Accounting Software Review and Selection Requires a Step-by-Step Plan

July 25th, 2013 by

An effective accounting software review must include each of the critical steps you need to accomplish when searching for a new business management system.  Although you might want to move forward with your accounting software review as quickly as possible, history tells us that the failure rate of accounting software selection projects is high.  In many instances a product may be purchased, but severely underutilized.  In other cases the accounting software product will be scrapped long before expected.  In the meantime your employees are suffering with a system they did not want and cannot use effectively.

Accounting Software ReviewWhy go through this process when you can avoid failure simply by creating and following a step-by-step accounting software review?

Before you do anything ask yourself one critical question.  Do you know what you are doing?  If are not sure about what specifically needs to be done, ask other people.  The Internet can prove to be quite educational as there are any number of articles that might help you learn.  You might also use GoogleBlogSearch to identify articles relating to topics you define (accounting software, accounting software selection, ERP software selection).

Organizing and managing an accounting software review project isn’t easy.  It’s probably going to tedious and at times very frustrating.  In addition you are going to have to get everyone in your firm to agree to participate; not tacit participation, but real participation where people contribute their time and their knowledge.  If you cannot get a critical mass of people deeply involved in the accounting software review, cancel the project.

Do Your Homework

A formal accounting software review acts as a sieve to some extent.  Your needs definition will be compared against likely candidates, but you must first identify business management systems that might be of interest.

There are several avenues you might want to investigate.  Certainly an Internet search will identify products that might be of interest.  Industry publications should provide product options.  Your local or state CPA society probably offers seminars and conferences that feature accounting software products as an agenda item.  Even your competition might be able to provide product names.

In all of these cases, this first accounting software review step isn’t designed to make a purchase decision, but to create an initial study list.  Read about these products.  Visit product web site.  Talk to local resellers.  Try to gather as much information as you can.  You can even read product reviews that are published on-line as well as in print publications.  Don’t accept a product just because a reviewer likes it.  You have to like the product and that’s the most important accounting software review criteria.

If a product seems to be of interest, carry it forward in your accounting software review.  If it isn’t as interesting as other products, then move forward without it.  Just because an business management system is widely supported doesn’t necessarily mean you must consider it, much less purchase it.

There is one option that might be of interest.  An accounting software review doesn’t necessarily have to include a large number of product candidates.  If your initial research identified a product that appears to be a very good match to you and everyone else, you might want to evaluate this product on its own.  If it passes all of the tests we will discuss below, you can reduce the amount of time required by the more detailed (many products) accounting software review.  You certainly shouldn’t force acceptance of just this one product, but if people like it, look forward to using it and it provides the functionality and business intelligence (reporting) options you require, there is nothing wrong with short cutting the process.

Agree to Launch a Formal Accounting Software Review

If the majority of users votes to do so, launch a formal accounting software review.  The objective of this review should be the identification of accounting software products that might be a better fit than your current system.  Notice that the objective here isn’t the replacement of your current system, but the search for alternatives.  Having found one or more likely candidates, they and your current accounting system should be evaluated and a “winner” selected.

Organize the Accounting Software Review Project

Having decided to launch a formal accounting software review, you now need to organize the project itself.  Obviously the first task is appointing someone to lead the project.  That person will report to either the senior executive/owner or to a software selection committee if your firm is fairly large.  The project manager will make sure people participate at the proper time and in the required level of detail.  Basically the project manager will make sure the accounting software review moves forward at an acceptable and effective pace.

The first and certainly most critical step in any accounting software review is securing everyone’s support.  This isn’t tacit support, but real and active support.  Senior management cannot say they don’t have time to participate and “Just let me know what you want to do”.  If you cannot secure the support of senior management, kill the project!

Decide if the Cloud is a Viable Option

It appears that over time the Cloud will become the preferred deployment option for a majority of firms.  This makes sense as long as it makes sense to you.  Just because the Cloud is a viable alternative doesn’t necessarily mean you must move in that direction.  If maintaining an on-premise accounting software product no longer seems to be attractive, your accounting software review might want to include Cloud options.  Maybe you could deliberately select one or more Cloud products and include them in your review.

If you are interested in the Cloud, but will be including on-premise products in your accounting software review as well, please keep in mind the fact that the revenue model for Cloud accounting software products is different.  Cloud vendors charge a monthly per user fee so the cash flow is different.  In order to compare cost apples to cost oranges, you are going to have to use something like Net Present Value to complete the cost comparison correctly.

The Cloud might prove to be an attractive option, but make sure it is attractive for the right reasons.

Evaluate Your Current Business Management System

Rather than starting your accounting software review by looking at other products, step back for a moment.  While you and many people in your firm might not be thrilled with your current accounting software system, the problem may not necessarily be fatal.  Evaluate your current business management system and determine if it can be improved.  Don’t assume that what you see is all that you are going to get.

