ERP (Enterprise Resource Planning) software has come a long way since being first utilized by manufacturers to oversee material resources. Today, it serves organizations of every industry and size across many domains to manage their businesses effectively and increase operational efficiencies. One crucial aspect of ERP software is its ability to streamline financial processes, including finance and accounting. ERP accounting software plays a pivotal role in this, offering comprehensive tools and solutions for financial management, tracking expenses, and ensuring compliance. Additionally, it seamlessly integrates with other core functions such as inventory control and professional services automation, creating a holistic approach to business management.
This article's tips can assist in making more informed choices and increase the odds of your success.
How To Select An ERP System?
Are You Searching For Enterprise Resource Planning Systems Like QuickBooks, Or Does Your Existing ERP Need to Keep Pace with Changes to Options and Market? - Are You searching for an ERP? When purchasing one, you will find that options and market conditions have evolved since your last search.
Statistics reveal how bewildering ERP implementation can seem. Up to 60 percent of implementation attempts fail because their leaders underestimated its scope and effort requirements, such as maintenance time and resources required for implementation and upkeep.
Average ERP implementation costs three or four times the budget, regardless of size and scope. Select a deployment method. Failure can be expensive, but proper education can prevent this; select an ERP that best serves your company for desired results and ROI.
Key Takeaways
- ERP software provides many advantages to companies by increasing the efficiency of critical processes, improving collaboration between departments, and facilitating accurate and timely data delivery.
- Successful ERP implementation demands input from all relevant parties.
- ERP software can help small and mid-sized companies improve service, increase productivity, and expand.
What Is Enterprise Resource Planning (ERP)?
Enterprise Resource Planning (ERP) software applications provide businesses with comprehensive software applications that tackle key areas like accounting, supply-chain management, procurement, and project administration. In addition, ERP solutions address manufacturing processes, including sales compliance compliance, customer service production management of services, and compliance of sales.
Manufacturers and distributors have long utilized ERP systems due to their breadth of functionality covering many supply chain areas. ERP solutions originated as discrete supply chain solutions. Still, they soon evolved to encompass accounting needs across industries and provide industry-specific functionality.
How ERP Solutions Have Evolved
ERP landscape has undergone dramatic change despite remaining true to fundamental accounting principles. Cloud hosting and autonomous integration represent two recent technological innovations that differentiate ERP from standalone accounting software solutions.
ERPs are created to assist your financial and accounting functions, which is central to all modern ERPs. More than just accounting software or supply-chain solutions, modern ERPs serve as operating platform systems that affect every aspect of a company, acting like conductors rather than musicians of their businesses.
ERP encompasses more than traditional point solutions, such as those targeting specific industry issues. While point solutions might meet immediate needs, they often need more flexibility or scalability and meet only narrow targets.
Businesses today assess and select ERPs differently from how they did ten or twenty years ago; traditional RFPs with lists of accounting features or feature types no longer prevail.
ERP (Enterprise Resource Planning) software has evolved since it achieved its intended aim almost 50 years ago, expanding beyond Finance and Accounting into all areas of a company's operations, from process coordination and sharing information across one database to support all business operations.
ERP systems present an inherent difficulty: as functionality expands, their complexity increases significantly, becoming costly and time-consuming to maintain and customize. Though ERP is often seen as monolithic in design, modern ERP is increasingly employing application extensions, allowing businesses to meet business requirements without cumbersome customization processes; cloud storage also facilitates faster processing times and extensibility within mobile environments.
ERPs have begun moving away from single software-only approaches and toward platform-based platforms with their core functionality connected via smaller, agiler applications that leverage the cloud's flexibility. Operating and deploying remotely also relieve businesses of any burden in maintaining or upgrading infrastructure and hardware, with updates arriving automatically and regularly.
ERP systems can utilize cloud services for faster processing and improved data security, providing usable information for AI reporting and predictive analysis.
Modern ERP platforms go far beyond simple applications. Though powerful, modern ERPs boast adaptability that enables them to work with any organizational tools or systems without interruption during change or growth.
