ERP

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.

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.