Accountants and business people overall are generally aware that whatever happens in the company must be reflected in the corresponding accounting books or ledgers as accurately and as quickly as possible.
This means that accounting as a business process should be able to obtain, process, and store a significant volume of data that comes from a battery of different sources. I do not believe we need to convince anybody to use a computer-based accounting system to perform those business functions—this has been obvious for quite some time.
That being said, the next questions to ask are these: How adequately does your existing accounting software measure up to reality? And how can you improve it?
There are a few compelling reasons for moving to new accounting software—each of which is sufficient to convince the chief financial officer (CFO) or accounting department that your current system does not satisfy all company requirements.
Of course, the list of reasons below is not necessarily comprehensive or absolute—any given company will have its own motives for initiating a new system selection process, and I would appreciate your feedback to add real examples of your experiences to this list.
Six Reasons for Change
1. Your software vendor has discontinued development and support of the accounting system.
There are many reasons why a software development company may leave the market and stop supporting existing customers. A product strategy change can result from a business merger or acquisition, or (in a worst-case scenario) even a bankruptcy. This is a very sad result, but that doesn’t mean it’s impossible. In this type of situation, you should take a very close look to estimate the potential risks and effects. Implementation of another financial package could be the best alternative.
2. Integration with new source system functionality is so painful that it becomes almost impossible.
Let’s say that new packages are installed at your company to improve processes and make business more efficient. And let’s say they really do well—with the exception of feeding transactions to the accounting system. Because of the different ages of the technologies involved (or for any other reasons), integration could require escalating efforts and financial resources, and will eventually make no economic sense. In such case it is usually easier and wiser to replace the entire financial package. By the way, such situations should be foreseen and eliminated during the planning stage of new software implementation, but they are unfortunately neither.
3. Your software is not flexible enough to accommodate business changes.
Both the speed and frequency of change in today’s business environment are incredibly high, and many companies perform constant modifications in the way they handle materials, manufacture goods, store and distribute finished products, and so on. Also, one company may be acquired by another business, or merged with another company. Of course, accounting system must be able to accommodate rapidly altering practices in the bookkeeping and financial reporting systems, but not all of them are technically capable of performing similar changes.
4. Your system does not allow users to import and export data to or from Excel spreadsheets. This tells its own tale and does not require additional comments, except to say that this is a derivative effect of the US Sarbanes-Oxley Act (SOX). Import/export functionality is extremely important for accountants, but you would be surprised by how many software packages do not support this. From my numerous conversations with practicing accountants, I know that the problem still exists, and that they waste plenty of effort in reinventing the wheel to work around this obstacle. Modern applications surely have the problem resolved; however, many companies are still using older packages.
5. Your accounting procedures lie outside the accounting system.
If your accounting department is maintaining increasing (and incrementing) numbers of manual processes or multiple data entries, or regularly requests that your IT department create custom-made add-ons or even autonomous programs, you should re-examine your accounting software. Time-consuming operations should be automated, and manual work should be eliminated wherever and whenever possible. A new accounting software package can resolve those issues.
6. You have growing data quality and access problems.
As a company grows, the amount of transactional accounting data grows incrementally as well. And one day your accountants will realize that the systems have become unacceptably slow, with data content errors and all manner of other errors. In other words, the system is not able to handle large amounts of data. This means that your company has simply outgrown the physical capabilities of your existing accounting system, and that you need to replace it.
Thoughts? I welcome your ideas and comments—let me know what you think in the comment field below.
See article that provides some perspective on JRA replacement.
Please check this