Abstract

The process of selecting a new accounting or ERP system can become very time consuming and frustrating. Rather than presenting a multi-page document that discusses each task you need to accomplish, let’s concentrate on a single issue: evaluating the system itself.

At this point in your accounting and ERP software evaluation project you should have completed at a minimum the following significant tasks.

• You have solicited and received the buy-in from each significant stakeholder: executive, CFO, CIO or IT manager, line of business managers, sales and marketing managers and staff and finally the people in the trenches (those people who will actually be using the system on a daily basis).
• You have met with each of these stakeholders and determined what from their perspective they like and dislike about your current system.
• You have met with various executives and managers and determined what the company needs to do well to achieve excellence.
• You have also met with executives and managers to determine the direction the company will be taking in the future (current direction as well as expansion into new industries and geographic territories).
• You have figuratively speaking taken the company apart and put it back together to enable it to become more competitive (some may call that process improvement) and have launched improvement projects to transform the business.
• You have met with stakeholders and determined what features, functions and reports the new system should support to achieve the company’s strategic and operational objectives, some of which may be future events that “might” happen.
• You have researched various product options and discussed your requirements with vendors and/or software resellers.
• You have conducted a very high level needs analysis to identify and eliminate those products that clearly cannot meet your most important operational and business intelligence requirements.

Now we have reached the point in time where this article becomes relevant. The only products being considered are those that appear to meet your most important requirements. Although you have not yet actually “seen” the product in the level of detail you will need, the vendor or reseller has confirmed the fact that their products can meet these requirements. This hands-on evaluation will either confirm or deny the relevancy of those products under consideration and you will decide which products move forward.

Step by Step Analysis

A proper hands-on product evaluation (a.k.a.demo) cannot be completed in a single day. This also applies to an evaluation of a mid-market accounting system. Keep in mind the fact that there are several significant stakeholder groups and each need to view the system. Actually some people might need to view the system twice. The first viewing would concentrate more on ease of use while the second viewing would analyze detailed functional processes. Some people will need to actually “touch” the system as they will be asked to enter transactions and this will require some time to complete. Given all of this you will need to decide who should attend a demo, when and the format of the meeting (viewing from above or actually operating the system).

Functional Requirements

An accounting and ERP software evaluation project must start with a very detailed analysis of features and functions. RFIs (Request for Information) are important decision tools. If a product does not support a significant number of key requirements, it should be eliminated from further consideration regardless of how good it is in other respects. It doesn’t even matter if a product is generally accepted in the industry. If it doesn’t do what you as a unique firm need it to do, then it probably isn’t right for you.

The RFI analysis can be scheduled as a two-step process. Take the RFI you created (If you didn’t create an RFI, then stop and do so!) as you evaluated your current system and created a vision of your future. Identify all of the requirements that are very important to critical. Use this same check list to vet each product under consideration. Look first at the critical requirements that cannot be met. Then look at the requirements you identified as being important, but not necessarily critical.

If a product does not meet a sufficient number of your critical requirements, particularly when compared against other products under consideration, maybe it should be eliminated. Of the products remaining, identify the important requirements that cannot be met. Then determine if these requirements can be met via an existing third party enhancement that has been thoroughly tested. If no third party enhancement is available, can the product be customized? Finally, compare the list of shortcomings for each product. If one product is clearly weaker than other products, decide whether it should be eliminated or not.

At this stage in the accounting and ERP software evaluation process you are looking for products which you and a majority of your users like (first impression discussed below) and one that can do what you need it to do. Whether you eliminate a product now or later is really not that important other than the fact that evaluating any product is very time-consuming. If the products you decide to carry forward are supported by the people who will be asked to use them, then it’s OK to eliminate one or more products as you move forward.

