January, 2009

Sung to Pete Seeger’s “Where have all the flowers gone?”

As I watch reports of Pres. Obama’s meeting with Republican leaders over the next round of bailout—excuse me, “stimulus”—money, my confusion over accounting double standards continues to soar.

Let’s see, it’s okay for the Feds to parcel out $700 billion, $800 billion, a trillion dollars or more without clearly accounting for its use. At the same time, SMBs in this country struggle mightily to comply with existing accounting services regulations—and brace for a new round of regulatory “structure” to keep corporate America in line.

Memo to these SMBs: Don’t follow the example set by the Federal Government (at least thus far), or you could wind up in jail.

Like it or not, small to medium sized businesses in this country will pay the heaviest price for the irresponsible deals struck by big businesses—sometimes in cahoots with the very regulators charged with being public watchdogs.

So, the best move for the Main Street, USA business community is to be compliant, compliant, compliant. Go above and beyond minimum accounting requirements and regulations. Show that you mean business; and know how to run one. Here are accounting system software tips to help set the stage correctly:

1. Buy software you can grow into. Entry-level accounting solutions make much of the fact that larger accounting system software products—such as Microsoft Dynamics® GP—offer a dizzying array of features, many of which are superfluous at this stage of a company’s existence.

That may be true now, but what about in a year? What about introduction of new government regulations mandating accounting services controls and reporting that go way beyond today’s standards? What happens if mom and pop USA suddenly start getting scrutinized under the same microscope as much larger companies?

Be safe now, so you don’t have to be sorry later. Besides, as we’ve all learned with such robust programs as Microsoft Office, you can pick and choose what you want to learn and use now, and leave the rest alone. Once you get accustomed to accounting system software basics, it’s easy enough to proceed without all the advanced features—until down the road, when you need them.

2. Be secure, be secure, be secure. I keep harping on this because it’s so critical, and it’s one of the most overlooked issues in the SMB marketplace. Dynamics GP has eight—count them, eight—layers of security. Most entry-level accounting solutions have one. Do you want to trust your company’s lifeblood to one “guard” able to be compromised or relatively easily taken out, or do you want an army of guards at your accounting services door?

3. Don’t wait to be up to date. Entry-level accounting software tends to bog down after accommodating just a few simultaneous users. This slows productivity and disrupts important, time-sensitive processes. Implement accounting services that virtually eliminate this problem from the get-go, so you’re not needing to reinvent or restructure your accounting software as you go.

Bloomberg recently reported on a Denver-based jeweler citing SAP ERP cost overruns and delays as contributing factors to its Chapter 11 filing. The problem is all too pervasive across all types of ERP deployments, including accounting software product lines and processes. Accounting solutions in principle too often become accounting software nightmares in practice

Quoting from the story: “SAP, the world’s biggest maker of business-management software, took almost three years to install and implement the system instead of one year, while costs ‘ballooned’ to $36 million from a projected maximum of $10 million, Shane said in papers filed yesterday in U.S. Bankruptcy Court in Denver.

“Shane, based in Centennial, Colorado, became ‘substantially overstocked with inventory, and with the wrong mix of inventory’ when Walldorf, Germany-based SAP finished the system in September 2007, according to the filing. The software ‘adversely affected sales’ through the first nine months of 2008, it said…

“The SAP system didn’t become ‘stable and functional’ until the fall of 2008 and still doesn’t operate as initially planned, Shane said in the court filing. The retailer now employs eight contractors to modify the SAP system and ‘bring it to full functionality,’ it said.”

Obviously, the typical SMB Microsoft Dynamics accounting system software implementation is far less expensive than the millions of dollars cited in this story. But, the Shane deployment highlights key issues that can affect any ERP level accounting software deployment. Among them are:

• Lack of detailed and well-organized pre-accounting services deployment planning. Obviously, the client and ERP supplier weren’t on the same page. It makes me wonder if they skimped on deployment and training expenditures in an effort to keep overall costs down—a surefire recipe for disaster. Inventory overstocking and lack of full functionality add to my belief that there may have been a full court press to get this up and running, without dedication of resources needed to meet objectives.