How To Select An ERP System
Planning is vital when selecting an ERP system, so the following ten tips provide a starting point to assist in your selection process. Following them and taking time for due diligence and research should allow most businesses to find an ERP that suits their requirements.
Decide What Features And Functions You Need For Your Business.
To ensure the success of an ERP project, it's critical that early identification of functions and features your company needs are conducted. A thorough business analysis and needs assessment may be necessary if starting from scratch; this will allow for a determination as to which processes your new ERP will cover as opposed to which will not. Upgrading an existing system may not necessitate significant modifications; nonetheless, it should be reviewed thoroughly to understand how your business has developed over time.
Needs analyses should set forth specific goals, along with an articulation of success for your organization. What problems is my business trying to resolve with this system? How will its success be defined? For assessments, seeking outside help often proves helpful - consultants, system integrators, and VARs specializing in ERP can conduct these assessments efficiently and quickly. Once complete, review these findings with potential vendors - some might specialize in specific industries and be excluded altogether due to these criteria.
Modules are essential parts of ERPs used by businesses across industries and the products they sell, regardless of industry or specialty. Each ERP provider may offer additional modules explicitly tailored to accounting and finance functions and purchasing, manufacturing, and inventory management; some also offer marketing automation and ecommerce modules. Your organization must identify which are needed during an initial implementation based on needs analysis; additional ones can be added as business requirements change.
Make Sure That You Receive Support From Both Your Team And Executive Management.
Since an ERP can have far-reaching ramifications for all aspects of your organization, gaining executive sponsorship for this endeavor is paramount. To secure their support:
- Utilize business requirements analysis.
- Show senior management how ERPs benefit them as well.
- Designate one executive who will champion your project; all are viable options.
Sponsors are essential in convincing individuals and employees of the benefits of any project they support, particularly ERP implementation. Organizational change can be complicated, so change management and project advocacy play an integral role here; an ERP project's chief advocate acts as chief evangelist by spreading its benefits throughout all parts of a company and eliminating roadblocks to decision-making processes as necessary while taking difficult calls when competing priorities clash with each other.
Writing An Official Request For Proposal (RFP)
Writing formal RFPs, such as for accounting ERP software, requires time, thought, and consideration to accurately communicate your requirements to vendors while leveling the playing field. Writing these documents allows your organization to prepare formal documents demonstrating why a project such as ERP system implementation, specifically in the context of accounting, should take priority over other organizational priorities. Writing an RFP forces one to think more deeply about which accounting-specific features would make up an ideal ERP solution system - helping communicate them clearly to vendors, thereby leveling out any disparity between your accounting needs and what vendors offer in response.
Find Out If Your Erp Can Integrate With Any Existing Software.
If you intend to use an ERP system as part of specific processes, ensure it easily integrates with current business applications. Many popular solutions come pre-integrated with popular apps like ecommerce stores, point of sale (POS), marketplaces, and vendor management services - these integrations ensure core processes can remain unchanged if required and also serve to eliminate data entry between systems manually.
An ERP with industry-standard APIs such as SOAP or REST will make application integration much quicker and more straightforward, providing security while speeding up implementation timeframes. Developers familiar with them will use them quickly for new systems - which means faster implementation times overall.
Importing and exporting CSV files is also essential, with Microsoft's ODBC SQL and JDBC SQL APIs necessary to ensure a new system can communicate natively with SQL databases.
Take Into Consideration The Functionality Of Your Erp System.
Functional fit describes an ERP system's capability of solving business challenges effectively. It can be defined broadly as its ability to accommodate existing processes within your company. You should ensure your chosen solution works smoothly alongside current operations while meeting future expectations by simulating future scenarios and considering short- and long-term options when selecting an ERP solution.
An ERP system with rigid processes could suffice, while one that's more customizable may be necessary. Rigid ERPs come with set methods you must abide by, while flexible ERP solutions adapt themselves more closely to meet the unique requirements of every company.
