Growing Pains: 10 Signs You Need to Upgrade from Accounting Software to an ERP Environment

Updated: April 30, 2009

Issue

Nobody disputes the importance of accounting software for an SMB (small to medium-size business). But there comes a time in the life any growing company when it needs to think about transitioning to a more powerful, sophisticated and flexible ERP (enterprise resource planning) software environment.

By integrating all of a company's business operations into a single software infrastructure, an ERP solution can handle a wide array of work, including general accounting, payroll, procurement, order fulfillment, HR, logistics and scores of other tasks. ERP eliminates individual computer systems in finance, HR, production, shipping and other departments, replacing them with unified software — divided into software modules — that roughly approximate the old standalone systems.

Signs


Is it time for your business to put away its accounting program and other standalone applications? Here are 10 signs that your changeover may be imminent.

1. Expanding customer base: Your business now has so many customers that tracking and invoicing has become a headache, perhaps even a nightmare. ERP can pull data from across all areas of your business to take your company's billing operation to a new level of quality and efficiency.

2. Business expansion: Your company is growing, expanding into new departments, locations and business lines. As a result, your accounting software is becoming incapable of tracking supplier shipments and other critical activities across an increasingly complex business structure.

3. More employees: The number of new hires is beginning to cause chaos in accounting, HR and other key business sectors as overburdened technologies struggle to keep pace with a growing workload.

4. Changing business focus: A company with new goals and responsibilities will probably need software that's more powerful and flexible than a standard accounting product. Consider the case of a rapidly growing environmental consulting firm. A simple accounting program worked fine when all the business did was advise homeowners on how to cut energy use. Now that the firm has also begun installing solar panels, energy-efficient furnaces and other green technologies, its simple accounting software can't keep pace with newly complex business operations.

5. Software headaches: Separate vendors supply your company's accounting, HR, inventory management and other key software applications. As a result, crucial information entered into one application never arrives in the others, causing confusion and wasted time.

6. Poor planning: Your business plans consistently fail to meet project goals due to a lack of accurate data and financial insight. By supplying deeper and better-organized information, ERP software provides the foundation for more accurate and successful project management.

7. Spiraling IT costs: It almost always costs more to support several incompatible or marginally compatible software environments than a single unified system.

8. Poor Internet integration: Your business can't take advantage of e-commerce, Web-based contact centers, electronic billing and other cutting-edge Internet-oriented technologies because its weak, fractured software environment won't allow it.

9. Declining staff productivity: There are many reasons for a steady decline in staff productivity, but forcing employees to work with disparate systems that can't keep pace with growing business demands is certainly a prime candidate for crumbling performance.

10. Diminishing allure: In these troubled economic times, many companies are up for sale. A unified software environment shows an interested buyer or investor that his or her potential acquisition won't be weighed down by a weak and inefficient software infrastructure.


Next Steps

After you've determined whether your company needs to upgrade to an ERP solution, it's time to research what you need to know about the software and the available options. Focus' Market Primer: ERP Systems is the perfect place to start. Once you've reviewed the ERP market, progress to our Buyer's Guide: ERP Systems and Comparison Guide: Midmarket ERP Solutions for further information that supports your buying process.

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