Thinking of buying a new system? This post could save you money

It’s tempting to think that buying a new system, whether it’s a top tier ERP product or something more modest will solve all of the problems that plague your company.

Indeed it’s a view that is heartily endorsed and promoted by a legion of sales consultants, industry ‘experts’ and specialist media.

The latest iteration of a new system will come with glossy brochure telling of a wonderful new world where the grass is green and it is sunny all day. Where transactions are rapidly and accurately posted and management accounts simply fly out with no human interaction at all.

The reality though is somewhat different, especially in the area of ERP. In fact research has shown that in most implementations clients never actually gain all of the advantages that they expected and that it may cost more and take longer than first envisaged.

There are a number of reasons for that but to take it right back to the start, the first question you need to answer is whether you need a new system at all.

I’d argue that many of the problems solved by the implementation of a new system could be solved by looking at the processes rather than the software and that smart managers would actually be better off running a ‘ghost’ implementation rather than spending a shed load of cash on something new and shiny.

Now don’t get me wrong, if you want to buy a new system then I’ll be happy to help you implement it. Maybe you’ve got a lot of cash you need to get rid of or you’re pumping a gazillion transactions into Sage line 50 each day. In which case buy, and buy soon.

But actually a lot of the problems that are often ascribed to ‘the system’ are actually a product of behavioral issues or simply down to the fact that the business has moved on since it implemented its current software.

One issue frequently cited as a reason to buy new is the difficulty in getting information out of the black box. It’s a problem that many businesses face and certainly a real factor in the decision to buy.

However often this can be down to a need to reorganise the processes around the business. The oft quoted ‘garbage in garbage out’ is a good example. If your inputs aren’t done to the correct standard or with the required level of detail then the system is irrelevant; you just won’t get the information you need.

Similarly if your chart of accounts no longer fits with the way the business is organised then it’s no wonder that people are downloading information, chopping it up in excel and then reporting it in a different way. This is often seen as a difficulty getting reports out of a system when in fact it is more about how the system is configured.

New systems have loads of bells and whistles. The more they have the more attractive they look. Who could fail to be impressed by TLAs such as ODBC, OCR, CRM and of course CPM*

Oddly though many software producers are now turning away from integrated bells and whistles and either licencing white label versions of popular modules or simply suggesting that the clients buys a different add on for specific purposes.

One of the most striking for me was when a vendor announced in a meeting that their reporting was awful and that the client would be better off buying their mid tier ERP system and then bolting on a third party reporting app!

So if you are going to do that then why not bolt on the reporting app to your current system? It would be cheaper, quicker and cause a lot less disruption.

Indeed in these days of SAAS** connectivity and integration are taken as a given.

Why is it then that many system changes do bring substantial benefits to the clients and end users?

In my opinion it is not the system that provides the benefit, it is actually the process of implementation that helps.

When a client goes through an implementation project they are forced to think about how the system should be used, what the chart of accounts should look like,what reports are really needed and to go through a data migration cleanse.

This kind of deep thinking doesn’t require a new system, you can do it with what is in place already, it just takes the political will and commitment in the company to make it right and as already stated the company can buy third party add ons at any point in its journey.

I’d argue that many companies would be better off running a ‘ghost’ implementation where they go through all the stages of an implementation project such as scoping, design, development and training without actually spending cash on new software.

In many cases the business would benefit greatly from the refresh but wouldn’t suffer the main upheaval of implementing a whole new system.

I realise of course that I’ll be very much a lone voice in this view, after all there’s a whole industry that exists due to its ability to convince you to change.

It is also true that some companies just have to change. Maybe they need a more capable system or their current provider is ceasing support or whatever it may be. I just think that they need to have a more balanced view of the process.

The advert – I’ve run and worked in implementations for companies large and small. I’ve run choice projects and system refresh projects. If you are thinking of buying a new system then why not get in touch?

Maybe I can save you time and money.

* So I’ve been a bad person here. TLAs are my pet hate. TLA= Three Letter Acronym, ODBC=Open DataBase Connectivity, OCR = Optical Character Recognition, CPM= Corporate Performance Management.

** OK so this is Four Letter Acronym. SAAS = Software As A Service. An app that is delivered online that can provide extra capability for a base system or standalone. Good examples would be Gmail as a mail client, Salesforce for CRM or Concur for travel and expenses management.

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Why your finance department is rubbish and what to do about it

So listen – not everyone’s finance department is rubbish and some are worse than others but if you get the feeling that the finance function at your company is more of a cost than a value then I have some good news for you – it doesn’t have to be that way.