All stakeholders of an organization should participate in determining its functional fit when selecting an ERP system, from customers and stakeholders alike. Consult everyone who will be affected by it so you can ensure it will fulfill as many needs with minimum customization and costs. Research what software your competitors are using - ERP programs often specialize in specific industries, so identifying vendors who specialize specifically can narrow your vendor list further down.
These questions do not provide exhaustive coverage; instead, they provide just enough data for you to determine whether your function matches up:
- What are the current system failures?
- What aspects do our current systems perform well?
- What types and quantities of manual processes can an ERP system automate?
- Where would you like to improve reporting and visibility?
- What methods must be integrated with this new ERP?
Answers to these questions will generate a list of requirements the new ERP must satisfy to be successful, with functional fit being key in any ERP implementation project. Before beginning an evaluation of an ERP implementation strategy, companies should address these queries first.
Also Read: What is an ERP Accounting System?
Research The Vendor And Evaluate The Track Record.
Always ensure your future partner can offer high-quality products or services with solid support without difficulty or hassle. Establishing the vendor has the reputation to back their marketing, but this could take some time. Look into their experience concerning your industry: are they focused solely on that sector with experts knowledgeable of it all, or do they use implementation partners with relevant skills for implementation?
Gartner Forrester and other analysts publish rankings and market analyses of ERP vendors annually or twice annually, clearly showing a vendor's strengths and weaknesses. Technology trade presses can also offer up-to-date information. Look out for articles discussing the short and longer-term future of firms within financial press articles, and analyst reports for publicly listed firms.
G2, Capterra Gartner, Peer Insights, and Software Advice provide recent reviews for enterprise software; each offers customer ratings and comments. LinkedIn user groups also make for great ways to learn more about vendors.
Attending user group meetings of accounting ERP vendors is an excellent way to gain impartial, up-to-date information. Here, you will meet an assortment of users familiar with your accounting ERP product who will share their knowledge between announcements of new offerings or how-to sessions. These gatherings also allow an excellent opportunity to inquire into accounting-specific aspects of customer support - are there dedicated account managers and teams specializing in accounting ERP solutions, how experienced is its support team in addressing accounting-related issues, and are there accounting-specific references available, etc.
Websites provide an essential window into how a company operates and their values. Do case studies from your field exist, or has the vendor invested in resource pages to address common problems and allow customers to answer their own queries? Such content shows they care deeply for customer success. At the same time, an unpleasant website experience indicates they do not prioritize marketing over product development.
Search Google to research each business on your list, looking specifically for vendors with complaints and bad press. This way, you'll quickly understand their reputation by studying past issues with them and potential problems in the present.
Consider All Associated Costs.
ERP software prices depend heavily on the vendor, number of modules, cloud or on-premise system deployment model used, third-party implementation method utilized, and number and type of licenses purchased.
Not all users require full licenses - ERP vendors charge differently depending on which features users need access to, so access should be tailored specifically for each role and C-suite member. Someone responsible only for entering expenses or tracking time might pay less; an ERP vendor might discount its fee accordingly.
Depending upon how an ERP system will be deployed, upfront costs could include licensing fees, maintenance expenses (for installations on-premises), computer hardware expenses associated with these installations, custom-coded software development costs, testing, consulting services, and training fees. Estimating ongoing expenses requires considering several factors, such as user profile size/type requirements and anticipated customizations/add-ons and locations where your business operates.
Cost isn't necessarily an accurate reflection of an ERP system's quality; extra features you may or may not use could render such systems worthless for you and should prompt an ERP needs analysis at the outset of any journey. An initial assessment must be conducted as quickly as possible to get an accurate idea of their value proposition to avoid overspending on features you won't ever use or require.
Consider your ERP's return on investment over five to seven years when considering its ROI (return on investment).
Cleansing Your Data
ERP implementations can become increasingly complicated as decision-makers struggle with the information their system requires. In most instances, migration of all historical data may not be necessary or beneficial - you should omit data sets unless there are compelling arguments against including them. Many organizations set a date cut-off whereby any records created before that time will automatically be excluded from consideration.
