My Software is Better Than Yours

The software business is full of people trumpeting their software as being the best. At a conference I attended last week, someone waxed poetic about how much better Navision (Microsoft Dynamics NAV) is than Great Plains (Microsoft Dynamics GP). This happens to be a topic that I am qualified to weigh in on, being certified in both.

But I didn't. The only time I compare two software packages is when determining which is the better fit for a company.

When someone starts telling you how amazing the system they are selling is, my advice is to tune them out. I even tune out those charts that purport to compare software packages feature by feature. Why? Because you can't capture the differences in approach between two packages in a word or short sentence.

Take foreign currency exchange for example. Most major packages offer this feature, but when you get to know the individual packages you find out that there are significant differences in the way they actually handle foreign currency transactions. How does it treat foreign currency fluctuations in a standard costing environment? How does it do General Ledger revaluations? How does it reverse errors? Does it make adjustments only at the General Ledger level or does it affect the subledgers? How well do third part add-ons integrate with it? Will it allow the consolidation of subsidiary companies denominated in a foreign currency? These questions may be relevant to your company, in which case they are worth asking. If they are not, then why bother even making the comparison?

Before we even begin to implement software, I can guarantee you there will be significant areas where the software will not work the way you expect it to. We will have to look at the logic behind both the software and your business processes, as well as how expensive each is to alter. Then we will have to decide which way is best for your business. I would argue that how well a software package is implemented is as important to customer satisfaction as the underlying software. In other words, a great package poorly implemented will often be perceived as poor software. That is another reason I take personal opinions about software packages with a grain of salt.

At the end of the day, the question of which is best for your business is the only question worth asking. It will take a lot of research on your part to arrive at an objective answer, but the results are well worth the work.

The Most Advanced Accounting Software on the Planet

"Tally 9.0 has been dubbed the most advanced accounting software on the planet." That claim is obviously more marketing spin than carefully researched fact, but it points to a trap that we so frequently fall into: comparing accounting software as though there were some perfect system against which all others must be measured.

Anyone who knows me will tell you that I'm a Microsoft fan. In my quarter century of accounting, I have spent a decade implementing Dynamics GP (Great Plains) and Dynamics NAV (Navision). But I still wouldn't claim that it's the most advanced accounting software on the planet. The issue is not how advanced it is, but how well it fits the client's needs and budget.

"Unlike other accounting software, Tally accounting software makes sure all data is protected and backed up automatically" (further on in the same article). If someone starts comparing two accounting packages, stop them right there. There is no standardized language in accounting software upon which to base a fair comparison. Two packages may claim to have advanced inventory features, multi-currency, role based security etc. etc., but when you investigate, you find that they have addressed these features in very different ways. Furthermore, there are hidden assumptions included in the words. I would challenge anyone who claimed that their system automatically backs up data. How can their system ensure that backup media are being properly rotated and taken off site? These are both critical aspects to the back up process. The word "automatic" sends up red flags for me, as do the words "easy", "user friendly" and "at the click of a button".

Frankly, we accounting software implementers have done ourselves a lot of harm by raising people's expectations to unrealistic levels about how easy it is to change accounting systems. Yes, the software installs quickly. Yes, everything is menu driven. Yes, the manuals are online and there's an extensive help system. All of those features do not change the fact that accounting is done very differently in different companies, even those in the same industry. The bulk of the time spent in an accounting implementation is in marrying the new system to the company's procedures and requirements, as well as migrating the historical data to the new system, not installing the software. One thing I admire about Microsoft is the way they insist that all customers work with a local firm ("Partner"), so that there is someone familiar with the customer's business environment on the ground to deal with specific issues.

Microsoft actually goes one step further. They design their systems in layers, the top layer being the changes needed to make the software fit the individual client. They don't claim to be the most advanced software on the planet. They claim to provide a set of flexible tools so that you and your Partner can make the system fit your needs.

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.

Getting the Most from a Software Demonstration

You can buy Microsoft Office from any authorized dealer. When you're considering accounting software however, half of your time should be spent evaluating the consulting firm. There is a lot of skill involved in fitting accounting software to a company in terms of determining requirements, examining business processes, converting data, training staff and staying within the budget. Obviously, you want the best consultant you can find.

In the past couple of weeks I have attended two demonstrations of Microsoft's new reporting package, Performance Point. I will have more to say about the actual software in a future post. Right now, let's concentrate on the demos.

Both firms are experienced at what they do. They both say they have a large number of happy clients. They both are represented by a seasoned sales representative who knows how to run a demonstration confidently, with no errors or software issues. The problem is that the demos were virtually identical. How is a customer to decide between two firms when their presentations are so similar? I have two pieces of advice for companies who demonstrate software: customize the default demo and don't tell me, show me.