Clients that I have worked with generally present with the same symptoms; inaccuracy, late figures, disconnects between accountants and operations, little understanding of what the figures mean, high turnover of staff, little in the way of value add, little input into the strategic direction of the business. You get the picture.

So if some(or all) of this sounds a bit like your company what can you do?

I’ve made my interim consulting career out of fixing just this sort of issue and so I’m about to give away some of my trade secrets. I don’t mind though and I’ll explain why later.*

So here’s some reasons why things aren’t working out and what you can do.

Issue 1 – Lack of engagement. So your finance team don’t contribute, get involved, add value. It’s distinctly possible that they haven’t ever been explicitly given the green light to get involved.

So I know what you’re thinking – people shouldn’t need to be invited to contribute, they should just do it anyway right?

Well in an ideal world we’d all be go-getters with a zillion ideas just bursting to get out but in practice some people need to be given permission, incentive or a push to contribute more than their day job. I even came across a department where people had been told to not give suggestions as they weren’t welcome!

Solution; have a chat with the team, tell them their input is valued, set up a suggestion scheme with rewards and more importantly than all of that; listen to people when they come up with ideas. If people think they are not being listened to then they’ll stop contributing.

Issue 2 – missing deadlines. The management accounts don’t turn up when expected, reports aren’t getting done etc. etc.

I once had a client who cited this as one of his main reasons that he thought his entire team needed to be fired.

I asked him what his deadline was and he couldn’t tell me. That probably says more about his management skills than the quality of his team.

The problem is that if you can’t say what you want to happen then how is anybody supposed to achieve?**

Solution; Be clear about what you want and when you want it. Setting your expectations in the form of the reports you want to see with a finance calendar showing when you expect to see them is the first port of call.

Issue 3 – Poor accuracy. It’s a difficult one this but not insurmountable. Often this will simply be a result of poor technical skills in the department or a lack of controls.

Sometimes you won’t see the result until there’s a massive change in the figures from one month to the next or until the auditors present their results at the end of the year which can be a bit embarrassing!

Often though it’s down to poor integration between departments. Sales may not have input all the figures for the month correctly (or at all). Ops may have forgotten to process all the goods received notes or the warehouse has made a cock up in the stock take.

Solution; get some good control in place. An organised, technically able financial controller will be ideally placed to make sure that the inputs are coming in full and on time and that the outputs make sense.

Issue 4 – poor communication; Typically the finance department resembles a sausage machine with stuff going in and stuff coming out but with little in the way of intelligent value added commentary. Put simply you can’t understand what they are trying to tell you or what it means for the business.

As an accountant I’m the first to admit that we don’t do ourselves any favours in this respect. Sadly all too often we tend to like to shut ourselves away and communication can be a little lacking.

That having been said it’s also true that managers can sometimes keep finance staff at arms length seeing them as practitioners of some sort of ‘dark art’.

Solution; It’s all about communication and integration. Make sure you involve your finance team in meetings, if possible make sure they are sitting with the business instead of in their own little office and look at instituting some form of business partnership system.

It’s a good idea to get someone in to take a look at your reporting and refresh what you are doing. It’s also a best practice to communicate to the finance team what information you need and why you need it. Understanding what reports are used for makes a massive difference to the way it is delivered and what it contains.

Issue 5 – high staff turnover; This is a symptom of a much deeper and more troubling problem.

It is also the same problem that can be at the root of all of the issues we’ve seen here – a lack of leadership.

How often do you hear of people saying how much they love their job and yet they are paid less than their competitors?

On the flip side how often do you hear of highly paid people complain about their employer, their job, their colleagues and anything else that you care to mention?

The problem isn’t the job or the employer, it’s the motivation and leadership in the team.

If people feel undervalued, that their opinion doesn’t count and that they can’t make much of a difference however hard they work then they’ll be looking for a job no matter how much you pay or how many team building paintball days you have.

Solution; Get the right leader. If you have someone in charge of the finance department who is a motivator, who is able to give the team a vision about where they are going and what the future holds and is able to clearly articulate what is required of people then miraculously your staff turnover will drop.

In this post I’ve tried to highlight some of the most common causes of problems with a finance department and some solutions to them. Of course this isn’t an exhaustive list but it’ll get you on the right track.

If you need further help then why not get in touch. My specialism is in setting up finance departments so that they are best in class and giving managers the confidence in their accounts that they need.

*I don’t mind giving away these trade secrets because it takes experience to be able to use them. You’ll also need technical skill to set some of the things up and that’s what people like me do.

** One of my favourite quotes from a politician has to be “we know what we know, we know what we don’t know but we don’t know what we don’t know”. It may be that you don;t actually know what’s wrong you just have that nagging feeling. I specialise in giving people a plan to put into operation and letting then know where the issues are.