Abstract

Why do so many accounting and ERP software selection projects fail to achieve their objectives or fail altogether? Absence of executive buy-in? Implementation failure? Ineffective communication. All of these are legitimate, but maybe there’s a fundamental problem that isn’t addressed adequately. The process of selecting a new accounting and ERP system isn’t just about features and functions. Maybe firms just don’t create a strong enough foundation for success. Maybe they forget that individual people drive a firm’s success. Maybe they forget that the new accounting and ERP system has to help these people do their jobs better and make better business decisions. Maybe they forget these people and their needs and therefore doom a software selection project from the get-go.

Basic Research

Before you launch into your analysis, you might want to spend some time on research or background knowledge accumulation. The more time you spend educating yourself about software selection, the industry and specific products, the better prepared you and others will be when you begin your analysis.

From the point of view of individual people within your organization, how can they know what they need to be successful if they don’t know what’s possible? Rather than one or a very few number of people researching product and functionality options, extend this investigative process to as many people as practical. Rather than building your requirements document from the top down (only including project leaders and departmental manager), build it from the bottom up as well. This might actually give you a more accurate picture of what you need as a firm.

Efficiency and Effectiveness

Efficiency and effectiveness are two key business success elements. From an operational point of view, you want to minimize the cost of doing business per dollar of revenue. However, efficiency isn’t the only answer. People will want to purchase from you because the perceived and actual benefits (other than cost) of doing business with you far outweigh the benefits of purchasing from your competition. In other words, customer service is just as important as price. The way to maximize your customer service is to maximize the effect of what you do. People must work effectively as well as efficiently. Maybe one of your fundamental areas for improvement has nothing to do with software. Maybe it has more to do with customer service and the way you interact with customers.

Identify Requirements, Constraints, Strengths and Weaknesses

Organizing the software selection process is certainly a critical step. Having formed your selection committee, one of your first steps is giving people the ability to critique their own jobs as well as the organization as a whole. Give people the ability to describe their job objectives as they see them, critique the information that flows into them from other sources, critique their portion of the accounting system, and put into their own words what they believe the organization should do well and doesn’t do well.

While you want to launch this software selection process by meeting with most of the people who will be participating in the process, it will not be possible to meet with them personally to discuss requirements. Instead, create what I refer to as a Preliminary Needs Definition document and then let everyone fill it out. The format is open-ended text responses to specific questions as listed below. I have used the term “we” because individuals don’t feel very comfortable talking it terms that refer to them directly.

• What do we do now?
• What works and doesn’t work?
• What can we do individually to improve business process efficiency?
• What can we do to improve customer service?
• What should we be doing that we are not doing right now?
• What changes should be made in the business management system to help us work more effectively?
• What can other people do to help us do better?
• Are these goals or changes reasonable?
• Where is the organization today?
• Where should it be in the future?

If you consider the questions above, you will see that most have very little to do with specific functional requirements. The questions you pose here are designed to build a picture of the type of organization you want to be in the future. Improve the organization first. If you don’t look inward first, how can you possibly define how the accounting or ERP system should assist you from a functional or reporting point of view?

As you move this process forward, you are going to start to build a picture of where you need to be in the future. You may also identify opportunities for improvement (problems are no more than opportunities for improvement). Deal with these issues first as any flaws within the organization can negatively affect the effectiveness of the new accounting/ERP system.

As you move forward, please keep in mind the following suggestions.

• Build a sense of teamwork by giving each person, not just the right to participate, but the right to be heard and taken seriously.
• Begin to build a consensus of what needs to be done by holding open-ended meetings with all groups that will eventually participate.
• Start collecting improvement / requirements information from individuals and workgroups.
• Identify the most important factors affecting your success as a unique business, whether they have anything to do with the accounting or ERP system or not.
• Determine what your customers want.
• Critique current system (software and business processes).
• Determine if specific business processes will require substantial improvement.
• Build a picture of the most important functional requirements.
• Build a picture of the most important reporting requirements, keeping in mind the fact that the reports found in most accounting/ERP systems are static pictures of the firm at a single point in time. What you really need is an effective set of business metrics that help you determine where you are and where you are possibly going.
• Keep in mind the fact that your new accounting/ERP system can produce so much information that it may become difficult to identify where you need to spend you time. Consider supplementing your reporting/metrics system with some form of exception management or alerts.
• Consolidate software requirements into a high-level needs definition document that can be used to review potential candidates.