First Impression

While it’s all too easy to immediately launch a detailed hands-on analysis of a candidate product, you really need to approach this in the proper order. The first step should be a high level view that gives people an overall sense of a product. Since resellers and vendors are all too eager to give you a “dog and pony show” to promote what they think are a product’s strengths, give them this opportunity. Let them show their product and all of its glory (with some controls of course to keep them on track). Your objective here is a little different. You want to give your users an opportunity to form an initial impression of a product.

First impressions can become in many cases a self-fulfilling prophesy. If a system seems to be complex and the data input process more time consuming than with their present system, these first impressions may become difficult to overcome. Imposing a complex system on people who have not had an opportunity to view it first and approve it may prove to be a significant issue.

While first impressions are extremely important, you need to submit to your users products that meet your functional and transactional requirements. It makes no sense to ask people to spend a significant amount of time evaluating a system if it doesn’t meet certain minimum standards. That’s why you need to complete the detailed functional analysis first.

Touch the Product

High level views of a product are important, but some people really need to “touch” the system. This is particularly true for people who are going to be responsible for transactional input. Modern accounting and ERP systems have become powerful tools that give firms more control over their daily operations and certainly more business intelligence. Unfortunately the achievement of this power may impose more burdens on people than you might realize particularly if you don’t really need everything that a product provides. That’s why it’s critically important that people assess how a product is going to fit within the business processes of your unique firm.

This hands-on analysis should concentrate on two key areas. How long is it going to take to complete a transaction such as an AP invoice? Second, to what degree do the business processes as required by the accounting or ERP system possibly conflict with the preferred business processes of your firm?

Business intelligence applications can give people very useful information, but the extraction of that information usually requires the addition of data fields that were not present in your “old” system. That’s OK as long as you understand that it’s going to take more time to complete the transactions that contain the added fields. The more information you need, the longer it takes to input source transactions. You need to strike a balance somewhere.

To some extent the same argument holds true for business processes. Workflow can become a very powerful tool that helps people do what they need to do, but at the same time it can impose activities on people that do not need that level of control. The larger the system the more it has the potential to impose processes that are not needed or wanted. As your accounting and ERP software evaluation process moves forward, you need to understand what the system will impose on you and whether this imposition is appropriate for your firm.

Third Party Enhancements

No accounting or ERP system can provide everything every firm needs out-of-the-box. With limited resources vendors have to decide what functionality they are going to create and what functionality they are going to encourage third parties to create. Since it is very likely that your evaluation will reveal functionality gaps, it is vitally important that you determine if there are third party enhancements that address these gaps. Of course this also means that you will need to evaluate these applications just as you are going to review the core accounting functions.

Customization

If the products you are evaluating do not meet all of your functional requirements and you cannot find acceptable third party enhancements, some degree of customization will be required. My first suggestion would be to see if it’s possible to eliminate the need to customize a product in the first place. If there are other products that do not require the same degree of customization, maybe you should eliminate from further consideration a product that requires substantial customization. I realize that this candidate for elimination might be a crowd favorite, but substantial customization should be avoided if possible.

If no product supports what you need, maybe you should change your business processes. I realize that you might think you need certain functions, but it makes no sense to customize a system if you can change the way you do business. Maybe the fact that no product supports what you think you require is a sign that you need to change?

Business Reporting and Intelligence

This is probably one of the less complex issues you will need to address in any accounting and ERP software evaluation. At the same time it is one of the most important considerations. Today’s products all support some form of Business Intelligence (BI). Even mid-market and small business products support fairly sophisticated reporting systems. My challenge to you is this. What do you really require in terms of BI? Given the fact that you can extract just about anything you need, the evaluation really should focus more on what you think you require rather than a product’s ability to slice and dice data. Since it’s extremely easy to create reports and graphs, it’s also extremely easy to produce too much of what you really don’t need.

I have addressed this issue in several past articles and would therefore refer you to these articles if you are interested, but would also summarize my thoughts as follows.

