Turnarounds: 2. Technology Triage

The first article in this series talked about the initial things to do in an accounting turnaround. This one is about the accounting system itself. The first step is triage: determining if the system is good to go, walking wounded or a dead man standing.

The brutal reality is that in a turnaround situation there may not be a budget available to upgrade the technology. In addition, the existing technology may be old. Here are a few ideas about how to make the best of what you have:

1. A better chart of accounts - If the staff is spending time analyzing accounts to separate different kinds of transactions, then create new accounts and define what kinds of transaction go in each.
2. One-size-fits-all financial statements - Talk to the managers about what they need. The sales manager needs different detail than the production manager, for example.
3. Inflexible Reporting - Older systems did not come with flexible report writers that let you create custom reports, but you can often retrofit a report writer to an older system, even if all it does is copy the contents of a file into a spreadsheet.
4. Version 1.0 - Check with the software developer whether you are on the current version. You might even be eligible for a free upgrade. If there is a user group, talk to them about what to do to bring the system up to date.

Giving management and other stakeholders (e.g. the bank) better, faster financial reporting goes a long way towards re-establishing trust in the accounting system. Your time spent on technology triage will be well spent.

Next installment: Finding a New System

Eliminate M.E.S.S.

M.E.S.S. stands for Manually Entered SpreadSheets. Don't get me wrong. I was raised on spreadsheets: first Visicalc, then Lotus 123, finally Excel. They are a second language to me. But when I see people pecking away entering raw data in them, I have to wonder why they can't get it from their accounting system. Ideally, their time should be spent analyzing their data, not keying it in.

Why does M.E.S.S. happen?

• A lack of trust in the accounting system, particularly when someone was not in favour of the change to begin with. Early in my career, a mining client converted their accounting system. The Accounts Payable manager, close to retirement, didn't trust the new computer, so she kept track of all of her vendors using a spreadsheet. About a month after going live, the new system crashed. They were forced to recreate the information manually. Everyone that is, except Accounts Payable. Guess who felt completely vindicated?

• The accounting system does not allow for all requirements. A government agency I worked with had a large number of "sidecar systems", meaning M.E.S.S. The reason was that their accounting system didn't track the information they needed. The spreadsheets were so ingrained in the system that when we converted to new software many people didn't think to include them in their requirements. The implementation team had to actually root them out and convince people that they were no longer necessary.
  

• Insufficient detail in the General Ledger. At one client it was someone's job to take all of the entries in the Employee Advances account and separate them by employee in a spreadsheet, so that the individual advances could be tracked. The General Ledger needed to have an account (or subaccount) for each employee so that time wouldn't be wasted making the entries twice.
  

Is M.E.S.S. ever justified? Of course if you are doing something that has never been done before, like due diligence on the purchase of a company, then you have no choice. The issue for me is when the same spreadsheet is prepared month after month. Then, it's a M.E.S.S.!

Getting to Phase II

Remember when you first installed your accounting system? Remember how the implementation team wisely left the "nice to haves" out of the project as they wrestled with customization, training and data conversion issues? How many times did you hear, "Let's leave that to Phase II"?

Did Phase II ever happen? If you just answered YES, then congratulations! Many systems never make it that far.

What am I talking about?

• The digital dashboard that was going to show all your key performance indicators automatically, all in one place.
• The customized financial reporting that was going to put the power in the hands of the end users.
• The add-on software tailored to your unique industry.
• The automated integration which your system currently handles manually.
• The cool new software that would make sales analysis a snap.

So what happens?

• Software and data issues chew up the budget for the whole project.
• Delays push the project up to its deadlines.
• The project team goes on to other projects.
  
• People put in so much overtime that they lose their energy.

The result is an accounting system that processes transactions and reports results, but is missing those things that made it so attractive to begin with.

My message to you is: Don't abandon your dream!

Go back to the original plan. Be both cheerleader and slave driver, but get it back on track. This blog is devoted to getting the most out of business systems. Don't settle for less than the best!