Accounting Systems Selection – Critical Evaluation Steps

July 25th, 2013 by

Accounting systems selection (small to mid-sized firms) or ERP software selection (larger and/or more complex firms) is difficult, time consuming and frustrating at the best of times.  Compound that with a less than effective accounting systems selection plan (or a poorly executed selection plan) and you can almost guarantee failure; either failure to achieve many of your objectives or failure altogether.  While I could spend the next ten pages discussing every task that should be included in your accounting systems software selection project, let’s just highlight some of my top concerns.

Accounting SystemsBefore we move forward, let’s briefly review several key software selection elements.

Ask yourself if you know how to organize and control an accounting systems selection project.  One of the greatest dangers is people assuming they know when in fact that are ignorant.  If you don’t know how to organize this project, hire someone to lead the project.

Acquire software selection knowledge.  The Internet can prove to be quite educational as there are any number of articles (one of which I have linked here) that might help you learn.  You might also use GoogleBlogSearch to identify articles relating to topics you define (accounting systems selection, accounting software, accounting software selection, ERP software selection, etc.).

If your company is not organized for success (culture, leadership style, business processes and finally business management software) new accounting systems will accomplish little if anything.

The decision to replace an aging system or upgrade to a more powerful system must be driven by and supported by every person in the organization, not just disinterested executives.  Without this universal commitment, the accounting systems selection project will fail.

If you cannot get a critical mass of people deeply involved in the accounting systems selection project, cancel the project.

Start at the Bottom

Most selection methodologies for accounting systems stress the active involvement of senior management as a critical first step, I would beg to differ.  Certainly senior management must approve and actively support such projects, but it’s far more important that the “users” of accounting systems participate in every step of the software selection project.

How can you determine what the organization needs in terms of new accounting systems if you don’t ask people what they need to do their jobs more efficiently and effectively?  People are a firm’s most important asset.  They have to want to succeed and be given the tools to do so before the firm as a whole will ever achieve excellence.

Define Where you Want to Be

You are not going to achieve success if you focus on today’s issues rather than tomorrow’s opportunities.  While there is no doubt that correcting current business management software issues is one of the drivers of change, you cannot just focus on what needs to be fixed.  Improvements in accounting systems might give you a bit of a positive bump in performance, but they are dealing only with where you are today, not where you need to be tomorrow.

The leaders of truly successful firms spend a lot of time “thinking”, trusting today’s issues to others.  Operational managers are a bit more rooted in today, making sure things get done.  That’s what they get paid to do.  However, even operational people should be devoting some of their precious time to developing a picture of where they need to be to meet tomorrow’s challenges and opportunities.

Accounting systems support a firm’s efforts to achieve excellence, but a significant part of being an excellent firm is the constant search for opportunities to improve.  This isn’t change for the sake of change, but a constant evolutionary process.  That’s why you need to evaluate where you want to be, not just where you and your accounting systems are today.

Accounting Systems Selection is a Learning Opportunity

Ignorance is possibly one of the most critical contributors to failure.  How can you build a better tomorrow if you don’t know what’s possible?  Although this is certainly a significant issue for smaller firms launching a search for new accounting systems, it can and does affect larger firms that are more used to ERP software functionality.

The leaders of smaller firms may have very little experience with the rich functional and reporting options available in today’s accounting systems and to be honest it’s difficult to secure such knowledge without talking to an accounting systems reseller.  Unfortunately resellers tend to want to sell software, not teach people and that’s the dilemma.

Having said that, maybe you can combine your learning experience with your later detailed evaluation of the accounting systems in which you have an interest.  You are certainly not ready to make a purchase decision, but you do need information to understand the possibilities that can be found in current accounting systems.

Maybe the best course of action is to find a reseller that’s willing to teach you.  The fact that they are willing to do so is probably a very good indicator of the level of service you will receive if you were to purchase one of the products they represent.

The other piece of the learning opportunity as we mentioned earlier is evaluating whether you have the knowledge and experience to organize and manage an effective search for accounting systems.  If you know that you don’t know what to do, you can either learn how to do it (reading articles such as this one will certainly help) or you can bring in an unbiased accounting systems consultant who does have the required knowledge.

Better Reporting Leads to Better Decisions

Accounting systems and ERP systems should not make decisions.  Their role should be presenting relevant information in a timely manner that will allow people to make better business decisions.  In the past accounting systems generated lengthy static reports that presented a picture of some aspect of the firm at a single point in time.

In today’s interactive world, static reports contribute nothing to the decision making process.  Let’s face it; you cannot make a decision unless you have all three elements that contribute to the decision making process:

  • Where have we been?
  • Where do we seem to be going?
  • Where should we be?

You cannot make effective decisions unless your accounting systems give you a complete, time-phased picture of your actual results (past, present and projected future) as well as a picture of where you believe you need to be.  Now you have all of the information you need in a single graphical presentation.

Since time-phased graphs lend themselves to analysis, you can even take this information and create a system that presents only the information that needs your attention.  If the actual results are within specified parameters, you don’t need to spend any time reviewing that which does not need to be reviewed.

Information fuels the decision making process, but you have to have the right information that will allow you to see where you need to concentrate your attention.  If you are interested, you might want to refer to the following articles.

AR Collections – A Poster Child for Wasted Time

One of the best examples of scrapping static reports is the trusted Aging Report.  Your accounting systems will generate a lengthy report that lists every unpaid invoice.  Now what do you do with it?