• Ask yourself why you need the information you think you need. Challenge people to justify their need for specific BI information just as you challenged yourself to justify a new accounting or ERP system.
• If you are going to improve business performance, you must start by identifying the key drivers that influence your bottom line. I am not convinced that people spend enough time identifying what they really need to do well. Key drivers are like common denominators. There are no underlying factors that influence their behavior. Identify these key drivers and control them and those business processes that are affected by these key drivers will improve as the key drivers improve.
• 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. As I have said many times in the past, bar charts and pie charts are pretty creatures, but they tell you nothing as does every other “status report”. Status reports are static by their very nature and therefore will never support the decision making process. You need to create a system that tracks key business drivers and helps you understand where you have been, where you are, and where you appear to be going. In addition you need to determine where you would like to be. That’s your target and that’s what you compare against your actual performance.
• Consider creating an interactive Exception Management reporting system. If you identify key drivers and you present that information in terms (mostly line charts with some form of regression analysis and forecasting) that will allow you to see where you need to concentrate your efforts, you have two of the key ingredients for an effective Exception Management system. Use the system to analyze this data and build in alerts that help you become more proactive than reactive. Then take the last critical step. Build a task management system that allows you to track your efforts to control and improve key drivers. A task manager is not unlike a contact manager in that it allows you to record notes and schedule reviews. It also needs to support collaboration so that multiple people can be working on the same issue and sharing their thoughts and analysis.

Customer Relationship Management

Customer Relationship Management (CRM) systems can become powerful tools to generate new business and hold onto the business you already have. The real question is whether the products you are evaluating support CRM the way you would like to practice CRM. Some CRM systems are so powerful that they actually get in the way of efficient and effective sales and marketing activities for individual firms.

Evaluate the CRM system associated with the product you are evaluating. Does it support the way you would like to run your CRM activities? Does it offer the functionality you need as a unique firm? Does it offer so much functionality that it gets in the way? Are there other CRM products that more effectively support what you want to do? To what degree are these products integrated with the product being evaluated?

CRM doesn’t necessarily drive your business, but it is the gateway to new customers. People need to look on the CRM system as their business ally, not their business foe.

User References

While first impressions and hands-on testing of candidate accounting and ERP systems is critically important, these experiences are not the same as day-to-day “testing”. That’s not possible so you are going to have to rely on current users to paint a possibly different picture. Your task is not as easy as it might seems because the most readily available references are those provided by vendors and resellers and these firms are hand picked to represent the best of the best. If users are truthful, they will provide information regarding success as well as challenges they have faced.

By all means talk to vendor and reseller provided references. You might even consider site visits if the reference is fairly close. Don’t stop there though. Product specific user groups can be identified and contacted. Their experiences might be very educational. You might also try web sites such as Toolbox.com that allow participants to literally ask a question such as “Does anyone have any experience with Product X”?

Vendor and Reseller Evaluation

If a product has passed all of the tests you have subjected it to, your final analysis should concentrate on the vendor and reseller. Do the vendor and reseller both appear to be stable financially? What is its roadmap for product development? Is this a new product to the market, an older product that may be declining or a product that is growing in terms of popularity? Who is going to be responsible for support? How quickly will support people address your issues?

In the end the most important question needs to be asked. Is the potential relationship with the vendor and/or reseller one that is more like supplier/customer or true business partner? The services provided by your prime contact (vendor or reseller) can answer part of this question, but your gut feeling is more important. If you are going to establish a relationship with a reseller or vendor, it should feel more like partnership rather than a strict business relationship.

Buy-In

You needed a buy-in from all stakeholders before this accounting and ERP software evaluation project launched, and you will need this buy-in now before you move forward to a purchase decision. Hopefully the vast majority of your users have all concluded that a single product was superior to all others and are eagerly awaiting its implementation. That’s the ideal case. Reality says that people will have questions and issues that need to be addressed. By all means address every issue as it arises. The fact that someone might not have voiced a concern doesn’t mean they have no concerns. It might just mean that they were reluctant to do so.

