Is your business software system starting to give you problems? Are these issues preventing you from competing effectively today or do you have a sense that you may have problems at some point in the very near future? What should you do and when should you make a move?
The decision to replace your current business software system isn’t a black or white question. It’s based more on an accumulation of issues that at some point tip the balance. Rather than waiting until you are forced to replace your current business software system, adopt a proactive approach whereby you are constantly evaluating your current accounting or ERP system.
Don’t let a failing business software system force you to make a change. This usually leads to a rush to judgment and a purchase decision that proves to be unwise. Instead adopt a system of continuous evaluation whereby you examine where you are today and where you want or need to be tomorrow. If you base the decision to replace your current business software system on this future oriented analysis, you will have time to create an effective selection and implementation project plan.
Business Software System Evaluation Checklist
As I suggested above, there isn’t any one factor that leads to the decision to replace your current accounting or ERP system (unless of course it completely blows up). The question now is creating a checklist that will enable you to effectively evaluate your system.
The list that follows is just a suggestion. I cannot tell you what to do. I can only pose some questions that might help. Your first task is determining what’s important to you and only you can do that.
Is your current business software system becoming increasingly more fragile?
This really applies to older systems (legacy possibly?) that have been in use for many years and really outgrown their functional competitiveness. In many cases IT managers are somewhat frightened by the cost of new systems, but you really need to bite the bullet and at least evaluate your options. If cost is a concern, you might evaluate one of many Cloud alternatives.
Does your business software system adequately support the needs of your customers?
Getting the job done shouldn’t be your primary objective. Serving your customers should be the primary driver for change. If you cannot provide your customers the service and functionality they need or demand then you need to create the equivalent of a requirements document that is dedicated to increasing customer satisfaction.
Have you outgrown the capabilities of your current system?
Firms that grow quickly, particularly if they started with a small business software system, can outgrow the capabilities (functionality) of their system. Rather than waiting until your current system really cannot do the job, look into your future. Two years or more would be nice. Determine where you might be in the future and what capabilities you will need to compete effectively. If your current small business software system cannot meet those future requirements, then you have sufficient time to find an appropriate product without a rush to judgment.
Are the demands of your industry making it more difficult to compete effectively?
You could have a fairly decent business management system, but if your competitors are offering better services based on what their software systems support then you need to consider moving away from your current system. You can have competitive products and services, but that’s not everything.
Is your CRM system detached from your business software system?
Many firms maintain at least two databases (sometimes even more). One contains their accounting data and the other one their CRM system. You should have but one database that serves all of the needs of your firm.
Do you have in place a continuous software evaluation and improvement plan?
Managing your business software system is just as important as managing your business. Your accounting or ERP system cannot be thought of as a static entity. Your business is going to evolve over time (sometimes quick quickly) and you have to change in order to maintain your competitive position.
If your firm needs to evolve, your business software system needs to evolve as well and that’s why you need to create a plan that enables you and everyone in your firm to continuously evaluate your system. I created an exercise called The Annual Business Checkup that sets forth a method by which you can support this continuous software improvement initiative. It’s a bit like an annual medical checkup which everyone recognizes as a good thing. In this case you take the time at least annually to evaluate your business software system and its ability to support your business now and In the future.
Never let your business software system deteriorate to the point where you are forced to take immediate steps to correct long standing issues. Adopt a proactive approach to what I call Business Excellence that combines business strategy, business process improvement, employee excellence and software excellence.
Do your current business processes support competitive excellence?
It goes without saying that your business software system must support the way you choose to run your business. If you let your business processes deteriorate over time, how can you possibly support competitive excellence?
Do employees have to resort to manual tasks?
A typical small business software system can certainly “do” accounting functions, but in many cases employees have to address issues that arise manually. The most notable example here is collecting overdue invoices. All accounting and ERP systems product an Aging Report, but the process of contacting customers to encourage payment is completely manual or a contact event has to be created in the firm’s contact manager (but you don’t have instant access to a customer’s payment history). As you are evaluating your current system, identify every single manual task and determine whether this task can be supported by a software application that seamlessly integrates with the business software system.
Can you complete business activities and tasks efficiently and effectively?
All accounting and ERP systems support business transactions (e.g. sales order entry). The real question is whether your current business software system can help you complete these tasks in a reasonable length of time. Can you look up a customer’s credit status? Does the system allow you to specify the product or service pricing schedules for individual customers? I could ask a very large number of questions, but I think it’s best if you really decide whether your system gives you these capabilities.
Do you need more effective business decision making support?
Your business software system must help you complete tasks and activities, but of equal importance it must help you make sound business decisions. A typical small business software system may not give you the reporting flexibility you require. Maybe the reporting tools are lacking in terms of support for dashboards and performance metrics. Maybe there are insufficient data fields to track the information you need to track
A more robust accounting or ERP system may enable you to input required data, but you may not understand what output information you may require. In this case the issue isn’t the system, but your failure to take advantage of its reporting capabilities.
If you are going to compete effectively, you must define precisely what information you need and the display format that will enable you to see at a glance where you need to invest your time improving your business.
Can you adequately monitor and control your operations?
Completing tasks and activities is certainly important, but so is the efficiency of your business activities. This is where performance metrics comes into play. If you are going to maximize the efficiency of your operations (e.g. inventory turns or the time required to complete sales orders or the order to shipment interval), you have to monitor these activities in order to know where improvements are required. Does your current business software system give you the ability to create and track performance metrics?
Do you continuously look into your possible futures and determine what it will take to compete effectively?
As I mentioned above, businesses evolve over time, either as opportunities present themselves or in response to specific strategic development plans. You should look as far into your future as practical (look too far and you are just guessing). These strategic views should then drive an analysis of the role your business software system will play. If you just “let things happen” you will be reacting to change rather than anticipating change.
Do you continuously evaluate options that might enable you to compete more effectively or operate more efficiently?
Technology improvements are changing the way we can manage our business. Access systems from any device anywhere. Launch apps on our smart phones. Utilize software to collaborate with employees and even customers. Utilize workflow to control what could be manual business processes now. Adopt exception management that also includes task management and collaboration features. All of this is possible and you should certainly evaluate your options, but keep one thing in mind. Just because technology or software allows us to do something doesn’t automatically mean we have to do it.
People make an organization profitable, but they need help. Your business software system will give people the tools and information they need to excel. The system itself doesn’t actually do anything. It helps people do their jobs more efficiently and more effectively and it helps people make sound business decisions.
People must understand what is required of them in this new environment, must be given the tools and the training to carry out these new tasks, and must see the system as a friend rather than an adversary. In the end, the people side of the equation is perhaps more important than you might have first imagined.
If a company is not organized for success (culture, leadership style, business processes, etc.) a new business software system 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 software selection process will fail.
You need the right system that will help people succeed. That means that you must continuously evaluate everything, including your business software system. Rather than waiting for a crisis, adopt a proactive attitude whereby people are constantly searching for ways to serve your customers more effectively and carry out their jobs more efficiently.
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