Commitment to the Process

Now you have reached the point where you must dedicate yourself, your employees and your company to the process of selecting a new accounting / ERP system. I’m not suggest­ing this is anything like a holy crusade, but the commitment is similar. This project will consume a great deal of time and ultimately money to bring to fruition. There will be a tendency on the part of some to lose interest. Their participation and input is critical. They and you must support the project until it has been completed. This is the only way to insure the product you select meets your needs, and will be accepted completely by the people who will have to use it.

Summary

This first step toward selecting a new accounting or ERP system sets the stage for everything that will follow. If you don’t give people the ability to contribute toward the critique of your current system and even the organization itself, you may not receive suggestions that could otherwise prove to be quite valuable, and you run the risk of being seen as imposing a solution on people who have not been included in this process. These people may support your final purchase decision, but they could also resist any changes you might make or resist the new system. That you do not want. Create an inclusive software selection process that will generate enthusiasm. If you ask people how you can help them, they will respond accordingly.

Abstract

Everyone is aware of the fact that accounting and ERP software selection projects seem to have an excessively high failure rate. A month doesn’t go by without hearing that a customer has sued their ERP vendor or implementer/reseller for a failed project. While this is certainly an issue, some of the blame may need to be placed on the shoulders of the buyer and for any number of reasons. While reimbursement could be collected, the lost time and lost productivity can never be recovered. Maybe the following can be used as a checklist to reduce the likelihood of failure.

Introduction

If I attempt to list every step in a typical accounting/ERP software selection project, I could publish a book. Instead, I want to concentrate on those steps you should take before you actually launch the formal project. If you are organized for success, the likelihood of failure will be reduced significantly.

Share the Responsibility

Never launch a software selection project thinking that the vendor/reseller is 100% responsible for the outcome. That almost guarantees failure. Your primary objective in any ERP software selection project should be a successful outcome and that means you need to take whatever steps are necessary to do what needs to be done.

This philosophy also applies to the purchase decision making process. While there is no doubt that you need to appoint a project manager to make sure things get done, no one person should be totally responsible for an ERP software selection project. Every person should be responsible for the final outcome and therefore each person must make the “selection”. The only way this project is going to stand a chance of succeeding is for each person to participate equally in the final decision. The key concept here is mutual responsibility.

Secure Buy In or Kill the Project

It’s really quite simple. If you do not have the active support of each significant stakeholder, go no further. Your ERP software selection project has been significantly compromised.

Educate Yourself

Selecting a new accounting / ERP system isn’t something to be taken lightly. Any project of this magnitude and critical importance can fail simply because you get off on the wrong foot. Start this ERP software selection project by taking no direct action. Instead, spend some time educating yourself so that the decisions you make as you proceed will be based on realistic facts, not dreams or the marketing hype of software vendors. One of the most important steps you can take is learning how a software selection project should be organized. If you don’t understand what needs to be done and by whom, how can you possibly know whether you are on the right track?

Construct a Foundation for Greater Success

Rather than duplicating what you are doing today, take your business apart and create a stronger, more effective structure. While formal Process Improvement should not be undertaken lightly, maybe you don’t need such radical change. Maybe you do. The key concept here is creating an organization that is more efficient, more effective, more productive and therefore more profitable. Then you can determine what you need in terms of business functionality that will help you move to this future vision.

Assess Your Ability to Change

Even though you may have recognized the need to change, and have identified specific areas of the business or business management system that need to be changed and to what degree, if you cannot manage effectively such a n ERP software selection project, or your management and employees are not ready to change to the same degree you believe is required, the project’s basic foundation will be compromised.

Develop an Understanding of what’s Possible

This is to some extent an educational step, but focused more on the software functionality you might need. The more you know about the potential that can be released through current accounting / ERP systems, the better prepared you will be to define exactly what you require to improve your own operations. Learn what other people are doing. Contact prospective vendors or resellers to learn more about what’s possible in terms of functionality. At this stage make it very clear that you are conducting research, not buying.

