in mind when deciding whether or not your company has outgrown Quickbooks. Part two covers how systems selection is the first big hurdle in a conversion. Selecting the “wrong” system is not an uncommon mistake and the “right” system may be one of several feasible choices, each with trade-offs vs. the other. Here are some high level do’s and don’ts that will help you select the “best” system.
System Selection Do’s
- Consider your business strategy and direction. Don’t go through a selection process in a vacuum. Your business strategy and direction are the driving force behind your system, not the other way around.
- Use a formal process with defined goals. Use a disciplined structured process, that fosters a selection based on objective assessment rather than emotion.
- Get outside help. Like many things, people get better with practice. Most of us go through a systems selection process less frequently than buying a house. Your chances of success are better if you get a professional to help you.
- Look at what is unique (and not) about you. Most of us are not as unique as we think and yet we are all unique to some degree. Thinking about your needs through this lens will help you focus on what is really important.
- Write down your pain and needs. The idea is to focus on needs that are the most important and not get hung up on the little things.
- Include functional areas in your business. System selection is increasingly driven by the finance department and is less of an IT function. Whoever drives the process, include the other functional areas to 1) address their needs and 2) get their support and buy-in.
- Manage your vendors. Use a formal Request for Information. Effective RFI’s focus on the most important items and not every detail. Help your prospective vendors understand your business and needs and seek to determine the following:
- Are they a fit culturally?
- What resources will they bring to the implementation process?
- What does their post implementation support look like?
- Consider the total cost of ownership. Not only the cost of the software up-front, realistic professional services and on-going maintenance and support. In choosing between vendors, you will likely have some cost/benefit choices.
System Selection Don’ts:
- Shoot from the hip. This is an expensive long-term commitment. It is better to be thorough and circumspect than rush to what seems the obvious choice.
- Stop at the vendor’s demo. A common mistake is to let the vendor show you their slick demo and lead you around by the nose. It is okay to take the guided tour, however, it is best to have them respond to your needs and use cases and hold an interview where you drive the agenda.
- Get what a peer got. Just because a particular system worked for a colleague doesn’t mean it will work for you. Don’t short-cut the process.
- Get the latest “hot” or a proven “end-of-life” system. Another version of short-cutting the process.
- Get an overpowered system. Believe it or not, some systems, too powerful and robust, can bring a company to its knees. I once saw an emerging company try to go from Quickbooks online to SAP’s middle market system. Although it was a fine system for running an international mid-market company, and their people and processes were top-notch, it was too complex at that point in the company’s life. The conversion failed and they ultimately went with Dynamics.
- Get a system you will outgrow in two years. I once saw a company convert to a version of Sage with limited multi-currency functionality. They ended up converting to a higher version of Sage within a year. They would have done better to go through one conversion to the higher version.
- Let a single internal constituent dominate the process. Politics and personalities. You will likely ultimately have to choose between functionality that works better some department than others. It is best to have someone with clout and objectivity drive the decision based upon what is best for the organization as a whole.
Typical Path Choices
- Industry specific system vs. a general purpose system. In this case, there are trade-offs either way. The more general purpose systems tend to have bigger user bases and broader functionality. Industry specific systems usually fit specific needs better but the more general functionality is not as good, and they tend to have smaller user bases.
- Cloud-based vs. Internally-hosted. With a cloud-based system, you have much less internal responsibility for keeping the system running, maintaining servers and their attendant support software. These also tend to have more power in the hands of the users and less in the IT department. Cloud-based tends to cost less up-front, but the annual subscriptions are higher than internally hosted; there is also less control of your data than with an internally-hosted system.
I believe the most important takeaway is to use a formal process. Such a process will structure the selection to include realistic and logical options based on your company’s needs. A formal process also factors into the success of the final step in the process. In part three of this post, I will go over systems conversion and how to implement your new financial system.