Accounting Software Outlook for 2012

December 27, 2011

As we all know, the world will end in 2012. That means that this is your last chance to improve your accounting software – buy or upgrade now to avoid the apocalypse rush!

I do have three somewhat serious predictions for 2012:

accounting-software-outlook

  1. The percentage of new cloud computing / SaaS implementations will continue to rise rapidly: this one’s a no-brainer, as we seem to have gone beyond critical mass in acceptance of the cloud by smaller businesses as well as larger companies. In fact, if the trend we saw in 2011 continues apace, then by the end of 2012 a new on-premise implementation will be as rare as a SaaS implementation was a couple of years ago.
  2. Driven to some degree by the affordability of SaaS, more small companies will invest in newer ERP and Accounting software in order to improve efficiency and thereby reduce personnel costs. This may add marginally to the unemployment woes in North America, but in reality many of these investments will fail to pay off due to inadequate implementation planning and spending.
  3. By the end of next year there’ll be a massive reduction in the (already smaller) volume of business transactions reduced to paper and sent by mail. We’ve already seen this to a degree, but the number of companies that (a) can send invoices, purchase orders and confirmations by email, and (b) that are willing to accept emails instead of hard copies, is increasing rapidly. This will mean that accounting systems that cannot easily generate and email these documents are strong candidates for upgrade or replacement in 2012.

Wishing you all a very happy new year and all the best for 2012 (as long as it lasts…)!


Comparing Hosted (Online) & On-Premises Software Systems

December 20, 2011

hosted-online-or-on-premises-software

We have touched upon the benefits of hosted software before, but we have yet to provide a side-by-side comparison of hosted and on-premises. The following post will serve as an overview guide to the difference between these deployment methods.

The Advantages/Disadvantages of On-Premises Software:

   Advantages    Disadvantages
  • Data is stored inside the organization
  • Increased customization and control of systems
  • No monthly subscription fees
  • No internet connection required
  • Hardware can be shared between other internal systems
  • Possibly quicker performance
  • Easier to integrate with 3rd party applications and other systems
  • Client-owned software
  • Larger initial investment
  • Hardware upgrades and maintenance required
  • In-house IT management recommended
  • Physical space required
  • Software upgrades must be handled on the client end

The Advantages/Disadvantages of Hosted (Online) Software:

   Advantages    Disadvantages
  • Reduced upfront cash outlay.
  • Infrastructure costs pushed to provider
  • No more worrying about backups.
  • Painless upgrades
  • Increases access to expert support (in lieu of an IT department)
  • Remotely accessible
  • Improved security and reliability
  • Possibly increased uptime
  • Immediate or quick access to a broad range of applications
  • Reduced control of systems
  • Data stored outside the organization
  • Internet connection required
  • Client does not own the software

As you can see from the tables above, each deployment method has its strengths and weaknesses. Although many vendors cling desperately to one method or the other, some vendors offer both hosted and on-premises. Depending on your personal preferences and type of business, one deployment method may be preferable than the other.


Managing Inventory? That’s a negative!

December 15, 2011

In the previous post on negative inventory we debunked the myth that some bnegative-inventory-2usinesses “need”  their software to handle negative inventory. With appropriate inventory management business processes in place, there’s never any real need. But perhaps it’s more expedient to let your inventory management software go into negative quantities in the heat of the moment and correct things later – right? Well – no. Here are a couple of negative consequences of negative inventory.

Firstly, if we sell product that we’ve not brought into inventory, what cost of goods sold is allocated to the invoice? Is it the last cost, or the existing average cost? Well, either way, it’s definitely the wrong cost. Similarly, when you later bring into inventory the quantities necessary to wipe out the negatives, and input their actual cost, how will that affect your updated average cost calculation? What if you pay sales commissions based on gross margins? Review daily sales and gross margin reports. Have margin threshold alerts or exception reports? That all falls apart under a negative inventory scenario.

Secondly, in a properly integrated ERP system, other areas of a growing business rely on inventory quantities for decision making and transaction processing – things like reorder procedures, inventory allocation on sales orders, and backorder management. By not investing a little time and effort to implement good processes, you might well lose the ability to use tools and functionality that would actually save you much more time, on an ongoing basis.