• Substantial delays. Time is money—three years versus one is disruptive, demoralizing, and obviously financially damaging. Can you imagine having an empowered workforce and positive accounting system software employment environment amid these types of delays?

It doesn’t take an accounting software guru—or any type of math maven for that matter—to see that no matter how sophisticated or robust the ERP system is, success ultimately resides in the details of accounting services deployment.

Now, the jewelry company faces bankruptcy while a corps of eight contractors tries to repair the damage. Begins to sound a lot like “Humpty Dumpty” to me: “…all the king’s horses and all the king’s men couldn’t put Humpty Dumpty back together again.” This is no time to play Humpty Dumpty with accounting system software.

Many promises are made in the heat of making a sale, including fast accounting system software installation. So, just what constitutes “fast?” And, how does a QuickBooks® migration to Microsoft Dynamics GP, one of the most common accounting software moves, stack up in this department?

While every company’s requirements and roadblocks are different, there is one sure way to establish some clarity around such issues as a QuickBooks accounting services migration: get feedback from someone who’s been there and done that.

Jeff Skeen, founder of Titan Fitness, saw his company grow from 6 to 1,000 employees in six weeks, as the company acquired two health club chains and added 14 locations. This necessitated an efficient and rapid accounting software transition out of QuickBooks.

We worked with Skeen to implement a Microsoft Dynamics GP coup—delivering and deploying a Fortune 500-sized accounting solution in 60 days versus the six months typically anticipated when performed by a Big 6 accounting firm. This accounting system software easily will accommodate expected growth of the company to 4,000-plus employees in more than 60 locations over a five-year period.

What’s more, the price was one-third lower than comparable accounting services installations. Skeen expressed his satisfaction with the entire process, noting, ““I was very skeptical, then surprised. I figured I was missing something. Then, I was thrilled.”

“Wizard Productivity Systems got us up to speed and saved us on basically everything needed for a back office of six people to oversee 1,000 employees. They helped with application and license cost, training, implementation, chart of accounts setup, getting product on servers, selecting a hosting facility,” Skeen adds. “Our investors were surprised that we had put together a management team with a Fortune 500 infrastructure so quickly and cost effectively.”

Here’s a concrete example of the type of concrete time and price accounting services results that can be generated for clients. Since definitive information about these critical results typically requires some digging online, we wanted to give you some accounting software info that didn’t require a shovel.

Use the words “Madoff,” “economic meltdown,” and “new Administration” in one sentence, then try to convince somebody that increased accounting regulation isn’t coming. Of course there will be abundant new initiatives to keep tabs on, and control of, company finances. What we don’t know is precisely how increased regulation will impact our corporate books-or how soon. Read More at MSDynamicsWorld.com

A recent LinkedIn question about “concrete ERP return on investment” got me into a “let me count the ways” frame of mind.

Overarching “concrete” ERP return on investment depends on how you mix and apply the concrete. Such ERP powerhouses as Microsoft Dynamics® GP can provide huge ROI if properly implemented and utilized. Benefits are myriad and span the entire spectrum of technology—from sophisticated security to ability to track receivables and payables with pinpoint accuracy.

While ROI is ongoing, it also can be episodic. For example, one regulatory audit can wreak havoc on an unprepared company—both in terms of use of the in-house workforce to assemble needed information, and payments to outside financial and/or legal counsel. Appropriate accounting software can eliminate many of the headaches—much like being prepared for a tax audit ahead of time, instead of having to gather together needed documents and data.

