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Business today has increasingly complex infrastructure needs, including how to know when it’s time to replace your accounting software with an ERP (Enterprise Resource Planning) solution.

You may not know the difference between the two so let’s begin with basic definitions.

Accounting software handles transactions, like payroll, accounts receivable and payable, banking, financial reporting and some basic revenue/sales recording and tracking. Some accounting software comes with bundled functionality, like billing, purchase and sales orders, general ledger, timesheet, expense and electronic payment.

An ERP software solution will include the functionalities listed above for accounting software as well as managing project and supply chains, logistical requirements, warehouse management, inventory levels, contact management, eCommerce process, reporting and analysis, and more. It can monitor tangible and intangible assets (human work hours, product lifecycles, performance units, customer relations, IT management, etc.), human resources and financial resources. So ERP, or Enterprise Resource Planning system, is a comprehensive, fully-integrated, end-to-end solution that covers most, if not all, aspects of running a business with cross-reference data capability.

Traditionally, businesses would start with an accounting software and find that, as business volume grows, they have more to track and need to cross-reference data and would move to an ERP solution over time. Now the market has changed. Since ERP solutions include accounting software capability but are scalable to meet growth potential, it doesn’t always make sense to start with a simple accounting software.

Additionally, accounting software providers have been adding modular functionality; however, these can sometimes be akin to ‘franken-tech’ as features are bolted on to the original software with varying degrees of success. The trend now is that accounting software is becoming more comprehensive as a product suite; at the same time, accounting software typically handles a focused aspect of business while an ERP solution will address and manage the broader range of company operations and metrics.

In case you have an accounting software now and need to know when it’s time to replace it with an ERP solution, here are the top ten signs to help you decide.

1. You want better customer relationships.

Customers are now driving business. Recent studies show that 80% of the buying decision is done before the customer even talks to a sales rep. When they’re ready to buy, they want to talk right THEN – via their preferred device or modality – and expect the salesperson to meet them where they are in their experience with the brand.

That means your website and/or your salespeople need to have real-time product information (stock levels, order status, backorder information, etc.) and self-service options. An ERP solution will enable real-time information for your customers and staff so they get the information they want while gathering data about their buying behaviors and preferences to better forecast their needs and wants in the future. Personalizing their experience using their habits and adapted into your marketing helps develop better relationships with your customers.

2. You need visibility into your business growth and limitations.

Accounting software can work to give you visibility into operations when sales volume is low and, ideally, when employees and records are local to one location. However, when your business grows to new locations, a remote or mobile workforce, or multiple types of devices contributing real-time data, information obesity and chaos can set in quickly.

Another scenario that becomes challenging for accounting software is tracking or auditing historical data from outside the accounting system or data from an employee who isn’t available for an extended time (an extended illness or leave of absence) or leaves the company permanently. Maintaining multiple spreadsheets, systems or documents leaves blind spots; you cannot make strategic decisions with gaps in operational visibility. An ERP system integrates data from various inputs so that you can easily see it and make decisions with insight.

3. There’s too much paperwork.

Accounting software typically has only a few staff who can access the system. If there are multiple systems, such as an invoicing system that is separate from the commissions tracking system, manual data entry may be needed to coordinate the information. The obvious limits to this system are that the more business you bring in, the more time it takes to manually process the information. And, concurrently, the more potential errors that could happen due to faulty or incorrect user input. Even more, month-end close becomes an increasingly daunting task as transactions and the need to reconcile them grows.

An ERP solution would handle all these disparate activities from the appropriate data input point and automatically reconcile them. Paperwork and the potential for error are reduced and the month-end close is streamlined due to cross-data efficiency. And staff can then focus on more strategic, growth-oriented activities vs. routine monthly tasks that are now automated.

4. Data is maintained in separate silos.

When accounting software has been band-aided with different bundles of functionality added on to it or when the team is spending a lot of manual time to maintain data from different systems or business units, it is very difficult to get a unified view of what’s happening across the organization. The potential for human error, as well as finding and fixing those errors, increases with each data silo. Additionally, having fragmented data means a delay in getting information, potential conflicts with version control or information, challenges in syncing multiple systems and, the more time that passes as this occurs, the worse the problem gets.

An ERP solution handles cross-department data real-time to give you maximum insight to catch potential issues, facilitate strategic decision-making and make the most of potential opportunities.

5. Inventory management happens through spreadsheets and sticky notes.

Inventory management is usually beyond the capabilities of an accounting software system. Many companies will use spreadsheets which can compound all the previously stated issues: the potential for human error, reconciling to find and correct errors, a lack of real-time data, a fragmented view of the inventory and resources and an inability to give your customers the information they need about their orders.

