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Top Five Tips to Help Choose the Right ERP System

Mindy Barker | Barker Associates

Last week, we talked about the strategic planning of an ERP system implementation, with factors to consider in both the planning and implementation phases. This week, we pivot to how to choose the right system for your organization. 

The decision has been made. You and your key stakeholders are ready to automate and streamline the workflow and day-to-day tasks. You’re more than ready to increase efficiency and productivity with one resource for data centralization, workflow management, and tracking. You’re moving forward, but quickly become overwhelmed, not with the process of implementation itself, but with the vast variety of ERP system options available.  

Taking the time to ensure there is a good fit is crucial for success. In fact, implementation failures often occur where there was never the right fit from the start. However, this should not discourage you from pursuing a transformational strategy that will provide a competitive edge.  

The following are the top five tips that will help eliminate the confusion and move the process along to help you choose the best system for your organization. 

1. Thorough Process Review and Analysis. Prior to looking at any system, you should determine your current needs, as well as those needs that are likely to arise in the foreseeable future. Start by documenting your current processes, strengths, and weaknesses. Ask yourself the following: 

  • What is working?  
  • What is not working?  
  • Where are the gaps in the current system and processes?  
  • What should the system look like now?  
  • What should it look like going forward? 
  • Do I actually need a new system?  
  • What problem am I trying to solve? 
  • What functions are “must needs,” and which would just be a bonus? 

After you answer those questions, create a document that shows the core objectives, needs, and gaps; what essential functions, solutions, and automation capabilities a new system should provide; the budget; timeline; and a list of key stakeholders. This document should present a clear picture of the criteria you require in an ERP system. 

2. Determine Budget and Research Costs. You’ve determined your needs, but now you need to know what budget you have and the related costs of the various systems. An ERP system implementation is time-consuming and a large investment, so you want to ensure you are comfortable with your budget, as well as all of the associated costs up front. As you research ERP systems, you should have a good understanding of all the costs involved – not just for implementation, but long term. You may want to consider: What are the licensing fees? Are there costs for training? Are there support, maintenance, and upgrade fees? It is up to you to discover any “hidden costs.”  

3. Review of Current Infrastructure. Before proceeding, you want to have a clear understanding of your current information technology infrastructure. An ERP system is software, and you don’t want to start down a road with a possible solution only to find out later that it does not align with your current technology. This is a large enough undertaking of resources. You do not want to have to worry about investing in a new technology system as well. Involve your IT department from the beginning to confirm that the new system will be compatible.  

4. Evaluate Systems. Narrow your requirements and criteria to the five or ten that are priorities. What exactly are you looking for? Use a chart or Excel spreadsheet to list out each and to keep all of the details organized. Then research systems via Google, social media, reviews, and recommendations. Verify all claims made through independent research and 3rd party reviews, and consider all options to start. It is not prudent to choose one because you’ve heard the name before or because it is what competitors are using. Instead, ensure it will meet the needs you identified in your process analysis. 

As you analyze your potential new partner, you may want to make the

following inquiries:  

  • How many implementations have you performed? Any in our industry? 
  • Who will be responsible for different parts of the implementation? What experience do they have? Will you use a third-party for any phases? What is required from my team? 
  • Is there a guarantee or warranty? 
  • Are training and support offered? 
  • Is it customizable? Mobile friendly? 
  • Is there cloud storage? If so, what are the data limits? 

As you gather information about each system, plug it into your criteria chart, so you can easily compare the systems, their functionalities, and their solutions. Additionally, check on the system’s scalability. This is a long-term investment. You don’t want to outgrow it in the foreseeable future. 

5. Meet with Stakeholders to Make a Decision. Having everyone’s buy-in on the system that is ultimately chosen is critical to its long-term success. Management teams should be involved – anyone who will be impacted during or after the process. You will need their support during planning and implementation. Choose the one that offers as much of the functionality your organization requires as possible, and don’t be swayed by extra features that you don’t need. Finally, look for longevity and a proven track record with other organizations similar to yours.  

