If you are like most businesses in our industry, you are using QuickBooks (QB). QB is cheap, easy to use and can run a fairly large enterprise, with a few notable shortcomings. I have had the pleasure of knowing dozens of CFOs, Controllers, and CIOs that are starting to feel the pain of QB gaps. Here are their characteristics:
- Limited Project Costing
- In a project-driven business, knowing your costs per project/task/patient/case/grant/fund/lab/test subject is critical to proper bidding, cash flow projections, project management, and resource allocation. QB has one bucket for these costs, and everyone needs more detail. So the pressure for the second item on the list, system duplication, starts to grow.
- System Duplication
- In a growing enterprise, with lots of smart and driven people, they will create, buy or steal additional systems to be successful. Spreadsheets are what we all depend on to do our jobs, but dozens of mission-critical and disconnected spreadsheets can become our downfall. If operations are using a spreadsheet showing project costs, and it does not match the spreadsheet used by finance. These project costs need to be in the ERP system.
- Since we are blessed with many smart people in this industry, someone on your team will suggest they can create an Access Database or some other database that we all can share. Sounds tempting, but you have just unleashed a monster! The person who creates the database is supposed to be doing their day job and now they will spend 10s, but most likely 100s of hours building their creation and their own information kingdom. This database will not be connected to the finance system and will require double-entry of customers, resources, projects, and information that is already maintained in finance with a lot more integrity.
- If they wisely decide not to build a system, they will lobby to buy a system. A light project management, opportunity management, contract billing, bidding, forecasting, resource management system or at least a time and expense system! You have just opened the door to a growing and recurring cost of disconnect systems. These add on systems will be hard to dislodge later when you want to use a finance and project management system that has all these features included, integrated and supported under one application.
- Reputation with Outsiders
- Some may say, “Who cares that I am using QB”, but banks, investors, auditors, suitors, partnerships, and regulators do care. QB is easy, but it is also easy to erase a check I cut to my brother-in-law without a trace. The number one accounting system used by those who would commit fraud is QB. It could be the CEO or it could be the part-time bookkeeper, but it happens. A strong, double-entry, auditable accounting system is what gives banks and suitors a little more confidence in your numbers. It might add a multiple to your purchase price, or in a merger, it could determine whose accounting department survives.
- Limited or Additional Cost for Users
- The whole purpose of an enterprise accounting system is to provide and collect information from everyone in the enterprise. If you are capped at 10 users or are trying to avoid buying additional licenses for infrequent users, you start to make sacrifices: the CEO hardly uses the system, so we will email reports to her; receiving can fill out an Excel form and send us copies of the receipts; it would be nice if sales got alerts on overdue invoices, but we can’t afford that, and so it goes. The ideal system will have unlimited users so everyone who should use the system, can. As you add employees, you actually get some economies of scale!
- The Cloud or On-Premises?
- In general, the cloud is over-hyped, but for this industry, the cloud makes perfect sense. Our offices, employees and project sites are very fluid and dispersed. IT costs and talent are increasingly expensive, and the ability to scale up and down is critical to our survival. We may win a five million dollar study in ten countries, but when it is phasing out in two years, we may not want to maintain that overhead. Finally, pay-per-month makes a lot better use of capital than a big chunk upfront.
If you would like to talk about improving the efficiency of your ERP system, or how to take the leap from a QB-like system to your dream system, please email or call.
Michael Milligan, CEO [email protected] 614-568-2119