An ERP solution integrates your inventory management system, from managing enough vs. having excess inventory to monitoring cash flow and tracking inventory movement and distribution.

6. Your reports aren’t adding up to what you need.

Accounting software can run reports that tell you the state of your company’s financials. However, those reports generally cannot tell you the contributing factors creating that position. It could be anything from marketing campaigns that didn’t convert to having excess inventory that became outdated to not having enough stock to fulfill orders. Managing by spreadsheets, third-party reporting or financial reports means cross-referencing them manually to information gained from other areas of the business, which causes a delay in getting the information you need to make immediate decisions (which can be the difference between stopping a financial hemorrhage or taking advantage of a hot new opportunity). You may not get the detail you need or the consolidation of data may have incomplete syncing between multiple data inputs.

To keep up with dynamic customer needs and wants, it is imperative you integrate marketing, sales, operations and financial data real-time. An ERP solution gives you integrated reporting from multiple business units quickly and easily. Business intelligence dashboards are a quick way to see data visually the way you want real-time.

7. Forecasting trends, projecting results and budgeting mean too much conjecture.

Despite having the best instincts in business, you need data to back up budgets, sales projections and trend analyses. Real-time data is the key to having the insight you need for agility in making decisions and taking right action. Accounting software is limited in taking into consideration all the data you need and is sometimes even limited to a desktop application on one person’s desk.

An ERP solution gives you the real-time data you need, consolidating multiple data points into cohesive insights into a single, current, accurate data source. Real-time agility is the key to success in business today, especially given that the digital business environment that is now the norm. On-demand expectation for robust, insightful and accurate answers can only happen with an ERP solution that gives you complete data availability.

8. You’re hiring more people to manage more paper.

Managing your business on paper takes a lot of time to organize, collate, disseminate, fact-check, reconcile and analyze. It might be necessary to collate several customer agreements or consolidate multiple entities or across multiple currencies. It might be about getting invoices out efficiently, which might be a challenge when timesheets need to be collected or when the sales orders do not integrate with the commissions tracking systems. The cost of training and using multiple applications adds up. Having approval workflows takes time and takes the time of someone who understands them to review and approve them. And you cannot grow, or increase business workloads, without having more people to handle it when it’s all on paper. In other words, your business is not scalable.

So if you’re hiring more people to manage more paper, it’s time to get into the 21st century and get digitized. An ERP solution gives you a single interface (vs. multiple), tracking multiple business units in a single database (vs. multiple databases being synced), with full access vs. approval workflows, with all documents associated with the data you are pulling from the system for accountability and a paper trail and so much more. Even better, it’s all achieved with efficiency, so you get maximum performance from your employees (vs. having them focus on manual, routine, repetitive tasks).

9. Your company needs to meet security, regulatory or audit compliance requirements.

Systems security is an obvious priority; having multiple interfaces, third-party tools, spreadsheets and other information scattered on various desktops is not a secure environment. Additionally, your company may need to demonstrate a higher level of professionalism and accountability in your financial systems, especially if your company is a government contractor. You might need to have better controls in place, recognize revenues in a different way, handle the Standard Form 1408 or have to prepare for a funding or liquidating event. An ERP solution could help you stabilize and upgrade to meet such security and compliance protocols and/or regulations.

10. You need better system performance.

If company data is being pulled and consolidated by several systems, including third-party systems, the sheer volume of transactional information being tracked and manipulated may be slowing your overall systems performance. Legacy technology is now at a serious disadvantage in trying to deliver data on demand.

Instead of buying additional servers, you may want to consider an ERP solution in the cloud, or a hybrid solution in the cloud (combining public and private cloud servers). The advantage to taking your business to the cloud is that you minimize your digital footprint because your company will use only the bandwidth needed in the moment while having access to additional bandwidth as needed. That means your company will only use – and pay for – what you actually need when it comes to server capacity.

And bonus – going to the cloud also means your remote workforce can work and collaborate more effectively using shared resources.

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Altogether, it is vital you leverage technology to meet your customers where they are in your brand experience and where they’re going to be in their dynamic wants and needs in an ever-evolving business environment. Your business is going to grow and you must be ready with future-proof technology, meaning technology investments that can expand with your business to meet as-yet-unknown requirements. And replacing your accounting software with an ERP solution could be the first place to start in terms of a digital transformation process.

Your business needs, targets and current situation are completely unique. That means your ERP solution must be personalized for your company’s goals and needs. XTIVIA’s trusted expert advisors are standing by to learn about your organization’s needs to see what the right ERP solution would mean for your business. We’re standing by to help – just give us a call.

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