Following are just 10 of the ways that robust and reliable accounting system software can bring about solid ROI:

• No data entry redundancy;

• Rapid report assembly and printing;

• Up-to-date, accurate financials for forecasting;

• Elimination of time-intensive, costly “build as you go” accounting system software functionality in such areas as security, scalability, and currency;

•Facilitating reliable and straightforward employee use, thereby saving time and enhancing morale;

• Enhancing employee training on accounting solutions with clear and comprehensive step-by-step self-directed learning protocols;

• Improving employee retention programs, thereby reducing exorbitant costs related to rehiring and retraining;

• Improving employee recruitment efforts, because prospective employees view robust and reliable accounting software as a valuable employment benefit—this results in a more focused and effective recruiting effort, in turn leading to more productive hires;

• Serving as a valuable business development tool, because stellar accounting services provide one bedrock indicator of a stable company capable of providing accurate and timely information.

Of course, the ultimate key to success lies in intelligent deployment, consistent management and maintenance, and timely updating of accounting system software to address changing rules, regulations and functionality. Since it all starts with installation and accounting software training, make sure your ducks are in a row—and are able to move nimbly without getting mired down in soft concrete.

Too often when companies decide to deploy an Enterprise Resource Planning system, such as Microsoft Dynamics® GP or SL accounting software, managers dictate its use rather than dedicate resources to ensure employee acceptance and adoption.

It doesn’t work that way. Some might argue that the current economic situation will make all employees “suck it up” to keep their jobs. I look at the situation from the opposite perspective—now is the time for companies to optimize their employees’ productivity and morale. Only by having a satisfied workforce can a company maximize efficiency and cost-effectiveness in any department—and this is especially true in accounting services. Today, it’s more critical than ever to add every last nickel possible to the corporate profitability jar, and properly deployed accounting system software can help make this happen.

An August 2008 article by Alex Hankewicz recounted the “Top 10 Success Factors in ERP Deployment” based on a study of US firms experiencing a new ERP system—which includes the realm of accounting services. Following are some observations applicable to accounting system software deployment based on study findings:

•The most important factor when deploying an ERP, including accounting software, is senior management providing top-down leadership and full participation in key decisions related to the project;

•Second most important is adequate project team knowledge. The Project Manager (PM) must be able to rely upon both adequate quality and quantity of team resources to do the job. If required, the PM must be able to mentor, encourage and teach new skills to achieve desired milestones. This includes the all-important arena of accounting software training;

•Third most important is ability of the PM to achieve full interdepartmental cooperation. Working with conflicting schedules and constraints to create an atmosphere of full cooperation throughout an accounting services department is the objective;

•Further down on the list is the PM’s ability to exercise interpersonal skills to motivate people and communicate effectively with all management levels. The PM also must be aware of, and sensitive to, cultural and global differences in work ethic and management styles as part of this process. This requires ability to manage priorities effectively and know-how to coordinate across multiple time zones that may be involved in the ERP deployment.

Being clear, communicative and caring in how the workforce—including the critical functions handled by accounting services—is supported throughout an ERP deployment can be the make-or-break difference between a smooth, satisfying process and a sour result.

As companies downsize in response to economic difficulties, some are looking at taking their accounting software with them. Some cite simplicity as a reason. Others bemoan “exorbitant” consultant management and maintenance fees. Before going into a downsizing frenzy, consider these important accounting software issues:

1. Decide whether your present accounting software is overly complex—or just comprehensive. For example, consider Microsoft Office. It’s a comprehensive application, and often the user doesn’t need many of its features. But the user can fairly quickly learn basic functionality, and go as far as needed or desired. In this sense, Office is straightforward; the learning curve is basic, and complexity isn’t forced on the user.

Among accounting solutions, there are definitely systems that fall into this Microsoft Office category. Microsoft Dynamics® accounting software, for example, offers comprehensive capabilities—but the basics are fairly straightforward. It doesn’t force users to go through complex training ordeals to gain basic proficiency.

