As a result of major advancements in both policy and technology over several decades, international trade and foreign investment have become central to overall economic growth. Governments have successfully negotiated international agreements that are responsible for reducing many long-standing barriers to trade and foreign investment, ultimately promoting the flow of goods and services between nations. Due to the elimination of many different barriers to trade and investment, large corporations have established foreign factories as well as production and marketing activities with foreign partners, essentially creating a true borderless economy. In addition to foreign policies, emerging technologies have also played a key role in the globalization of the world’s economy by making it easier than ever to communicate with people across the world. Specifically, advancements in information technologies have provided many with access to a variety of tools for gathering information to help identify and pursue various economic opportunities. Consequently, globalization has made it attractive for businesses to establish importing and exporting operations. Exporting represents a major component of the overall health of a nation’s economy, where countries are rich with unique skills and resources. Importing is also important as domestic businesses often look internationally for resources that are either a) not readily available domestically or b) inexpensive elsewhere, that will help to drive down their cost of goods sold and increase profit margins.
With any major purchasing decision, budget is an important factor. When it comes to purchasing wholesale inventory software, sticker shock is common for those moving off of introductory systems or manual processes. However, as with any capital expenditure, buying new software should be a decision made on more than just cost – if you want to make the right investment. The same principles apply as if you were such as seeking new warehouse space. So how come cost continues to be used as a deal breaker? Before you narrow down your software options based on cost, consider the following:
Too expensive compared to what?
Expensive is a relative term. When it comes to software, make sure you think about what you’re comparing the cost to. Most comparable Tier 2 systems will fall within a similar cost range, so it’s important to first identify which Tier will have functionality to meet your needs. Many companies start off with an arbitrary budget based on what they feel they should spend, and not on any real world frame of reference. Are you comparing the cost to other systems? To hiring additional employees? To purchasing more equipment?
How much will it cost you to do nothing?
Another cost to consider is the cost of doing nothing. Businesses who do not take this aspect into consideration are falling prey to omission bias – the tendency to judge harmful actions as worse than equally harmful inactions. Not purchasing software can affect costs directly by resulting in a new hire or indirectly through lost productivity. When it comes to hiring employees, good software should replace the need for additional staff which will save you more than just the cost of a system in the long run.
There is a reason that training is one of the most costly aspects of software implementations, namely that it’s also one of the most important aspects. When upgrading to a sophisticated accounting ERP system from introductory software such as QuickBooks, there will be a significant learning curve. This is not to say that such Tier 2 systems are all very complicated and difficult to use, but instead that the software necessary to help grow your business will require a better understanding of accounting principles and good business processes. Without this kind of knowledge it’s tough to run a successful multi-million dollar company, and this is where good training comes into play – with regard to accounting functionality, inventory management and other areas. To help you understand why training is so important, we have outlined some reasons below:
The better trained your employees are on a software system, the more productive they will be. All things being equal, when employees feel confident using software they will rely on it more in order to perform their responsibilities. This in turn can help automate previously manual processes, therefore reducing the instance of human error. This also means less time is wasted learning how to use a system every time you want to perform a task, and coming up with workarounds for managing certain processes. ERP software is designed to improve and streamline processes in order to increase efficiency and reduce costs. A good vendor will work with you to evaluate existing internal processes and explore how they can be enhanced or improved upon with the help of software.
Proper training reduces costs. This may not seem like the case initially, however in the long run proper training reduces not only the costs of on-going support, but also the costs associated with lost productivity. If you invest time and money on training up-front, employees will be better equipped to handle their daily responsibilities. This will also make it easier for employees to train new hires on the system, and to assist one another with software questions and issues. If you’re upgrading from introductory accounting software, it is important that employees understand why the system works the way it does, not just how it works. Creating a strong internal network of system experts will make the transition to new software easier for employees, which can reduce the stress associated with such change.