Recently the folks at TEC, the Tech Evaluation Center, wrote an article with the title captioned above. They make some simple and concise suggestions for knowing when it’s time to step up from QuickBooks or Sage 50 – or the typical massive jumble of Excel spreadsheets so commonly seen – into a real, integrated accounting system.
Since there is no “right answer” to the question of When? – since every company is unique in its own way — it’s usually best to do a little “soul-searching” first. In the TEC article author Catherine Muir points to six criteria companies might use to start looking for a more in-depth system…
- Depth/Breadth: You first need to ask yourself what functionality you need. Most systems will handle payables, receivables and general accounting needs handily. But what about inventory management or financial analytics? How about order processing and procurement planning? Are you a producer or distributor of goods? How about Human Resources? Each of these areas opens up huge areas for exploration – and careful planning and selection.
- Decision Making: As companies grow, data-based decisions become more important. Sometimes that data needs to be in real-time. How much detail do you need, and when do you need it? Who has, or needs, access to that data? Where does today’s “Business Intelligence” fit in with your company’s needs? Where will that information come from? The list goes on…
- Automation: Will the speeding up of processes via automation be worth the tradeoff of increased vigilance over data entry and process flow? Will you save time overall?
- Integration: Separate silos of information can be the scourge of any organization. A unified repository for company data, available to all (with appropriate security) is important. Sharing data across departments via a common database is the automation goal of most companies today – but it’s not easy. What systems within your company need to talk with other systems? Who needs the same data? What can and should be shared? How much does the lack of integration hurt your team, your company or your financial results?
- Compliance: Have you grown to where you need to consider or match up to industry best practices? Do you have compliance requirements with industry or government standards? ERP systems often help guide or maintain standard processes. How will you fit your company’s requirements to your software?
- Security/Responsibility: ERP systems generally include certain standards for security, varying from minimal impact to locked-down-tight security. Be sure to assess your company’s needs.
Once you’ve assessed your needs at a high-level and asked (and answered) some of the questions above, only then might you be ready to consider looking seriously into upgrading to a real accounting or ERP system.
TEC’s 6 criteria are as good a place as any to start asking these important questions.