3 Signs You’ve Outgrown Your Accounting Software

November 29, 2011

accounting-software-changeThis question was posed to me a few weeks ago during a phone meeting: how do I know if I’ve outgrown my existing accounting software? (This person is currently using QuickBooks.) In just a few minutes we identified three very telling signs that pointed to a “Yes”. Do any of these apply to your business?

  1. The system is (or gets) slow: This may be a little subjective – we all think our system is slow a few weeks after we first get it and think it’s blazing fast. But if you have to wait for minutes while an invoice posts, or if generating a report takes longer than lunch, then your transaction volume and / or data file size may simply have grown beyond the capabilities of your existing system.
  2. Manual Spreadsheet Duplication: If you’re manually keying a lot of business information into Excel, either duplicating or supplementing data that’s in the accounting software, then it’s time to consider moving on. And the more time spent in your company manually updating Excel, the more true this is. (And yet some companies will rather hire extra people to handle these manual updates than spend considerably less money on a more appropriate ERP System.)
  3. Making Business Decisions based on Software Limitations: This one was the clincher on the phone call. The company is considering turning down an exclusive distribution right for what they believe will be a very lucrative product line. Why? Because these products have to be tracked by lot number for potential health recall purposes, and the only way they could do this currently would be manually, outside their accounting software. That would not only be costly, but fraught with risks.

I don’t know if this company will decide to upgrade to a proper integrated ERP Software system with lot tracking capabilities, but the fact that they’re even thinking this way is a clear indication: the answer to the question above is a resounding “Yes”.


Food Distribution / Wholesale ERP Software

November 24, 2011

In today’s post, we are going to discuss typical functionality you should expect from food distribution and wholesale software. Most ERP systems are designed with afood-distribution-wholesale-erp-software particular industry in mind. As a food distributor, be sure to find software that is designed for wholesale/distribution with the required food-related components. A proper ERP system for the food industry should contain most, if not all, of the following components:

Lot Tracking

Lot tracking is important for the food distributors because it allows them to keep track of products sold from the source to the end consumer. Lot tracking allows a distributor to discover the origin of product contamination, if it were to occur, and identify specific “lots” of product to be recalled – eliminating the need to recall all products if only certain groups were affected.

Catch Weight & Multiple Units of Measure (UOM)

Unlike most durable goods, food items are often sold using a variety of UOM. For example, product can be sold by weight, volume or in groups that contain multiple items. Your food distribution software should be able to accommodate multiple units of measure. Catch Weight accommodates inventory items that vary in weight, thereby allowing different pricing allocations for the same item depending on weight.

Flexible Customer/Contract Pricing

Contract pricing is appropriate for a variety of industries but is often well used in food distribution. Your ERP software should automatically allow for different prices customer to customer. Preferred customers may be given preferential rates, for example, and these should be easily accommodated by the software. Customer pricing allows you to set customer-specific discounts as well as discounts that come into effect when an order reaches a certain size. Contract pricing is a similar feature that will allow you to define price ranges for customers that can expire at a defined point in the future – for example, a temporary sale or promotion.

Landed Cost Tracking

Landed cost tracking allows a business to accurate record and report on all expenses tied to acquisition of items such as freight and duty. Landed cost tracking can help food distributors determine the actual cost involved in getting product to their warehouse door – not just the cost of the goods themselves. Landed cost tracking can be used to accurately track margins for effective purchasing and pricing decisions.


Implementing ERP Software on a Budget

November 15, 2011

implementing-erp-software-budgetSticker shock is common when searching out an ERP system. If you are preparing to move off of an introductory system like QuickBooks to a proper ERP system you must have be prepared to make a significant investment in your business. The good news is there are several ways to reduce the up-front costs of a new system.

Implement a Hosted (Cloud) Solution

For the uninitiated, a cloud solution is a software system that is hosted on the vendor’s servers and accessed over the internet. Hosted solutions serve to eliminate the need for maintaining your own servers along with other benefits.

Cloud solutions are typically charged on a monthly basis and can be much more affordable for start-up and smaller companies. Many upfront costs, including hardware and license fees, can be saved by implementing a cloud-based system. Instead, you will be responsible only for a monthly fee that will include all costs you would otherwise need to come up with upfront. Upgrades are also included in monthly fees resulting in the elimination for significant expenditure down the road as well.

Reduce Data Migration

As part of implementing a new software system, data from the old software must be migrated (converted). The amount of data brought over, however, is up to you so cost savings can be found if some less-important data can be done away with.

Aiding in the data migration process can also save money. Typically a consultant must spend the time required to extract the data from the current system to move over to the new system. Many hours of migration can be saved if you have your staff help prepare this data (e.g. have your staff export and organize the data in an excel sheet to then be easily imported into the new system).

