Now depending on where you are in the world “xyz Software” could be a raft of different products designed for the entry-level business software market. In Australia, it could be MYOB with XERO launching a major challenge or Quickbooks in the USA & Canada. Regardless of where you are, there will be products that address the need for a low cost, generalist package for small business.
The problem comes when your small business starts to be not so small but is also not so big. When your trusty accounting solution starts to object to the volume of transactions you are processing or decides that it really does not like doing much more than basic bookkeeping. It is then probably time to start looking at your options.However, what are those options and when should you start thinking about making some changes?
Firstly, what are the indicators for change?
While not being a comprehensive list the following items are common:
- You have encircled your Accounting software with a plethora of spreadsheets, Access databases and point solutions to do things that are outside the scope of the Accounting software.
- You have multiple warehouses with different costs in each warehouse.
- You need to buy and sell in multiple currencies.
- You need to calculate a landed cost.
- You need to manage serialised and/or lot tracked inventory.
- You need to handle product recalls.
- You need to manage warranties.
- You have multiple operating entities that need to consolidate to a parent.
- You need to manage back-orders.
- You need automated centralised replenishment based on demand and actual usage.
- The business does more than one thing; it imports, distributes, manufactures or has field service.
- There is a need for an integrated sales capability that includes, wholesale, retail and online.
If this list has a familiar ring then it may be time to assess how effectively your “xyz software” solution is supporting your business, as you have started to understand the cost associated with double entry of data and poor data integrity.
ERP or best of breed?
Put simplistically when the time comes to act you have two broad choices available to you.
You can take the brave step of moving to one of the more holistic software solutions that are loosely known as ERP systems. The companies that specialise in what we can refer to as the mid-market include Pronto Software, Syspro, Epicor and Microsoft to name a few.
Alternatively, you could decide to augment your current accounting solution with add-on modules that have been designed by either the Vendor themselves or a 3rd party software developer. These add-ons aim to deliver integrated or interfaced solutions in areas such as Inventory and Warehouse Management, Work Order Management, Purchasing, eCommerce and a raft of other functional areas.
Depending on your companies circumstances the decision could be an easy one to make or it could be a very difficult. The unfortunate fact is that there is a gap in the market between where the entry-level solutions start to become problematic and where the mid-market solutions start to become cost effective. I am regularly commiserating with business owners who are struggling with the problem of knowing that the solution they can afford will not support them for long and yet being scared of the cost of the solution that will grow with them over 10 – 15 years.
Changing your core accounting solution is similar to performing a heart-lung transplant while the patient is running a marathon. The business does not stop trading while it happens so you want to avoid doing it more than once. That fact alone tends to tip the scales in favour of moving to a solution that has the scope and capacity to grow with your business. This means that you are immediately lining yourself up for a 6-digit investment even if you do adopt a SaaS strategy.
If that investment is just not a possibility for your business even with some form of deferred payment or annuity scheme, there is still hope. There are products in the market that have been designed to integrate with the popular entry level accounting systems that deliver solutions for specific industries. Regardless of which option you take, make sure that you know what you are looking for and have clearly defined your goals in terms of the business outcomes you need to achieve. The vast majority of the ERP horror stories out there start with poorly defined objectives and an absence of executive ownership of the project. These are both easy errors to avoid.