2. Decouple accounting software from maintenance and management considerations. If you’re paying substantial maintenance and management fees for your present accounting software, make sure they’re justified. Too often, companies throw out the baby (perfectly useful accounting software) with the bath water (overpriced, unnecessary consulting). You may discover that it’s the consulting program, not the accounting software, that requires downsizing or rethinking.

3. Decouple accounting software from training issues. Today’s major accounting solutions offer myriad self-directed, e-learning and webinar accounting software training options. Even with such mid-market mainstays as Microsoft Dynamics, trainees can get up to speed quickly using these tools. If someone wants to sell you ongoing, instructor-led courses, dig deep to find out why. You may discover that much, if not all, training can be handled as part of the accounting software package—with little or no additional expense required.

4. Evaluate system change disruption and demoralization factors versus the stability of a system already in place. No matter how well it’s presented or packaged, change is daunting for many. In the current, rapidly-changing economic environment, a bit of stability and familiarity can go a long way with employee longevity and productivity. “If it ain’t broke…don’t replace it.”

5. Think long-term and next presidential term. When the economy ramps back up, you’ll want to be using accounting solutions that are robust and scalable enough to keep pace. Plus, potentially expanding government regulation with a new Administration inevitably will rein in and revamp much of the presently deregulated financial structure. As this occurs, companies will want to make sure that their accounting software is plenty comprehensive—to handle any regulatory reporting and auditing challenges coming their way.

Much is made of price disparity between such entry-level accounting solutions as QuickBooks® and mid-market stalwarts, including Microsoft Dynamics®. Often, this is comparing apples to oranges. Needs and challenges of a mid-sized company versus a very small business are typically different—and typically warrant different accounting solutions.

Given this scenario, comparing prices is a wasted exercise. Obviously, entry level pricing will be considerably lower than mid-market accounting solutions.

As the price comparison isn’t really a valid consideration, what does matter? Cost. The price paid for accounting software is the money outlay. Cost relates to additional expenditures made necessary because of accounting software shortcomings. Optimally, potential cost issues should be examined prior to buying accounting services—so that a cost/benefit analysis can be conducted. Areas that can become expensive quickly because of a poor accounting software include:

Human capital. If your people don’t take kindly to their accounting software, morale, productivity and longevity issues result. Besides the loss of productivity costs, you may have to hire in trainers and coaches to resolve issues. An employee who leaves often costs a company 70-200% of his/her annual salary for rehiring and retraining. Ka-ching #1.

Audits. Can your accounting software stand up to the typical IRS or other audit? If not, start calculating potential professional fees charged by CPAs, lawyers and other advisors to straighten out problem areas. I was struck by an Oregon newspaper article that stated, “IRS audit costs Sandy Fire District $10,000…The audit was one of the first in a ‘concerted nationwide’ crackdown of fire departments…” Given that our basic Microsoft Dynamics® purchase and implementation is less than $9,000, do the math. Of course, you can always argue that the accounting software wouldn’t have mattered in this case. Possibly.

But, if the IRS is moving to a “concerted nationwide” crackdown on fire departments, other industries are likely to be targeted—particularly as the Treasury Department ratchets up its efforts to find money anywhere to fund our economic bailout. While choice of accounting software can’t guarantee you won’t be audited, it can make a substantial difference. Ka-ching #2.

Security-related regulatory compliance. Entry-level accounting software typically has one layer of security. Mid-market accounting solutions generally offer many layers, and are much harder to hack. An article entitled, “How Much Does a Hack Cost?” pointed out, “According to the annual report by the Computer Security Institute and the FBI, the average loss per company due to security breaches in 2005 was about $167,000…Some rules of thumb say that $100,000 is a good starting point when measuring average loss per incident. Some say $200,000.” Do you really want your accounting system software to function on the low-end of the security scale? Ka-ching #3.

Oscar Wilde said, “A cynic is a man who knows the price of everything and the value of nothing.” Being price-conscious without considering the value of first-class accounting services is shortsighted and potentially very costly in the long run.