  • Make sure that you are operating on the most recent version of your current accounting software system.  If you are not, ask the accounting software reseller or vendor what features are available in the most recent version.
  • Check to see if there are third party applications that can provide missing functionality.  Every accounting software product supports third party applications.  In some cases there are literally hundreds of add-on products that can be integrated into your accounting software product to increase its functionality.
  • If your reporting system isn’t giving you the information you need, investigate whether you should purchase more powerful business intelligence (BI) tools.  Some of these reporting tools could be completely integrated with your current accounting software product or other, more powerful BI systems could read your database and create the data views you need.
  • If you still have gaps in functionality, determine whether your current accounting product can be customized.  This certainly isn’t the best alternative, but your accounting software review needs to be thorough.  If customization is the only alternative, you might want to conduct a more formal accounting software review to identify other products that might be a better fit for you.  Having identified several products to include in your accounting software review, you can then compare those products against your current business management system (with required customizations) and determine the most effective alternatives: customization or purchase of a new accounting software product that does not require customization.

Just a quick note before we move on.  Every step outlined above to evaluate your current accounting software system should be a step you take after you have launched your accounting software review.

Organize Your Firm for Success

One of the most important steps you can take in your accounting software review is the analysis of your business itself.  Maybe the problems you are experiencing have nothing to do with your current business management system.  Maybe the problem is the way you run your business.  If the structure of your firm and your business processes do not support the way you want to run your business, you should step back for a moment.  Examine and improve your business processes, thus strengthening the foundation upon which your accounting system runs.  An accounting software review should also include a business process review.

Please don’t be frightened by the concept of business process improvement.  Yes, it can be a daunting task, particularly for large firms, but it doesn’t have to be so for small to mid-sized businesses.  Think of this as more of an informal review of your business.  Get together with people in your firm and ask a very simple set of questions.

  • Are there processes that really don’t make much sense?
  • How can we improve these processes?
  • Are there processes that we can eliminate without creating any issues?
  • Are there processes that we are not doing, but should be?

A thorough accounting software review must include the analysis and improvement of the way you run your business.  This is your key foundation for success.

Define Your Accounting Software Requirements

There are two ways you can approach this accounting software review task.  If you are a small to mid-sized business, you might want to concentrate only on your most critical requirements.  If you are a larger firm contemplating the purchase of an ERP type system, you are going to have to expand your requirements list to accommodate the greater complexity of your firm.

We realize that to some extent all accounting software products offer a basic set of features and functions.  That’s not what you need to define.  You need to identify what makes you unique (at least in your estimation).  Maybe it’s requirements to meet certain industry constraints.  Maybe it’s just a reflection of the way you choose to run your business.  The list doesn’t necessarily have to be that long, but it does need to be as comprehensive as required to identify what sets you apart from other firms.  In addition, you need to create a requirements list that will allow you to differentiate one accounting software product from another.

Start to Whittle Down the List of Product Candidates

Your initial research may have identified a significant number of accounting software products; far more than you really want to carry to the end of your accounting software review.  From this point forward you need to narrow your research quite deliberately.  If a product does very well, keep it on your list.  If a product isn’t that interesting, drop it from further consideration.  If a product doesn’t do quite as well as other products in terms of functionality comparisons, but many people really like it, carry it forward.  Keep in mind the fact that people are going to be asked to use a product and therefore a critical software selection criteria is ease-of-use.

You might want to consider an alternate product selection path.  Rather than trying to figure out which products meet your requirements most effectively using some form of manual analysis or product comparison, you might want to utilize a software selection tool like The Accounting Library.  Specifically The Accounting Library helps you

  • define your requirements in whatever level of detail you need,
  • identify your industry (thus eliminating products that do not really serve your industry,
  • specify the modules you need,
  • identify best suited products,
  • learn more about each product of interest, and finally
  • connect with a product specific reseller in your geographic region.

In the end this part of your accounting software review is all about identifying products of interest and also reducing the number of products under consideration to a more manageable number.  How you accomplish this is up to you, but the objective is the same.  Start to concentrate on products that stand a legitimate change of meeting your needs.

Accounting Software Review: Evaluate Products by Touching Them

Once you have identified legitimate contenders, your accounting software review should now move to the demo phase of the analysis.  Actually there are two key questions you need to answer.

  • Does the product do what you want it to do in a manner that best suits your business and your employees?
  • Do the vast majority of people like the product?

The fact that a product meets a requirement is important, but there are many ways this can be accomplished.  You need to satisfy yourself that your most important requirements can be met by a product, but you also need to make sure that the method by which a requirements is supported by an accounting software product makes sense to you.  Some functions are quite straight forward, but other functions may seem to be somewhat more “confusing”.  You need to determine if the method by which your requirements can be met make sense.

Second, the vast majority of system users need to “like” the product.  To be honest this is one of the most critical tests an accounting software product needs to pass.  If a product seems to be overly complex, that perceived complexity will inhibit full acceptance by users.  If a product is seen as a “friend”, it will become much easier to integrate with your business and your employees.  You want to purchase a accounting software product that people like.  It really is that simple.