As you move from step to step in this evaluation process, make sure people feel comfortable moving forward. If several people have the same concern, make sure these issues are addressed before you move forward. Don’t ignore people and don’t “wait until later” to address issues. You want people’s buy-in on a continuous basis, not a specified point in the process.

Conclusion

The accounting and ERP software evaluation process can become time-consuming and that’s OK as long as you are spending your time wisely. Of course “your time” means everyone involved in this evaluation project. Having identified through your research products of interest, you will need to follow this step-by-step process rigorously. The initial steps you take are more allied with eliminating products from further consideration, while the final steps are really geared to painting a picture in everyone’s mind of how a candidate system could be used on a daily basis. Start with several products. Limit the number of people participating initially as those people will be responsible for a single task: determining which products meet a minimum level of your functional requirements and which products do not. As you move forward, more people should become involved as they are going to be asked to use the system on a daily basis. In the end you want people to look forward to the system they have had a hand in evaluating.

Reseller/Vendor: Let me show you what we have. No. That’s not the way to do it right.

User: Show me what you have. No. That’s not the way to do it either.

Software demos are an integral step in the process of selecting a new accounting or ERP system. The question isn’t whether you do it, but how you do it right to maximize the effectiveness of this critical task and maximize the likelihood that the best suited system will be selected.

Let’s start with when a demo should be scheduled. Resellers and vendors want to conduct a demo as soon as possible to lock a prospect into their product and overwhelm them with advanced feature and functions. This wow factor seems to be the underlying factor, but is this really what a prospect needs? The answer to this question is a strongly worded NO!!

A demo should be scheduled only after the user has had an opportunity to examine their firm (not just functional requirements but also business process improvements) and create a detailed picture of what they really require.

Demos should be utilized to confirm the fact that a product can deliver specific features and functions that will assist a firm move from where they are today to where they need to be tomorrow. The critical notion here is this whole concept of a more effective and efficient tomorrow that will help the firm achieve greater business success. They cannot just duplicate what they are doing today, for that implies that there is no basis for improvement.

If tomorrow is what’s important, then the first step a firm needs to take is crafting a picture of their future. What do we need to do well in order to achieve excellence? A well conceived and detailed needs definition creates this structure for success. I’m not necessarily advocating a requirements document that contains 5,000 line items (although this might be the detailed blueprint that allows a company to identify all of the elements that need to be in place), but I certainly think a firm needs to create a comprehensive description of the software elements that will help people do their jobs more efficiently and effectively.

What do I mean by efficiency and effectiveness as that’s going to drive what’s on the demo list? Efficiency implies completing a task as quickly as practical. Effectiveness means being able to do a job/task well. The user needs to look at key software processes supported by an accounting or ERP system and determine if tasks such as taking an order can be accomplished within an acceptable length of time. That’s an efficiency analysis. If employees can get bogged down trying to take an order simply because the software process itself is convoluted or there are so many fields in the system being evaluated, then that could be an issue.

Effectiveness measures whether certain critical tasks are present. Of course that will depend on the individual needs of the firm, but applications such as credit and collections, exception management, demand planning, inventory replenishment, and other functions need to be evaluated. These are the higher level requirements that need to be in place and that need to be done well.

There is one other element that should be present in an effective demo. It’s unlikely that a firm selecting a new accounting or ERP 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 consultant.

Resellers and vendors operate much more in the here-and-now. They know what’s possible, at least in terms of the 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 the prospect compete more effectively.

OK. What are the critical elements in an effective demo?

• The user needs to have done their homework and created a list of their most important requirements that will drive their success in the future.
• The vendor or reseller needs to show the prospect that they can meet these critical requirements.
• The user needs to evaluate the system to determine if it can be their friend or foe in terms of getting tasks done efficiently.
• Finally, the vendor or reseller needs to help the prospect understand what’s possible in terms of functionality with which the user may have had no prior knowledge.