Customize The Demo

It was no coincidence that the two software demonstrations were so similar. When you sell Microsoft software you are provided with a sales toolkit, including scripts for demonstrating the product and cool examples of what it can do. It's all there for you to follow. All you have to do is practice until you can do it without stumbling or software problems. This material is golden, particularly if you have a technical or accounting background and you have not ever actually had to sell anything before. It helps a small firm reach the level of professionalism that a sophisticated market demands.

If you are a seasoned implementation firm however, then you have actual client experience. You can enhance Microsoft's cool examples with some of your own. Why would you want to do that? Three reasons:

1. Microsoft's examples are aimed at an international audience, whereas you will want to show you're in touch with local needs,
   
2. It gives you a way to show your expertise, and
   
3. It differentiates you from your competitors.

Even if you decide not to go to all of the trouble of creating the sample data and turning a specific client report into a generic example, you can still talk about your experience, in other words, show, not tell.

Tell & Show

If a consultant tells a prospective customer how good they are, the customer will at best ignore the statement. If the same consultant shows the prospect what they have accomplished with other customers, particularly if the other customers have something in common with the prospect, then they will have the customer's attention.

In an individualized sales demonstration of course, the sales person will have done their homework and explored the real or perceived needs of that particular prospect. I would argue that even when you are just buttonholing people at a trade show, it's important that your presentation be tailored to show your expertise, because your competitor may be in the booth right beside you. And they have everything you have, unless you focus on your specific customer experience.

Tailoring the presentation does not have to be that time consuming. For example, Performance Point includes financial analysis software. Let's say you did a project for a company importing goods from China. The demonstration script could include a paragraph like:

Many of our customers import products for resale here. Recent large fluctuations in foreign exchange rates have made pricing their products difficult at best. To address this issue we not only helped a customer create a report that showed the effect of foreign exchange rates on gross margin by product, but we also added a parameter to allow them to see the effects on forecasted rate changes.

Faced with that kind of practical experience versus an out-of-the-box demo, I know which consulting firm I'd choose.

Accounting Software: Why Switch?

In his blog, "The Poetry of Marketing", Jim Behrle asks that immortal question: why switch accounting software?

Should your company use a new accounting software program or should you simply just go with what you have? There are many advantages to using software as opposed to relying on your employees. First, here are some of the reasons why you need to have the latest accounting software in order to keep your business on track.

Jim lists some basic issues clearly aimed at small business owners, to which I would add:

Have you discussed your needs with a professional accountant experienced in systems implementation?

If the answer is "no", then I wouldn't necessarily switch accounting software. The first step is to determine what you need and the second is to see if your existing system will meet those needs.

What can a professional accountant do for you?

• Help you create a structure that emphasizes the business drivers that are important to you. For example, if you rely on customers or vendors in the United States, then changes in profit due to the USD exchange rate should be easily identified.
• Help you create financial reports that are easy to read and act upon.
• Train you and your staff so that the transactions be entered easily and the reports created quickly.
• If it turns out your system needs replacement, they can help you select the appropriate new one (or upgrade of the existing one).

But please don't wait until the end of the year or when the tax returns are due before taking action. The best time to change systems is the slowest time of year for your business.

The Dirty Little Secret about RFQ's

RFQ's or Requests For Quotations are the bane of the accounting software industry. They take a long time to prepare, a long time to complete, and I have to wonder whether they improve the process of selecting accounting software at all.

The idea makes perfect sense:

1. You determine your needs, e.g. multi-currency, an inventory module that will handle obsolescence, a fixed asset subledger, etc.
2. You write all those needs down in the form of questions, e.g. "Will your software allow daily changes to exchange rates?"
3. You distribute the questionnaire to software consulting firms who complete it and send it back.
4. Based on their answers, you select a shortlist of consulting firms to interview and demo their product.

Simple, right? No! The dirty little secret is that accounting software vendors know that they can never answer "no" to a question on an RFQ or they will never be selected for the interview, so they bend over backwards to answer "yes" to all the questions. Strictly speaking, they're not wrong, because software can be changed or work arounds can be developed, but the result is not a true picture of what the software can do.

So, rather than using the shotgun approach with a huge questionnaire, determine your top ten features and grill the vendors about how their system approaches them. Pick features that are operational (e.g. how Sales Orders are handled) or unique to your industry. Secondly, spend a lot of time following up on the references supplied by the consulting firms (you DID ask for references, didn't you?) In my experience, other users have been happy to talk to me about their systems, even taking the time to invite me over to see it in person. Then you can ask them about the vendor as well.

Happy Hunting!