There is one other element that should be present in an effective demo.  It’s unlikely that a firm selecting a new business management system has had any recent experience with what we might call a “modern” system.  After all, they may have been using their present system for five or more years.  As such, they may not even be aware of what’s possible.  This is where the reseller or vendor can play the role of trusted business advisor and improve the effectiveness of your accounting software review.

Resellers and vendors operate much more in the here-and-now.  They know what’s possible, at least in terms of the accounting software products they sell.  If they are in fact going to assume the role of trusted business partner, they will need to understand where a prospect is today and where they would like to be tomorrow.  While the demo will confirm that they can meet a prospect’s needs in terms of functionality, they can also suggest new functionality that will help the prospect achieve excellence.  I’m not talking about everything cool their product can do, but just those functions that they believe can assist this one specific prospect compete more effectively.

One of the key elements of any accounting software review is the demo.  Actually there should be several types of demos, depending on the objective of the accounting software review at a specific point in the project.  We have written a number of articles regarding the accounting software review process as well as the demo process.  If you are interested, you might be interested in the following articles.

Analyze Reporting and Business Intelligence Functions

An accounting software review must contain two key selection elements.  There has to be a functionality match and the system has to be able to provide a platform by which wise business decisions can be made.  Accounting software functionality gets the job done, but business intelligence extracts from the business management system the information you need to monitor the health of your organization.  Actually that’s why I use the term “Business Management System”.  Your accounting system will process business transactions, but your business management system will be used to support the critical decision making process.

All accounting products produce reports.  That’s a given.  Reports though are just a picture of your firm at a given point in time.  You need to know where you have been (history), where you are (today’s position) and where you are going.  This last element is the key to business success.  You need a system that will help you determine where you need to spend your time.

If your firm is relatively small, the accounting software products that serve you will tend to create pictures (data) that concentrate more on the present.  More sophisticated business management systems can help you identify where things are starting to create problems, and that allows you to be more proactive.

Although we could spend a great deal of time discussing BI and Performance Metrics, we would refer you to other articles that address these issues in more depth than this somewhat limited article.  We would say though that the most important step you should take is identifying key areas of your business that have the greatest impact on your operations and bottom line.  If possible, get away from reports with rows and columns.  They are great as audit trail systems, but they provide data that doesn’t look into your future.

Use dashboards if they are available, but don’t use pie charts and bar charts.  Again they are just a snapshot of your business at a single point in time.  Instead, create reports that allow you to look at key performance indicators over time (last twelve months is always a good choice).  Now you can see “where” your firm seems to be heading.  Finally, add one additional line to these charts.  Display one line for actual results and another line for your target results.  An analysis of actual results is good, but being able to compare where you are and where you want to be is superior.

Evaluate Potential Business Partners

Virtually all mid-market accounting software products and ERP systems are sold by independent resellers.  If your accounting software review is going to include middle market accounting software products, your accounting software review should contain an evaluation of the people with whom you are going to do business.  Your accounting software review should identify accounting software products that meet your most important functional and reporting requirements, the firm standing behind that product must meet your partnership requirements.  This is not an objective review, but a subjective judgment.  You have to “like” the people who will become your most trusted business partner.  If you feel uncomfortable with a local reseller, ask the vendor to connect you with another firm.  If there are no such firms locally, you might need to consider eliminating the product from further consideration.

In today’s market, local representation is becoming less and less important.  You might be in California, but your reseller may be in New York.  The Internet has made it possible to communicate (and give support) from thousands of miles away.  Regardless of where your reseller may be located, it is critical that you like doing business with them.

Complete Final Evaluation

Your accounting software review has now reached the point where you can make a purchase decision.  You have all of the facts.

  • Your firm is organized for success.
  • You know what functionality you need to run your business the way you want it to run.
  • You have identified one or more accounting software products that meet your requirements.
  • You have reviewed these products in person and the vast majority of system users like the product.
  • You have reviewed the Business Intelligence options for each product and determined if each candidate can give you the information you need to make wise business decisions.
  • You have evaluated the resellers with whom you will be doing business and have found them to be acceptable.

The last step is obvious.  You need to determine exactly what this new accounting software system is going to cost.  If one product stands out in terms of price, functionality and acceptance by your employees, that’s the product you should select.


The process of conducting an effective accounting software review isn’t easy.  A lot of time will be required by a large number of people.  You have to learn how to conduct an accounting software review.  You have to look inward and improve the way you run your business.  You have to define in detail what you need as a unique firm to achieve success.  You have to review a significant number of accounting software products (unless you are very lucky).  You have to find a business partner that will help you compete more effectively.  I realize that this sound like a lot of work, but the end will be worth your efforts.  A properly conducted accounting software review will help you achieve success.

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2 Responses to “Accounting Software Review and Selection Requires a Step-by-Step Plan”

  1. JanoKamirain Says:

    Thanks for the detailed article about accounting software, reading this article was really very helpful in understanding accounting software in details.

    I have written reviews on top payroll software outlining their main features, pricing and other important facts..

    Here is the article

  2. نرم افزار حسابداری Says:

    very usefule article for accounting software

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