Remember to Include your Customers

Since your customers are your most valuable business partners next to your employees, involve them in this process. Ask them how you can serve them more effectively.

Build from the Bottom Up

One of the mistakes firms make is driving software selection from the top down. Executives, managers and project leaders will all contribute significantly to this project from defining requirements to making the purchase decision. What about everyone else? Is their input important? Are they ready to change? Will they accept the new system? Any person who will be using the new accounting/ERP system is a vital contributor to the firm’s success and the success of this project. Their contribution may shed light on important software requirements or business improvements. If you want to increase the likelihood of failure, leave these people out of the process.

Answer the Critical Questions

Your first step is giving people the ability to critique their own jobs as well as the organization as a whole. Give people the ability to describe their job objectives as they see them, critique the information that flows into them from other sources, critique their portion of the accounting/ERP system, and put into their own words what they believe the organization does well or does not do well. Maybe you should ask and answer the following questions.

• What do we do now?
• What works and doesn’t work?
• What can we do individually to improve?
• What should we be doing that we are not right now?
• What changes should be made in the business management system to help us work more effectively?
• What can other people do to help us do better?
• Are these goals or changes reasonable?
• Where is the organization today?
• Where should it be in the future?

Please keep in mind the fact that everyone needs to be involved in these initial questions. Leave people out at your own risk.

Build an Effective Information Management System

Let’s admit that it’s now possible to track anything you want. That isn’t the issue. Modern accounting and ERP systems can analyze data and spit out reports and graphs and dashboards that have the potential to either overwhelm people or give them information that they don’t need. Instead, you need to use this power to your advantage. As I have discussed in previous posts, what we need is a truly effective decision management system, not multi-page status reports or meaningless metrics and useless dashboards.

• Start by designing a targeted reporting system. Ask yourself why you need the information. If it doesn’t lead to a decision, then you don’t need it.
• Build a system of business metrics that gives people the ability to “see” where they need to concentrate their attention and to “see” if decisions they have made are leading to improved results.
• Finally, design truly effective Exception Management systems that give people the ability to identify and address issues that need to be addressed.

Summary

I have chosen to address only those software selection tasks that should be undertaken by the buyer and only the most important steps that precede  any form of needs analysis and product evaluation. While I would certainly hope that vendors and resellers would help people understand what needs to be done and by whom, I choose to follow the maxim “Let the buyer beware”. If you are contemplating the purchase of a new accounting or ERP system, you need to take responsibility for the project. If you organize yourself for success, it’s very likely you will succeed.

Abstract

Today’s communication and information devices now give us the ability to connect instantly to our ERP and CRM business management systems. Anything we can do in the office we can do anywhere else using any web enabled phone, pad or home computer. Instant connectivity. That’s what we need or at least that’s what everyone seems to be saying. There’s another term for this: micromanagement. Maybe we are trying to do too much? Business conditions do not change on an hourly basis nor does any business need to be adjusted instantly. That’s just an indication that our business plans and actions are not organized for success.

Is Micromanagement Necessary?

The latest TV ads for 4G phones seem to be trying to convince us that getting calls, e-mails and other communications 30 seconds sooner is absolutely necessary. I would expand that question much further. Is it really necessary that we stay in touch constantly (or instantly) with our co-workers and business management system? The necessity for instant reaction to changing business conditions is a sign of weakness, not strength. If we have to micromanage our business, all we have done is make ourselves indispensable and that’s a very poor business habit.

Notice that I have not said anything about instant connectivity to prospects and clients. That’s a slightly different situation, but still with some similarities. We do want our prospects and clients to be able to connect with us quickly. We want to be able to show them by our actions that serving customers is job one. This doesn’t mean that we have to call them back in 30 seconds or less, but it does mean that we will connect with them within a reasonable length of time. That’s the key. Our reaction needs to be reasonable and our customers’ expectations need to be reasonable. Connectivity though is very important. We need to be able to access information that is important to our customers and in many cases this means having a reliable connectivity link.

