Buying a new Accounting or ERP Software

[SMBConsulting]

As a small business owner, replacing your existing accounting or ERP software could be the second most important decision you make for your business. Before you jump on a new ERP software bandwagon and fire your existing system, try to answer the questions below. Make sure you write down your answers. This will help you figure out what you really want.

• What is the trigger event(s) that prompted me to look for new software? (operational, new idea, competition, new customer, vacancy in a key position)
• How often does this event occur? (Seasonal or Permanent)
• Did you try adjusting your business process to address this issue(s)? (Verbal AD-HOC adjustments don’t count)
• Is it your conclusion that the answer is to get new software OR are you being pressured by other employees?
• Do you know the most important features, to your company, in your existing system?
• Do you have a clear understanding of the missing features in your existing system(s)?
• Would you be the person driving the evaluation and implementation of the new software? (This is the first step towards buying a SHELFWARE)

I will list some DOs and DONTs in buying new software soon but in the meantime, you can email me if you have short questions.

Remember, buying new software is like going to the movie theatre. You make the decision based on trailers, word of mouth and/or the track record of a particular star but this does not guarantee your satisfaction. Software contracts are similar to movie theatre ticket contracts, they both do not guarantee your satisfaction and you will not get a REFUND.

[pnorilsk]

Frankly, I have an issue with your methodology. It remains me the story about aborigines who found an American car in jungles. The found all features on this car by trial and error, except one, main. They never be able to find that car can move - no way to check it.

Now, how people would know what they can expect to find in contemporary ERP systems without knowledge what they (ERP systems) can deliver?

Regards,
Peter.

[Barney Stone]

Software contracts are similar to movie theatre ticket contracts, they both do not guarantee your satisfaction and you will not get a REFUND.

That's one very good reason why you should consider purchasing off-the-shelf software that comes with a money-back guarantee. There are several excellent programs available to help small-to-medium merchants manage their operations. They are very affordable, and have either "try before you buy" or cleary stated return and refund policies.

Small companies should avoid long term software commitments and getting sold more sophisticated and expensive systems than they really need. I've spoken to startup companies that didn't even have their Websites running yet that were considering spending $50K or more on software before they had a single sale, when a couple thousand dollars worth of software would give them all of the capabilities they were likely to need for at least a couple of years. The rest of that $50K would go a long way towards making sure the company actually got off the ground, got some sales, and made it through those first few years.

- Barney Stone

[SMBConsulting]

I am referring to companies that outgrew their entry level accounting and business management software such as QuickBooks and Peachtree. When evaluating software applications such as MAS90/200, ACCPAC, GreatPlains.…etc., the try before you buy (TBYB) evaluation method is typically done in a standalone environment.

Assuming that business owner and managers are extremely busy, the hands-on evaluation time is unlikely to exceed two hours per system. In fact, in many cases, business owners and managers don’t even touch the trial version and conclude that “if the vendor had nothing to fear by giving me a trial version, therefore, all that was said during the demo is true”

It all comes down to how you manage the evaluation process. Some useful items to consider are as follows:

1- Ask the vendor to demo the product according to your current business process, you might as well provide the vendor with demo guidelines document a few days in advance. At the most, this will cost you one hour of planning.
2- During the demo, take notes of all work-arounds discussed and most importantly, all the issues where the sales rep answered you by saying “I will get back to you later on this one”, “We can customize this for you”..etc.
3- Make sure to document your team’s feedback after each demo in the vendor evaluation file

BTW, the movie theatre ticket analogy has been used by many US courts to resolve software contract disputes.

[Barney Stone]

No argument with any of that. Merchants should just be aware that there is a big gap between outgrowing QuickBooks and needing MAS90 or Great Plains, and that there are a variety of products that fit in that gap, and companies that specialize in supporting merchants who find themselves there. For a small company, trying to use software designed for a much larger operation can be just as much of a problem as trying to run a growing business on QuickBooks and Excel.

[InfoSourcing]

Hi,

When your company is outgrowing Quickbooks or Great plains, you need to be very specific in what terms it is outgrowing?? Are you touching the ceiling for creating customers in Quickbooks as it only allows certain number.. Are you spending too much time in integration? Trying to integrate Sales order from your e-commerce store into your Inventory mgmt and tie that up with Accounting ... Are you spending too much of time in customer support sending and recieving emails or CRM to be in short ...

Once you identify the core issues with ur existing packages then look for software vendors who provide this functionality or feature sets, which is called either as "Enterprise" or "All-in-one" software or lossely said as ERP products for SMB (Small and Medium business ) ...

Going through demo's give you a glimpse of what you see and what they show and playing around for 30 days gives you a rough idea but nothing like asking customers who are using it and best is to ask solution providers or resellers for reviews.

Reading reviews on forums like this, reading articles all will aid in judging the product, remember every product has pros and cons nothing is perfect but if you align with those products with your requirements or pain points and see how much each of this software can eliminate those pain points, then you will get the answer out of the list...

