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Choosing Accounting Software for SMEs

If you’ve been searching the web for information about choosing accounting software, then you’ve found many possible software packages and services, some suggested criteria for making your selection, and expensive tools to assist with your analysis. Unfortunately many of those tools concentrate on analyzing the specifics of accounting or of the technical capabilities, and hardly any deal with the overall business requirements. How does one possibly decide what software is best for one’s business, especially for small and medium enterprises (SMEs)?

What about starting with your overall business requirements and the potential for the solution to add value to the business, then determine what software you should consider? And why not follow a structured process and use some tools to assist with this process? The process should help you choose the team for the process, narrow the range of products to consider and determine what tools would best assist with the evaluation. Then the process should include considering how best to integrate the solution into your firm’s processes to get the most value.

The Accounting Software Dilemma

Often owners or managers turn to the accounting firm or in-house accountant and ask, “What software should we use?” Inevitably the accountant tells them the last software he used (because he knows it, assuming he found it acceptable); and the accounting firm tells them whatever software the firm happens to use. How well the software matches the company is often practically irrelevant.

Of course, you could get into different trouble ... you could ask the information technology (IT, or “computer”) person or department. At this point you’ll either need a lengthy requirements and technical study or you may be told whatever software the IT person last used, wants to use (good for his career) or that matches the technical platform preferred by him. With the study you might get closer to what you want, but it will still be influenced by the IT rather than business preferences. And woe unto you if you take the route of “our requirements are so unique we need to write our own solution”.

So, what’s an owner or manager to do about accounting software? How might you go about this process and whom should you involve?

Follow a Logical Process

To choose accounting software we can use a standard evaluation process, and allocate the amount of time and effort depending on the needs. The steps and issues are similar for everything from a small startup or a medium manufacturing company but the effort varies significantly depending on the size and complexity of the company.

We suggest you follow the general process shown in Exhibit 1, which has five steps, and modify it to suit your purpose. Within each main step, or phase, are further activities, as briefly defined below (for more details you may want to purchase the Owner's and BusinessPerson's Guide to Choosing and Using Accounting Software for Small and Medium Companies).

Exhibit 1: General Process for Choosing & Using Accounting Software
General Process for Choosing & Using Accounting Software

Define the Scope of the Process and Your Business

The process is simply the means for moving from requirements definition, to selection of options, to a decision and to implementing the decision. The details considered and the overall time for the process depend very much on the complexity of your company and what scope you want this process to cover. For instance, you could have a complex company but decide that you will only consider the accounting software and its requirements right now and will leave consideration of other software to handle customers, personnel and operations for another time. A broad scope naturally requires more time for the process than a narrow scope.

You need to start off by defining the scope according to what your company can get from the effort. Then determine who might be involved in the process and how much you're willing to spend on the process and on the solution and its implementation.

Get Your Requirements Right

You need to define your scope and understand your functional requirements before anything else. Later you can establish the operational and decision parameters that will influence your decision. If you don’t understand your real requirements then you are likely to be misled into buying something that someone in your company favors, that your accountant favors or that the vendor favors, rather than what you really need.

Narrow Your Options

Knowing and defining your company also narrows your search, because you can quickly determine which accounting software is being targeted at companies like yours. In our Owner's and BusinessPerson's Guide to Choosing and Using Accounting Software for Small and Medium Companies we show you a means for generally describing your company according to a “Big Picture”. Then by using the same “Big Picture” for accounting software products, you can see what products would be suitable for further consideration.

Defining your scope will narrow your options as well. The range of functionality under consideration and the potential budget must match your view of the “Big Picture”; these issues will identify which solutions are too small, too limited or too large or costly to fit your criteria. Why take the time to consider solutions costing $100,000 if your total budget is less than $10,000?

Since the evaluation process can be fairly lengthy and require time from your team and from vendors, it is worth narrowing the field as soon as possible, and considering in detail those that are likely options for your decision.

Plan the Implementation and Use

Even if there is just you and your accountant, and certainly if you have many divisions and a good size finance team, you want to think ahead about the way the system will be used and what it will take to use the system effectively. Not only may these issues affect your choice of accounting software, but they will definitely assist you to consider the potential operational issues and costs, and determine how your company will benefit. Involving your team effectively in the implementation will increase the overall chance of success, always a concern when using new software systems.

Choose the Appropriate Accounting Software Solution

Once you know the operational, accounting and implementation requirements then you can go out for tenders or simply assess the narrowed range of potential solutions. In our Owner's and BusinessPerson's Guide to Choosing and Using Accounting Software for Small and Medium Companies we provide a method for ranking the options you evaluate and for comparing them for a decision.

Implement the Accounting Software According to Your Plan

Having chosen a package or vendor, you need to put together the right team to implement the solution for your operations. You need someone to manage the implementation, training and integration into your processes. Then you need to assess the implementation after an agreed period to determine how well the implemented accounting software solution is meeting the business requirements.

Guide to Choosing Accounting Software

Our Owner's and BusinessPerson's Guide to Choosing and Using Accounting Software for Small and Medium Companies takes the above general process and explains each of the steps. We provide tools such as a Big Picture chart for assessing your business and narrowing the kinds of accounting software to consider, as well as a technique for comparing software options. Examples help to explain the concepts.

The Guide also explains security issues, considerations for web-based services, and why you might want to consider integrated solutions such as those including customer service (CRM), manufacturing (MRP) and total enterprise solutions (ERP).

If you purchase the Guide we also provide access to resources such as outlines for Request for Proposals and annotated lists of websites with additional materials to assist in this process.

Purchase the Owner's and BusinessPerson's Guide to Choosing and Using Accounting Software for Small and Medium Companies now by clicking on the link below, then follow the instructions to pay and download the Guide. Provide your email address and we will send you the site to obtain the additional resources. We are offering this Guide right now for US$28, a small amount considering the savings it could help you to achive with your accounting software decision and implementation.

Link to purchase Guide to Choosing Accounting Software for SMEs (Your bill will be to the account of Asia Web Services.)

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