Instant Connectivity is Disruptive to Business Excellence

Unless there is some form of unforeseen catastrophe, any business should be able to operate smoothly with little or no adjustments on a daily, weekly or even a monthly basis. Rather than having to react instantly to issues, the business should be structured so that serious issues are avoided or at least reduced. That’s why we need to practice what I call Business Excellence.

Excellent companies start with excellent owners and senior executives who create a people oriented management philosophy. They in turn recruit excellent line managers and supervisors. That’s the basic foundation, but it’s the regular people, the staff and line employees who will really make a difference. Regular everyday employees will make or break your organization. I know that seems contrary to the popular notion that excellence lies in technology and the management of the firm, but maybe I like to take a contrary viewpoint sometimes just to make a point. In this case I am speaking from the heart. Business Excellence is all about people. Business Excellence starts with the assumption that all people have the capacity to contribute to the success of the organization. Give people the tools they need to do their jobs well. Give them the encouragement to do their best. Give them a physical environment that supports efficiency. Give them a psychological environment which supports effectiveness. Give of yourself to each person in your organization and you stand a very good chance of becoming successful.

Having created an effective employee oriented structure, business managers need to then create an effective reporting system. Effective business decisions drive business profitability. These decisions need to be rooted in facts that can be brought to light instantaneously. People do not have the time to guess. They need to know where to place their attention. They also need to know whether the decisions they make are having the desired effect. If there is too much data, the underlying issues may remain clouded. If there is no way to compare actual results against targets, how can you ever know if you are where you want to be or need to be? Finally, people need to identify those Profit Drivers that have the most significant impact on their organization or on their specific area of responsibility. Adopt a proactive system that helps you track not just where you have been or where you are today, but where you could be tomorrow.

Having created a basic reporting system that gives people the information they need to make sound business decisions, you now need to give people snapshots that give them the ability to identify where their attention needs to be devoted. Truly effective business metrics give you a basis for comparison that either tells you where you are going and whether you are above or below expectations. 

I cringe every time I see bar charts and pie charts as representative of what information users can extract from an ERP system and display on their “dashboard”.  While these charts certainly look pleasant (particularly when displayed in color), in the end they are nothing more than status reports and as such do not (or should not) drive business decision making.  Why? Bar charts and pie charts do not (and never will) lead to any form of decision or action.  A pie chart that displays the percentage of revenue generated by a firm’s top ten customers tells you nothing.  There is no basis for comparison to tell whether this is good or bad.  It looks pretty, but it leads to nothing.

Now we finally reach the point where people can truly react to changing business conditions, but do so within a controlled environment that allows people to be proactive rather than reactive. Having to stay in constant contact with the business management system or co-workers is a reactive business methodology. The options listed above proactive. If you identify key business drivers and create an operational plan that maximizes the potential for these key business drivers, you don’t have to spend all of your time micromanaging your business. Now you can take this time and apply it to business process improvement, thus reducing the need to micromanage.

Most ERP systems can identify exceptions that should be brought to the attention of named users.  That’s what alert systems are all about.  If a tracked metric is above or below a specified target value, an alert is either posted on a user’s home page or sent to the user’s e-mail address.  Unfortunately that’s about as far as most systems have developed the concept in spite of the fact that Exception Management as a business methodology has been around for almost 30 years.  The user is notified, but all of their activities after that are for the most part manual exercises.

A fully proactive Exception Management system is not a Workflow Manager nor is it just a series of e-mails relating to a specific topic.  It is in fact a framework by which sound business decisions can be made.  While the ERP system would be the primary vehicle by which exceptions are identified (operating the same way present alert systems do), users would also have the ability to open their own exception topics. Once open, multiple users could be given access to the exception file.

Let the Business Run Without You

If someone needs to be in touch constantly and react instantly to what’s happening within their business unit, something’s wrong. There is no person within any organization who is that important. In fact the business should be structured so that it can run without the constant manipulation of any one person. Create an organization that gives people the atmosphere and the tools that foster success. Identify the profit drivers that need to be monitored and optimized. Give people the ability to communicate with each other and jointly address key issues. Structure your business for long term success and you won’t have to worry about staying connected 24/7.

ERP Software Blog is a blog site supported by a large number of resellers of the various Microsoft Dynamics products (Dynamics GP, Dynamics AX, Dynamics NAV and Dynamics SL).

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