Ramp Up

Many software packages have add-ons that include specific functionality that may only be wish-list features. As a result, new or small companies can often run their operations very well on the basic system without these add-ons. You can then decide to implement desired features in the future at a convenient time when your budget allows for it.

Financing

As with most capital-intensive purchases, financing or payment options are often available. A deal can be worked out to reduce initial expenditure so that you can get on the proper system now to accommodate the growth you will see in the future.

PerspectiveDownload ERP Software Pricing Guide

Implementing a proper software system for your business can be an expensive undertaking. It is crucial, however, to understand the importance of such an investment and to treat it like an acquisition of any other significant business asset – such as a truck, person or machine. When viewed in this way, the cost will seem much more reasonable when compared with other business assets.


How to Compare ERP Software

November 14, 2011

How-to-compare-ERP-softwareEnterprise Resource Planning software (ERP) packages are complex systems that accommodate a variety of business functions such as accounting, inventory, order processing, purchasing, contact management & customer communication. Due to the complex nature of ERP systems, it can be difficult to compare them. The following are several ways you can differentiate between software offerings:

Core Components

This first measure is one of the most obvious but still warrants mention. To be considered true ERP software, the system should be able to accommodate a variety of business processes across the organization. Not all vendors abide by the same definition of ERP as it is technically defined rather loosely:

  1. The systems share a database
  2. The systems share information amongst each other

  3. Information is available in real-time

  4. The system and installation is elaborate

Therefore, it is important to compare the overall components. Does the system have accounting & inventory modules? Customer Relationship Management? Etc.

The People

Many ERP systems are similar in their functionality. Where they tend to differ more greatly is in the people behind the software. Evaluating your experience with the people behind the company is important to get a feel for how you think it will be to work with them. Have they been attentive to your needs? Have they been personal and put your business needs first? Do they understand your industry?

The Price

Another obvious, but dangerous, means of comparison is price. Certainly price is very important in making a decision but always be careful. Low pricing may be attractive but may be the result of low-balling. Higher pricing is usually a safer bet in terms of functionality and conservatism, but you may be paying more than you need to. Instead, the art is finding a balance between the two. A system that has a price that is agreeable to you, can meet your business needs, and is being realistic about costs is the appropriate choice.

Meeting Your Needs (Customization & Software Fit)

Software flexibility is a great way to compare software. Some vendors offer a “canned” piece of software that is rigid and cannot easily be adapted to your specific business. Every business has something unique about them that may require customization so it is important to find a system that is able to adapt to these unique needs.

Company History & Current Standing

Look at a company’s history to determine viability. The longer they have been around the better – keeping in mind that ERP software has only been around since 1990. Also, bigger is not always better as large companies have been known to dump software products fairly frequently, forcing upgrades or software upheavals. Instead, look at the company’s success stories, frequency of updates and be sure they are constantly adding to the system instead of winding it down. And better yet – talk to their customers.


Top 5 ERP Software Implementation Mistakes

November 4, 2011

erp-software-implementation-mistakes 1. Rushing the Process

ERP software is a major investment in one’s business success. It deserves as much care and attention as any other critical business process. You may spend months evaluating software requirements, researching vendors and eventually choosing appropriate software, only to end up having the software implemented improperly. A good implementation team should always be able to make the software work for your business but just how perfectly it fits your needs depends on how much time you spend on the process. Ensure full buy-in and make the implementation a top priority so that you can benefit fully from your new software system.

2. Avoiding Necessary Expenditure

An honest software vendor will be upfront about implementation costs and should overestimate rather than underestimate costs. However, overages can occur despite all efforts to avoid it. It is important that the implementation is thorough and done properly, however. The costs of not completing a thorough implementation are much greater than the costs of a proper implementation.

3. Skimming Over Important Historical Data

When migrating data from your old system, be sure you have all the data you need. Data that was useless in your old system could very useful when pulled into a new system with proper reporting functionality, for example. Some data is safely left behind while most may be useful for reporting on historical data (example: looking at sales trends over the past 5 years by month).

4. Choosing the Wrong Team

It is as important to select a vendor for the team behind the software as much as the software itself. Ask yourself these questions of the team you will be dealing with:

  • Do they genuinely care about your success?
  • Do they offer personalized service?
  • Did they get to know you and your business well?
  • Have they helped you identify business process changes?
  • Will you be receiving canned or personalized support?

5. Not Being Thorough with Training

Ensure the appropriate amount of time is spent on training – not just to get to know the way around the system but also learning to use the specialized and highly functional components that the system was selected for. It may be best to spend time training on the more complex stuff once employees have gotten used to the basic functionality for ease of learning. However, time should be set aside for this in advance or else it may never be done.


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