Remember no one system will be a 100% perfect match for all of your needs or requirements, but it should be an overwhelmingly good fit for your organization. Barker Associates has extensive experience with ERP system implementation plans, assisting organizations achieve increased productivity and efficiency. Use this link to my calendar to choose the best time for your free 30-minute ERP consultation.

Harley, Blue Dog, and Change

Harley is a Bichon Frise we rescued when his second owner rejected him. Besides being adorable and sweet in so many ways, he is also the most anxious dog I have ever met. My husband calls him PITA, which stands for Pain in the A____. He is 11 years old, and he has been with us most of his life. 

Mindy Barker | Barker Associates

Harley loves to play with his toys, with and his favorite is Blue Dog. It is challenging to identify Blue Dog as a dog at this point, as you can see from the picture above. 

Blue Dog is to Harley like a work process is to most business people, including accountants. Harley wants his Blue Dog, and we want to stick with the same comfortable process.  

Our resistance to change is one of the core reasons most accounting system implementations go bad.

~Mindy Barker

Pushing an existing bad process into a new system is a plan for disaster, yet I see it happening all the time. As the investment market increases pressure on companies to produce fast results, companies try to ramp up the speed to implement new systems to deliver faster results. The compressed timeline does not allow for sufficient planning and training of staff on the new system.  

I also frequently find that the system selected is not right for the company. Software cost ends up being the deciding factor over functionality when deciding whether to upgrade software. A comprehensive analysis of software capabilities to support scalability, growth and control turnover is often a critical missed step in the overall selection and evaluation phase of the project. 

How can software selection control turnover?

Accountants today are in high demand. Accountants who are responsible for the day-to-day processing of accounting transactions are not interested in performing vintage-style repetitive data input and cumbersome processes when more automated options can be implemented. Talented and well-educated accountants at this level are contacted by recruiters a minimum of 2-3 times a month. The career-path accountant wants to be challenged to create more efficient processes. You will lose them if you force them to continue to deal with antiquated systems.  

When evaluating new financial management systems, QuickBooks may be included as the incumbent system for businesses who started as a small business but have grown over the years. 

I have a very complicated relationship with QuickBooks. On the one hand, I have a tremendous amount of respect for what they have accomplished from market penetration in the business world. The result is the low tangible cost for maintaining the system, which (here’s where my relationship gets complicated), creates a barrier for leaders to open their minds to more robust ERP systems. Leaders resist taking the plunge to move up a level to a more strategic system until they are forced to do so as a result of a financial transaction with a lender or equity financial backer. I have seen businesses with annual revenue of $50 million still using QuickBooks, which drove off great staff and created chaos.  

Besides the internal turmoil caused by the failure to evolve technically, there are implications to enterprise value. Financial reports that fail to provide clarity during due diligence are limiting factors to monetize the Enterprise Value of the business. Understanding the quality of earnings or completing an audit are other critical functions that require precise, succinct financial reports. 

The ease of using a system such as QuickBooks can equate to Harley and Blue Dog. I don’t think our household will suffer (much) if Harley ever has to replace Blue Dog, but I am not so sure about fast-growing businesses who continue to rely on QuickBooks. The lack of functionality and ease of integration can prevent you from seeing the entire story of the company for which you have responsibility.  

Consider the following indicators that you need to review your financial ERP system:  

  1. Experiencing a high turnover in the accounting department. 
  2. Month-end close takes more than seven days. 
  3. Reconciliation of Bank Accounts takes more than 30 minutes. 
  4. Customer collections are not timely. 
  5. Lack of clarity of profit of specific services or products. 
  6. Personnel expenses by department not readily available. 
  7. Processing of corporate credit card transactions requires more than an hour of an accountant’s time. 

With the right financial story, you are empowered to grow your business. Take an honest look at your situation using the factors listed above. Barker Associates helps our clients with a balanced look at their position and the path to financial clarity, and we are happy to help you, too. Contact us today to schedule a free consultation – cfo@mindybarkerassociates.com.