Buying accounting software is a complex process that must be approached with care in order to avoid costly mistakes with long-term business repercussions. In my many years of selling advanced accounting software like Sage Accpac ERP and MAS 500 for Mindover Software, I’ve run across more than my share of businesses that failed to respect the process and often learned from their mistakes the hard way.
Here is a list of five of the more common mistakes many businesses make when buying accounting software:
1. Failure to fully understand business needs.
Seems obvious, right? You’d be amazed at how many businesses rush into a search for sophisticated accounting software without properly understanding a) how their current software comes up short, b) what software functionality is critical to the success of the business and c) what needs are not present today but may be in the near future.
It may seem annoying to my customers, but in order to avoid this very pitfall I always start the sales process with a prospect questionnaire. Usually lasting about 30 minutes, the prospect questionnaire helps define the critical business requirements for new accounting software while setting expectations for the overall sales process.
One effective way for a business to define its many functional needs is to hold a meeting with the key parties who will be users and beneficiaries (accountants, executives receiving reports, production staff, etc.) of the new system. The purpose: write down as many requirements as possible on a white board based on what is being done now and what may be needed in the future. Afterward, a prioritization can be done based on how critical each item is to core business processes. A separate “wish list” can also be compiled to help communicate additional requirements that would be nice to have either right away or in the not-so-distant future, depending upon feasibility, price and ROI.
Customers I’ve worked with in the past that had already put together a comprehensive list of needs were more likely to make informed decisions regarding which accounting software would best meet their needs. These customers also were better able to zero in on their most critical requirements, weed out those software vendors that didn’t deliver the goods and pave the way for a successful project launch.
2. No project champion.
Implementing new accounting software is an expensive and time-consuming process, which is why it’s imperative that an internal project champion take the lead. Unfortunately, it’s not uncommon for an executive like a CFO to manage the search and purchase of complex business software then delegate the responsibility of implementing and using it to accounting staff. The results of this top-down approach can be disastrous, for the company and the software reseller doing the implementation. What the CFO expects may not be adequately communicated down to the staff, or the staff may not have the same level of software acumen as the CFO; in either case, the project can lead to mixed results, functional scope creep and much longer (and costly!) implementations.
An internal project champion should be involved from the initial software vendor search all the way through the post-implementation transition. An internal champion needs to be familiar with most of the accounting process flows to be able to communicate fluently with software vendors, which ensures that the software ultimately selected meets the identified business needs.
At the risk of insulting some very smart, qualified IT professionals I personally know, I also believe the project champion should have an accounting or financial background. An IT person’s knowledge tends to be focused on hardware and networking technology, which is tangential to the search and purchase of accounting software. An accountant, on the other hand, has experience working with accounting software, knows the make-up of the company’s transaction flows and can articulate the business requirements more readily. While an internally appointed project champion won’t guarantee the success of a project, it will improve the probability of a business obtaining software that will meet the majority of its most important requirements.
3. Using an “IT consultant” to manage the research and vetting of software vendors.
No, I don’t have a personal vendetta against IT professionals! As I mentioned before, IT consultants are very comfortable with hardware and business productivity applications such as Microsoft Sharepoint and Exchange. Very few, however, have deep knowledge of enterprise accounting software, business processes and accounting lexicon.
Some IT consultants justify their hiring by promising to evaluate the merits of each software package and software vendor to make sure they meet company price and functionality objectives while sparing the company the hassle of dealing with aggressive sales people. It sounds like a great idea on the surface, but rarely does it add true value to a business in search of new accounting software.
IT consultants attempting to shepherd the software review process simply add an extra layer that insulates a business from the source of information needed to evaluate and determine it best options. The needs of a company are complex and highly resistant to a “cliff notes” approach conducted by an outsider. Factors that limit a 3rd party consultant’s ability to manage the entire process include depth of knowledge of a company accounting transactions and process flows, intimate understanding of the company’s unwritten rules of project engagement and ability to judge potential chemistry between a software implementer and the company’s accounting staff. At the end of the day, only the business knows what’s best for it, and introducing a 3rd party only increases the possibility of ending up with less than desirable results.
4. Not pursuing software integration opportunities.
Replacing accounting software should be done in light of accomplishing greater efficiencies throughout the company. Many businesses that balk at integrating multiple software applications do so because of perceived up-front costs. If a comparison were done in Excel showing the cost of implementing an integrated system versus the cost of not fixing the problems, the savings of a fully integrated would almost always win out!
I once had a customer that sold beach toys and trinkets to resorts all over the US and Caribbean. After a walk-through of his business, I was able to show him how a new, integrated system would save him more money than the up-front cost of the software and our professional services combined. By integrating credit card processing and shipping into the accounting software, his business could handle twice the amount of business with fewer billing and shipping errors and less staff. Another customer of Mindover Software was literally able to triple its revenue over a period of four years in part because of how efficient they were able to manage inventory, field sales, shipping and sales processing (click for story).
5. Forgetting to check customer references.
This step is often overlooked when a company begins to zero in on the preferred accounting solution. Too often, companies will satisfy themselves with a software demo rather than perform due diligence to be sure the software truly delivers on the promises made by the software vendor. Reference checks are probably the only occasion during the entire sales cycle that prospects have to cut through the hype and learn what real-world companies think of the software.
I remember one prospect that was ready to eliminate the accounting software I represented based on negative feedback received from the competition. Rather than let a negative comment influence the outcome, I essentially said why not let the software do the “talking?” I arranged an on-site customer referral visit for the prospect to better see how the solution functions in the “real world” as opposed to what’s perceived in professionally scripted demos. The prospect was so impressed by what she saw that we had a signed proposal in hand the same day of the visit!
Keep in mind that the prospect could just have easily seen aspects of the solution that did not live up to our sales hype. In that case, it would have given a more complete picture of how effective the solution might (or might not) be for the prospect’s own company. The moral of the story? Take time to check 4-5 referrals in order to gain a balanced view point of the accounting software and, equally as important, of the reseller that will be doing the actual software implementation, training and follow-up support.