Tuesday, 1 July 2008

Just Like Buying a Car

Turnkey: it’s a beautiful word, isn’t it? When used to describe accounting software, it conjures up the image of just turning the key in the ignition, hearing the roar of the engine and driving off into the sunset. It’s a whole sales pitch in a word. The only problem with it is that it doesn’t tell the whole story.

Let’s start with Excel. You buy it, install it and use it, right? It’s the perfect turnkey system. Well, if you ignore user training, that is. Have you ever seen a spreadsheet done by someone who wasn’t properly trained? The formulas are not consistent down the whole column, so you can’t just copy changes down. There are blank rows in the table so you can’t sort it. The formatting is awkward so it doesn’t print well. You get the picture. Excel is only a turnkey system if you ignore training.

But what about QuickBooks, one of the simplest accounting systems on the market? You buy it, install it, get trained on it and use it, right? If you ignore system configuration and internal processes, then yes, Quickbooks qualifies as a turnkey system. Even with a starter system like QuickBooks, designing your chart of accounts is not simple. I have seen accountants take weeks to set up their accounts. The time is well spent. You start with all your reporting requirements, e.g. financial statements for the bank, reports to the owner and tax schedules, and work backwards to figure out which accounts and departments you need. Determining your internal processes can take time as well. You want to be sure that transactions are properly approved and accurately entered. Any processes involving cash need special attention to be sure they are controlled. You also want documents to be stored in such a way that they can be easily retrieved.

Moving up the scale, you find Great Plains (Microsoft Dynamics GP), a package I spent a lot of time implementing. I shuddered when I heard GP described as a turnkey system, because it isn’t even designed that way. It is flexible, which means that it is also complex. In the right hands it can be moulded to fit a wide variety of different businesses. Each module has several set up windows to determine how that module works and how it interacts with other modules. There are third party modules designed to make the main, general purpose package work with specific industries. In addition to training, system configuration and internal processes, you have to spend time testing. Oh, did I mention data conversion? Typically you need to convert at least some of the history from a prior system to the new one. Because the logic behind the two systems is different, the way they store their data is different. Typically newer software stores more data than older systems did, so you need to decide how to fit the old data to the new system.

Navision (Microsoft Dynamics NAV) adds another layer: customization. GP can be customized as well, but NAV was designed for development. NAV gives you basic accounting software and expects you and your Microsoft partner to develop your own system. Whatever the package, once you decide to change the programming, you add the complexity of systems development. You need to create customer specifications, do the programming and test the results exhaustively.

All in all, the image I prefer to use with accounting systems is a marriage. You spend a lot of time first finding the right partner then figuring out how to live together. Only then can you floor the accelerator and drive off into the sunset.