Migrating clean data is critical. Due to customers interacting with various parts of an organization, data often exists in multiple versions and formats that differ by department and application; purchase order numbers/dates/names and addresses could vary according to which software they utilize; inaccuracies could arise as departments use different applications; incorrect and outdated customer records are likely among these variations.
Clean data migration involves an in-depth examination of all your information to find, classify, and determine its format. Furthermore, redundant records should be deleted, while any remaining ones should be converted into more suitable ERP formats.
Due to the complexity of data migration, most organizations establish a team of data migration specialists who can determine what information needs migrating as well as when and in what format. It is also crucial that any non-migrated information be handled appropriately; members from throughout the company who understand how individual business units consume or create data should form part of this team.
At least one team member should take full responsibility for regulatory and compliance obligations and have the authority to make decisions independently.
Plan The Implementation Process Carefully.
ERP software can transform many aspects of your company, so its implementation should be carefully considered. Each vendor offers individualized solutions tailored specifically for you; some offer highly adapted systems designed around existing processes, while others may require you to change how you work to take full advantage of the ERP system. Early identification helps avoid unpleasant surprises when switching on by anticipating potential hurdles early. ERP will soon become part of everyday work life by working through them together quickly.
Early in your decision-making process, pose known questions - will employees need retraining to operate the new system? Who should lead the implementation team, what should our change management approach should be, etc? Commission can range anywhere from several months up to multiple years, depending on the product's complexity and the company's size; having an expert project manager makes implementation much less likely and ensures you reach milestones on schedule.
ERP implementations can be simplified with a practical timeline and implementation plan that covers six steps - planning and discovery being the initial steps before purchasing an ERP system is selected as the next step.
- Design The current workflows will be evaluated, and any necessary customizations will be identified.
- Configuration Step One: Establish and Prepare Training Materials Step Three: Assume Data Import Steps Four through Seven are Followed.
- Test Progressive: Includes fine-tuning the system.
- Implement: ERP goes live.
- Support: Users have all the required knowledge to optimize their system and can rely on this support service should any issues arise.
Realistic expectations are essential to the success of any ERP implementation project, and failing to live up to these promises could cause distrust among board members and stakeholders, potentially leading to backlash or worse.
Consider whether the ERP solution you select will be deployed on-premise or via the cloud, with cloud-based ERPs often more cost-effective due to not needing as much upfront investment and being widely adopted among companies.
Assess What Ongoing Support You Will Require.
As soon as an ERP implementation project begins, many factors will play a part in determining its level of support post-implementation. These may include factors like business time zones, availability of certified IT administrators who can oversee it, and any customization needs of your ERP system.
At its heart, on-premises ERP installations depend on understanding the availability requirements of their business. To do this, companies would need to calculate how much productivity, revenue, and reputation would be lost if their ERP system went offline for even an unexpectedly short amount of time, helping determine how much support each organization needed. Cloud services do not consider uptime as one factor when calculating support costs since providers can ensure high availability with all customers at any time.
Some vendors provide customized support packages with different levels of service - bronze, silver, and gold packages are typically offered - that provide customers with additional resources such as guides, blogs, eBooks, and videos for basic packages; priority technicians access is usually included with premium plans as is telephone support during regular business hours; 24-hour coverage should only be required in extreme situations. Advanced customer service typically strives to be proactive to ensure your ERP system runs at peak performance.
Conclusion
Selecting an ERP accounting system that suits your company's unique requirements can profoundly affect its accuracy, efficiency, and success. Doing this requires conducting an in-depth assessment of business needs, carefully considering possible options, and understanding long-term objectives. By following our guide's steps, you will make an informed choice that matches up with what works for your business - the appropriate ERP can streamline financial operations while aiding decision-making for improved decision-making resulting in enhanced business growth potential - take time evaluating and selecting an ERP accounting system best tailored for your business today.