Wholesale & Distribution ERP Software Modules

December 8, 2011

wholesale-distribution-erp-software-modulesAs we mentioned in a previous post, it is important to ensure you are seeking out a system that is well-suited to the industry and space you operate in. For example, we recently covered what to look for in ERP software for food distribution or food wholesale. Now we’ll take a macro-level view and evaluate important ERP software modules for wholesale and distribution.

1. Financial Modules

   Basic    Important
  • AR/AP
  • General Ledger
  • Bank Management
  • Contract Pricing (Price-lists)
  • Landed cost tracking
  • Multi-currency
  • Inter-company accounting
Click here for more Advanced Accounting Modules

2. Inventory Modules

   Basic    Important
  • Order Entry & Invoicing
  • Purchase Order
  • Return Merchandise Authorization (RMA)
Click here for more Advanced Inventory Modules

3. General Modules

   Basic    Important
  • Contact management (CRM)
  • Commission Processing
  • Backorder management
Click here for more Modules/Components

This list should serve as a good starting point for identifying functionality relevant for most wholesale and distribution operations. Proper ERP software should have the majority of this functionality or more to be a true fit for distributors or wholesalers.


Negative Inventory – an ERP Software anomaly?

December 5, 2011

About half a dozen times a year, I’m asked the question: “Does your inventory management and accounting software handle negative inventory?” The answer is no, and in my opinion no software should allow this.

negative-inventoryNow, if you can take me into your warehouse and show me what negative inventory physically looks like, I might change my mind. But of course there is no such thing. (In this case I’m referring solely to item level negative inventory, as opposed to location level, a different story.)

We’ve all heard the reasons:

 – We have to ship out before we have time to receive the incoming PO in the system

 – We need to invoice the customer what we ship, even if our inventory system says out of stock (common POS issue in retail environment)

 – We can always catch up data entry later and all will be correct at that point (actually no, it won’t)

The reality is that I’ve not yet encountered a single business who’s perceived need to handle negative inventory could not be superseded by a properly implemented set of business processes.

If you don’t have time to receive an inbound purchase order into your ERP Software before shipping out to a customer, and you need a physical invoice document to accompany the shipment, realize that the invoice is just a piece of paper. A modern system can generate a document that looks like an invoice without actually posting that invoice through the system. Then later (day-end perhaps) you can process the PO receipts for the day and post all invoices.

Similarly, in a retail environment, you can sell products through the POS, but be required to account for inventory in and eliminate any negative quantities before running day-end or shift-end processes and cashing up.

Check back in a week or so for some of the negative consequences of negative inventory.


The Benefits of Hosted Software / Cloud Computing

December 1, 2011

benefits-cloud-hosted-softwareThe story has been the same for the last several years – cloud-based services are the way to go. Even the skeptics are beginning to believe in the benefits of the cloud. According to Toolbox.com’s 2011 ERP Report, Enterprise hosted (cloud) solutions now account for nearly half of all new ERP implementations. That is a tremendous level of adoption for a relatively new technology in the slow-moving enterprise arena. What does this mean? It means that all IT decision makers should at least consider a hosted solution for their business. Let’s take a look at some of the benefits of hosted ERP software.

Reduced Upfront Investment

Hosted software tends to be priced on a monthly payment basis with minimal upfront costs. Installation costs will still be incurred but they tend to be less than on-premises. Hosted deployment eliminates the need to purchase software licenses upfront which can be costly. Monthly payments are also easily able to be factored into cash flow expenditures –allowing for predictable IT budgeting.

Reduce Hardware Purchases

A hosted solution eliminates the need for hardware in-house such as servers. Instead, the vendor provides the latest and greatest in server technology and upgrades them as they go. Unexpected hardware purchases can be very costly so this can be a huge cost savings.

Reduce/Eliminate IT Staff

With a full server environment on-premises you may wish to have IT staff, or end up paying a third party a lot of money to maintain your hardware. With hosted software all the IT management is pushed to the vendor (except for PC/terminal maintenance, of course).

Other Notable Benefits:

  • Automatic upgrades that are included in monthly fees
  • Backups occur automatically and data is redundant
  • Data centre is far more secure than most on-premises deployments
  • Software is remotely accessible from anywhere in the world
  • Possibly increased uptime – better support/infrastructure

Some vendors offer both on-premises and hosted ERP software while others do not. Consider a vendor that provides both for an unbiased evaluation of what will work best for you.


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