While traveling in South Africa recently during the FIFA World Cup, I was privy to an interesting conversation. A gentleman, employed by a local food distributor, was complaining that all the ERP software he had looked at was either strong on the operational side – inventory management, order processing – but weak on the accounting side, or vice versa. His companion, a South African-based accountant, agreed, and felt that this was a natural consequence of vertical-focused software being developed with accounting functionality as an after-thought.
It seems a similar situation to what we frequently find here in North America. There are very few vertical-focused ERP solutions targeted at small and medium-sized businesses (“SMB”), that provide depth and flexibility on both the logistical and accounting fronts. There are some exceptions, and quite honestly as my expertise is strictly in the field of Wholesale Distribution Software, perhaps there are many exceptions in the manufacturing or professional services arenas.
Here’s what I think tends to happen: the SMB, when looking at software, is typically focused exclusively on improving operational efficiency, because that’s usually the bottleneck, particularly in a growth phase. So little or no emphasis is placed on the financial modules. Of course, this comes back to bite the business owner later on, because no matter how efficient you become operationally, you still need to collect your receivables, pay your vendors (sometimes), and be able to measure and monitor your business performance, profitability, liquidity, etc.
The obvious conclusion is that the SMB should pay attention to that financial accounting functionality as well – but that’s easier sad than done. That’s because many SMBs do not have sufficient qualified or experienced accounting personnel in-house to truly assess prospective vendors.
Question: how can the SMB effectively assess accounting functionality when selecting an ERP solution? Please make your suggestions in the comments section below.