Purchasing, licensing or subscribing to accounting software is sometimes not a pleasant experience.
Reality: ERP Selection Steps Most Companies Take:
- Google or Bing for info/research
- Email a bunch of consultants/VARS for pricing
- Pick brain of any who answer the phone and seem half-way knowlegeable
- Get free demo, free info, free second opinion
- Think about it
- Think some more
- Can’t wait any longer
- Oh heck, let’s buy from the company with the persistent salesman that keeps calling asking if we’re ready to buy because they are running a 20% discount special this month which expires soon.
- Google or Bing for better consultant/VAR or for free information on whether consultant or VAR who company just spent $100k with knows what they’re doing (Hint: If you have to ask…)
Reality: The 5 Mistakes Companies Make Selecting Accounting Systems (ERP)
Recognize any of the problems above? I won’t say that they happen in every ERP selection process.
The exception may be users who’ve previously worked with a particular system, left their job and taken another where they will then purchase or license the same solution.
Others starting fresh in their search for an ERP system tend to make the same mistakes over and over. Here’s a quick summary of the top 5 problems that can arise during your RFP or evaluation of a new system.
1 – The Solution Is NOT Meant For Your Industry
Ten of fifteen years ago companies would buy generic accounting software and force it to fit into their business processes.
Fast forward to today and there’s little reason to force a square peg into a round hole.
Solutions exist for nearly every type of business. Do you haul waste? Run a lumber yard? Sell inventory from multiple warehouses? Need to track projects? There are multiple solutions which have been built specifically for your industry.
Key tip: Ask the consulting firm how many customers they have that are in your specific industry. Then get names and check references. Consider it a huge red flag if the consulting firm is unable to name names.
2 – The VAR / Reseller Has Little Experience
A Google or Bing search will uncover dozens of names of consulting firms. What’s more relevant than just compiling a list of names is to know the extent of the recent experience those firms have with the solution you’re considering.
Key tip: Look for experience in your industry. If you are selling diamonds or groceries or fuel oil – the only relevant experience is that provided by a consultant to a company in your same industry.
3 – Promised Integrations – Don’t. Or They Integrate Poorly.
The biggest landmine, and point of failure, for almost every complex ERP implementation is the quality of third party integrations.
In many cases you’ll be using third-party enhancements which perhaps allow for multi-company or cash basis operations. Sometimes enhancements are purchased that add full Warehouse Management (WMS) or Electronic Data Interchange (EDI).
Don’t be fooled by the promise of integration ease. Ask the person who is selling or recommending the integration how many systems they’ve integrated to. The systems should be the EXACT type which you are considering purchasing.
Key tip: Third party developers are sometimes over-confident. It’s not unusual for them to over-promise in order to get the sale. Once sold, the integration is often under-delivered. Do your homework and verify how many integrations the developer has made and how happy the users are with the integration.
4 – Base a Purchase On a Free Demo, Free Evaluation, Free Meeting
In today’s market most companies looking for a new ERP should go through a paid proof-of-concept. This is a setup of the system using your companies data and some test transactions.
If you rely on a free demo, free evaluation and free meeting then you’re really only getting a sales pitch. This leaves you to do 100% of the critical analysis.
Key tip: When you’ve relied solely on a free demo you’ve really only gotten a sale pitch. Do not expect any critical information to help you make an informed decision.
5 – Buy Based On The Cheapest Google Search
Google or Bing are wonderful search engines. If your needs are simple and only require GL/AP/AR with no integrations or unusual concerns then by all means Google or Bing for the cheapest accounting software.
All others should ignore anything labeled “guaranteed lowest price”. The prices are low for a reason and it’s often that these companies are focused solely on selling, winning Presidents Circle trips and selling you some more.
- Nobody ever believes this
- Until they’ve spent all their money with an inferior consulting firm
- By then, there’s no money to fix problems
Get off on the right foot with a more focused selection that zeros in on your company’s key success factors and not the sales goals of a consulting firm trying to make a sales quota.