Accounting systems and ERP products can meet most of your requirements, but in many instances the match isn’t 100%. To bridge the difference you will have to customize the product or utilize solutions developed by independent third parties. Does this mean that these accounting systems or ERP products are somehow weaker? No. All it means is that vendors cannot be everything to everyone. Actually if you were to take accounting systems and “add in” every possible third party solution, the resulting “perfect” system would be so bloated that you would never be able to utilize it effectively.
Most small to mid-sized business accounting systems offer fairly decent functionality, but for the most part this functionality is limited to just general accounting, job costing and distribution. The general accounting features might be fairly robust, but even the job costing and certainly distribution applications offer only basic functionality.
Accounting systems vendors have chosen (and quite rightly) to develop software functionality that will meet the needs of most users. If you need something specific for the industry in which you compete or to meet the unique way you want to run your business functions, you are going to have to utilize applications created by a third party.
Again this makes economic sense. These Independent Software Vendors (ISVs) tend to specialize in a limited number of industries, sometimes only one. In some cases ISVs provide functionality that isn’t industry specific, but supportive of functionality in the core accounting systems that are not as rich as some people would wish (AR collections or supply chain management being two examples). In either case if your are in the process of selecting new accounting systems, you might need to create a combined system that includes these ISV enhancements.
If you are very lucky, the core accounting systems will provide everything you need. In some instances though, the core accounting systems will have to be supplemented by one or more ISV solutions. Does this mean you should automatically eliminate accounting systems that require ISV applications? Not in most cases. Just realize that you need to evaluate the total package: core accounting systems and required ISV solutions.
Define What You Need
Before we can really begin our discussions regarding add on solutions for accounting systems or ERP products, let’s put everything in its proper time sequence. As with all accounting systems selection projects, you have to return to the basics and define exactly what you require to become more successful.
You cannot and certainly should not read some article in a trade publication, assume any product (or industry leading accounting systems) will do and then start talking to vendors or resellers. Maybe that’s why so many software selection projects fail to meet their objectives or fail altogether.
Evaluate Primary Accounting Systems and ERP Solutions
Once you have defined your requirements, your second step is evaluating potential accounting systems. At this stage you should assume the primary accounting system or ERP solution can meet all of your needs (even though you know this isn’t going to be the case in most instances). Again I want to stress the importance of conducting a rigorous evaluation of all accounting systems. Many vendors want you to accept their interpretation of best practices. After all they have spent huge sums of money developing their products and they should know what’s best for you.
Time is the issue here. Many vendors and resellers don’t really want to spend a lot of time on any form of needs analysis. That just reduces their gross margin when they finally convince you to purchase their accounting systems. I understand that logic, but I would urge you to resist the temptation. The less time you spend thoroughly analyzing your requirements, the more you raise the likelihood of failure.
Identify Gaps in Accounting Systems
The underlying objectives of any needs analysis is the confirmation that one or more accounting systems can meet your most important requirements and of equal importance the identification of any requirements that cannot be met.
If accounting systems or ERP products cannot meet some of your most important requirements, what’s to be done? Can the product be customized? Is there an ISV solution that can meet your requirements? These are questions that need to be answered. All you need do in this phase of your accounting software selection project is the identification of product strengths and weaknesses.
Fill Gaps With ISV Solutions
Let’s assume that it’s generally better to fill these functional gaps with add on products provided by third parties. Of course customization might be the only alternative if no ISV solutions can be found. That should raise a red flag immediately though. If your business processes are so complex that the primary accounting systems nor any available ISV solution can meet these requirements, maybe you should consider a change.
While I said earlier that you should resist the temptation to accept a product’s functionality at face value, you should pause here and ask yourself a very tough question. Play the role of a devil’s advocate. Prove to yourself that your business processes are absolutely necessary. Maybe you should change?
Let’s back to the subject at hand. You have identified functional gaps in the primary accounting systems. Ask the vendor or reseller to help you locate ISV solutions that will fill these gaps. Your objective here isn’t an evaluation of gap fillers. All you want to do is identify potential ISV solutions.
In some cases vendors have established some form of certification process whereby ISV solutions have been evaluated by the vendor and “approved”. However, that’s just a small fraction of the total number of ISV solutions that have been developed. Cast as wide a net here as possible to make sure you give yourself the best possible opportunity.
To make sure you cover all of the bases, you might use something like GoogleBlogSearch to identify articles relating to topics such as “accounting system enhancements”. The key here is to make sure your research gives you as many options as possible.
Although the scale is certainly smaller here, the identification of potential ISV solutions is similar to your larger project to identify and evaluate best suited accounting systems. Start with a fairly large sample and then whittle down the list until you reach a “purchase decision”.
Evaluate ISV Solutions
The evaluation of ISV solutions for accounting systems should follow essentially the same process as you would when evaluating the primary accounting or ERP systems. You need to “touch” each ISV solution and ensure that it does what you want it to do.
Actually there are two different types of ISV solutions. Some are written in the same toolset as the primary accounting systems or ERP solutions while others are written in other toolsets. What’s the difference? In terms of functionality there may be no difference at all, but the integration might be substantially different.
If the IV solution is written in the same toolset as the primary accounting or ERP system, the ISV solution might be indistinguishable from the primary accounting or ERP solution. It looks the same and is located within the primary accounting or ERP solution so you cannot tell the difference. In other cases the ISV solution might sit outside the primary accounting or ERP solution even to the point where it is launched separately. Does this make any difference? It may not as long as the ISV solution functions like you would like for it to function.
You also need to evaluate the ISV itself just as you do accounting systems vendors and/or resellers. What’s the cost of the application? What’s the on going maintenance fee? How many applications have been sold? What’s the financial status of the ISV? What’s the update schedule? Can we talk to firms using the ISV solution?
The update schedule is probably one of the most important decision factors. If the application is what may be deemed “critical” (essential to your business processes), how quickly does the ISV release upgrades that conform to the latest upgrade to the primary accounting systems? While you should certainly ask the question, the ISV’s track record needs to be checked. You certainly don’t want to be holding off on upgrading your primary accounting or ERP system until the ISV upgrades their program, but that may be the only way you can sync the two systems effectively.
Identify Opportunities for Further Improvement
Although your needs requirements document should have listed the functionality you require of your new accounting systems, use this as an opportunity to evaluate “possibilities”. Maybe there are other ISV solutions that would improve your performance. Of course this also applies to your evaluation of the primary accounting or ERP system.
Maybe there are opportunities for further improvement in your business processes that you may not have considered previously or have even known were possible. While you want to avoid functionality bloat, take a few minutes here to evaluate all possibilities. Ask vendors and resellers what they might recommend in terms of additional functionality. You still have to make the final decision, but it’s always best to look over the horizon and at least see what’s possible.
Summary
Evaluating ISV solutions for accounting systems is a critical part of any software selection project. While there is no doubt that primary accounting systems have added significant functionality over the past several years, it’s impossible for them to meet all requirements for all prospects. Your task as the end user firm is to build a picture of the final system you will put into service.
Most of your requirements should be met by the core business management functions, but some will be met by one or more ISV solutions. This is particularly true for industry specific functionality. In this case a whole suite of applications may be provided by a single ISV. That’s OK as long as the ISV solutions meet your requirements and integrate well with the primary accounting systems. In the end it’s like a giant juggling game. Keep all of the balls in the air and create something that gives you the ability to operate more efficiently and effectively, both of which should lead to greater profitability.