[NickR]

Since I am somewhat considering the same and currently evaluating Netsuite and Finsock. I was wondering what everyones thoughts were on Web-based software? I am not outgrowing quickbooks but it seems like everything else. I am impressed if this thing does what they claim? Any opinion? NR

http://www.finsock.com

[Barney Stone]

Why would you want to trust your company and its data to a company that does not seem to have a real product yet, and has no contact information on their Website? If you Google "Finsock", all you find are your posts looking for information. Are you shilling for them? If so, it's a tacky way of driving traffic to your Website. If not, there are dozens of programs that fill the space between Netsuite and Finsock (at least from what little information there is about it on their Website), from companies that have track records you can easily research. I suggest that you make a list of the features and functions you are looking for, then find some of the other programs that are available that meet your needs and do some research on them.

[Gary Harrison]

Since I am somewhat considering the same and currently evaluating Netsuite and Finsock. I was wondering what everyones thoughts were on Web-based software? I am not outgrowing quickbooks but it seems like everything else. I am impressed if this thing does what they claim? Any opinion? NR

http://www.finsock.com

Quite a stretch comparing finsock which has no CRM or Accounting functions to Netsuite.

[Gary Harrison]

No argument with any of that. Merchants should just be aware that there is a big gap between outgrowing QuickBooks and needing MAS90 or Great Plains, and that there are a variety of products that fit in that gap, and companies that specialize in supporting merchants who find themselves there. For a small company, trying to use software designed for a much larger operation can be just as much of a problem as trying to run a growing business on QuickBooks and Excel.

Nearly every software company is aware of the price gap. The reason for the price gap between QuickBooks and Mid-Market software mostly has to do with the fact that most mid-market software is sold through reseller channels that need a 50% margin and the high sales and marketing expenses of selling a sophisticated application. When i worked for Industrious Software it took each sales person over 30 hours to close a sale. When you factor in that the average accounting / ERP application costs about 10 million to develop and that initial development cost may only be spread across hundreds or perhaps a few thousand copies, for many companies a $10,000 sale is break even.

At Interprise Solutions we have had to reinvent the way software companies work in order to profitable get to the price point we are at. I'm happy to say that we will be able to do it and build a strong reseller channel as well.

[Gary Harrison]

I think I would add a technological assessment to the list of things to look out for here. If you are in the windows world make sure the system you are looking at is built on .NET. SQL Server 2005 and Windows Vista both have features that only .NET applications can take advantage of and Microsoft has pretty much stopped developing on its Com/DLL framework. Most companies are keeping their Accounting applications for 7 years or more. If you are going to invest the time and money why invest in a system that is already obsolete?

[NickR]

Sounds valid, I am not "schilling" for them, I've basically tried every source I could find on the internet to ask about Netsuite and them, but I am more concerned with this whole web-application model? In your opinion is this a valid way to run a business as opposed to off the shelf software which you mentioned earlier?

[Gary Harrison]

Sounds valid, I am not "schilling" for them, I've basically tried every source I could find on the internet to ask about Netsuite and them, but I am more concerned with this whole web-application model? In your opinion is this a valid way to run a business as opposed to off the shelf software which you mentioned earlier?

Personally, my biggest problem with the hosted model is the ever increasing fees. It seems that once they got you locked in - the fees rise real fast. Netsuite will sign a 3 year deal with you - but then charge you separate for the new features as they come available.

At Interprise we are offering both Licensing and Hosted plans. Given the choice nearly 95% of the companies prefer the licensed model.

[Barney Stone]

Sounds valid, I am not "schilling" for them, I've basically tried every source I could find on the internet to ask about Netsuite and them, but I am more concerned with this whole web-application model? In your opinion is this a valid way to run a business as opposed to off the shelf software which you mentioned earlier?

Since we sell PC-based software (the Stone Edge Order Manager), we are obviously biased, but here are some of the pros and cons of both models:

Web-based systems

Pros: You can access them from anywhere on the Web. Program updates are usually automatic (which can be good or bad, depending on how good the updates are and whether they cause any problems for you). Somebody else takes care of data security and backups (again, that's good when it works properly).

Cons: Prices often go up. Many charge per-transaction fees that can get very expensive. Limited ability to get customizations, since you are probably working off of the same code base as other users. If the company goes out of business or drops the product, you are out of luck, and may even have trouble getting access to your data.

PC-based systems

Pros: You own the program (or a license to use it). There are generally no per-transaction or monthly fees. You own your data. If the publisher goes out of business or drops the product, you still have the program and your data and you can still use it. If the program uses a common database (e.g. Microsoft Access or Foxpro), you can probably get at the data for custom uses. In our case, our programs are written in VBA (Visual Basic for Applications) and are designed to accommodate customization.

Cons: You will have to deal with installing program updates. You can only access them remotely using Remote Desktop, GoToMyPC.com or some similar technology. You are responsible for data security and backups.

I'm sure there are other arguements on both sides, but that's all I can think of right now.

[Tim G.]

The evaluation process for a software company and customer is key to the success of not only the implementation process but the overall relationship between vendor and customer.

Someone posted a few back that a specific rep spent over 30 hours with a prospect to close a deal. (I applaud the gentleman who took the time with the customer) I agree the goal is to close deals in a timely fashion but the rep must understand the ROI for the customer is the entire reason they're shopping for new software.

Let's face it the COGS on software is literally nothing once the program is out of the development phase. It might sound Idealistic but I spend at my current company several extra hours to make sure the company shopping for the software is the right fit. You can't be afraid to say your product is not right for them. At the same time you can't be scared to ask for the deal.

As long as you've conducted your dilligence you'd be surprised how many HAPPY customers you can bring on board who will experience a successful ROI.