In this case you do need to know when customer’s are not paying you in a timely manner and you need to know which invoices are overdue, but the process of collecting overdue accounts doesn’t have to be manual as it is for many companies.  Manual business processes are time-consuming (expensive) and inherently ineffective.  The collections management process is a poster child for such waste.

If you think about it for a moment, the process of collecting overdue accounts is really a form of contact management and that’s what should be employed to reduce your AR.  After all, a modest 3 day reduction in AR for a $10 million firm will generate a cash flow of $85,000.  Eliminate the waste.  Improve your cash flow.  All you have to do is ask your vendor if they or a third party have created an application that is no more than a highly specialized contact manager and one that will help you change your customers’ payment pattern.

Demo Evaluation

At some point you need to actually touch, feel and evaluate accounting systems in which you have an interest.  First and foremost you need to confirm that the product does what you need it to do and does so following processes that make sense to you and the people who will be asked to use these accounting systems.  Demos are not just about confirming functionality.  You have to evaluate whether the product makes sense to those people who are going to have to use it.

As accounting systems reach into the ERP space, they become more robust, but that degree of comprehensiveness may increase the time it takes to enter transactions.  That’s why it’s so important that you evaluate your ability to run your business processes on a daily basis.  Do the accounting systems being evaluated support your business processes and to what extent do they impose business processes and workflows on you that you really do not want?

You also need to evaluate your ability to make decisions based on information that will be in the database of your accounting systems.  How easy is it to extract critically required information?  Does more detailed reporting require additional fields?  To what degree will this slow down transactional efficiency?  Please remember that accounting systems cannot give you information that you did not input.  If you need more information (or perhaps the word is “want”), you are going to have to pay for it via more lengthy transaction processes.

Let me jump back in time a bit.  As I indicated earlier, your learning process might be enhanced significantly if you were to talk to vendors or resellers.  After all, your knowledge of what’s possible in terms of accounting systems functionality and reporting may be lacking.  I think it’s OK to contact vendors and resellers to schedule some learning time.

While it’s too early in the sales cycle to think in terms of purchase decisions, you can learn a great deal about possibilities by looking at today’s accounting systems.  Just make sure the vendor or reseller knows that you are not actively “shopping” right now.  At the same time remember that their time is as precious as your time.  Use it wisely.  Learn what you need to learn about their specific accounting systems and accounting systems in general.  If the vendor or more particularly reseller is interested in mentoring you, they may later on become a trusted business partner.


As you are moving through your accounting systems selection project, you are going to need to evaluate functionality and you certainly are going to need to know what this system is going to cost.  Just make sure you do it at the right time.

RFIs (Request for Information) should be designed to help you compare your functionality requirements against the accounting systems under evaluation.  Once you have confirmed via an RFI (or its equivalent) and subsequent demo that an accounting systems does what you want it to do, you can then take the final step to create what will become a legal document.  This RFP (Request for Proposal) will establish the cost of the project (software, data conversion, implementation, training, etc.) as well as the project’s terms and conditions.

Both of these steps are required, but I do have one significant concern.  As a user keep in mind the fact that these two activities are very time consuming for vendors and resellers.  You need to do your homework first.  If you have spent enough time with a vendor and/or reseller, your RFI should really deal with just your most important accounting systems requirements.

If you have reached the RFP stage, a listing of required functionality is important as it requires that a product do what you need it to do.  You should already do know this via your research, the RFI and demos, but it’s a good thing to confirm everything.

The real problem is unsolicited RFIs and RFPs.  How can you possibly ask a vendor or reseller to answer detailed questions about functionality and project costs when they have spent no time with you?  This is a complete waste of time and you accomplish nothing.  The vendor or reseller doesn’t know you and you certainly don’t know them or the accounting systems they represent.  How can you possibly form a business relationship if you are strangers?


The process of selecting new accounting systems or ERP systems is one of the most difficult projects any firm will undertake.  Failure isn’t an option, but it seems as though many firms challenge failure simply because they don’t understand how to organize such a project.

It’s not just about doing some web searches or reading reviews.  Accounting systems selection must be approached from a step-by-step basis.  You have to do your homework.  You have to understand not just where you are, but where you want to be.  You need to find that one product that does what you need it to do and you need to find that one vendor or reseller with whom you can form a lasting and truly beneficial relationship.

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3 Responses to “Accounting Systems Selection – Critical Evaluation Steps”

  1. John Says:

    I completely agree with the argument on taking the users of the accounting system into confidence at the planning stage. I have seen most of the ERP system implementation fail because of non involvement of the users.

  2. Nimon Says:

    Do not purchase accounting based software unless the vendor is willing to put a copy of it on your computer. Many systems require extensive training to take advantage of features that are time consuming. You should be willing to project the expected human resources costs of forging through features for many years. Set up a job and bill that job. Enter an AP Invoice, and try to pay it. Enter a PO or Subcontract and try to use it to generate an AP Invoice. Try to modify the Billing, AP Invoice, AP Payment and PO/Subcontract. Enter a change order. Seemingly simple steps that will significantly impact your decision. Your purchase decision should have more to do with the quality of the software than the talent level of the salesman.

  3. Greg Says:

    I agree with this post – you have to be educated in what you’re doing with accounting software systems. Letting the computer do all the work is just a recipe for disaster. Thanks for the post!

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