A guide to choosing and implementing financial software

Section 1: Time to change your business software?
Businesses change over time. Indeed you may have first-hand experience of growth, diversification, acquisition or rationalisation in your own company.

Each change factor brings its own level of complexity into the organisation and it's often the case that the business system gets left behind and it can difficult to ascertain whether your software is still fit for purpose.

Key signs it's time to change your business software:

• It's slow. You find yourself waiting for the system to carry out routine tasks.
• It's restrictive. You're not getting the depth of analysis you need, based on restrictions in the software.
• It's unreliable. Your IT department is inundated with requests for bug fixes.
• It's standalone. Lack of integration between systems means you have to re-key information - and there's no easy way to share information with the rest of the business.
• It's too small. The software is unable to cope with increased staff numbers.
• It's not compliant. Your software cannot meet the latest regulatory requirements.
• It's outdated. Reconciliation processes for example are manual rather than automated.

Section  2. Build the case for change

A business case can be defined as a structured proposal used to justify commitment of resources to a project.  Working through the proposed project's costs, risks, benefits and success factors will help you to stay within budget, on schedule - and gain invaluable stakeholder support.

a) Identify impacts of not changing

In Step 1, we identified indicators that your current system may not be up to scratch. Now you need to make a scientific case for change. Here are some factors you may want to consider:

• Poor cash flow. Inability to manage debtors effectively can lead to high aged debt.
• Increased waste, decreased working capital and inability to meet orders are all indications of a failing stock control system.
• Profit erosion. Delays in processing project-based costs (e.g. timesheets and expenses) mean you can't calculate profitability, can't predict budget overruns, and can't bill the client on time.
• Resource drain. Days (and costs) are consumed in the finance department as staff spend their time performing mundane, manual tasks when they could be adding value to the business.
• Staff operate in isolation. Lack of integration.
• Reduced margins. Lack of system scheduling and forecasting capabilities mean that key resources (staff, stock, equipment) go unutilised, eroding margins and losing potential sales revenue.
• Costly mistakes. Too many manual processes, duplication and re-keying of data which is costly from a process perspective and causes errors.
• Loss of confidence. People are frustrated by the software's processes and workflows which do not match their own - they are working for the system rather than the other way around.
• High customer turnover. Delays in processing enquiries/orders result in poor customer service.

b) Gain stakeholder buy-in

Within any business there is rarely one person who is able to make a major IT investment decision. The decision makers will have differing requirements, varying levels of authority and contrary experiences with software packages. Take the time to review the emerging business case with the key stakeholders to get their input prior to requesting signoff.

c) Identify financial benefits

The decision to invest ultimately rests on proving that the additional up-front investment is more than covered by the benefits that will be generated.

Having a clear understanding of the impacts is a great place to start. Depending on the type of business in which you operate, there may be specific financial benefits, but many benefit types are common across all businesses:

• Resource cost reduction. Time will be saved through the new system, reducing the need to recruit additional staff to cope with business expansion
• Sales impact. Increased profits are projected through better information relating to products or customers, or better stock availability
• Working capital reduction. Greater system accuracy allows a reduced stock holding, generating working capital benefits
• System cost reduction. The old system requires expensive hardware or support, that will be reduced with the new system
• Reduced loss and wastage. Greater accuracy reduces wastage in the system e.g. stock loss
• Efficiency improvement. Reduced downtime of equipment, more efficient use of assets, improved throughput and margins

Section  3. Source potential vendors

You've built the business case and gained funding for the project. Now it's time to see which software packages might suit your needs. Use the Internet to do some research on potential vendors and solutions or visit specific trade events, e.g. Softworld. Speak to your accountant or a consultant and get their opinion on who you should be considering.

Section  4. Send out an RFI

Having selected potential vendors, contact them with a Request for Information (RFI). An RFI is a formal document based on the list of requirements you put together in the business case. The quality of responses you receive at this stage is a strong indicator of the vendor's dedication to you if you become a customer. 

Section  5. Define a shortlist

Once you've researched the options, make a shortlist of three or four providers whose products meet your needs.

 Section  6. Arrange demos 

Having made your shortlist, contact the vendors and request a product demonstration. The aim here is to judge how well the solutions rate against your requirements.  Score each demonstration against your requirements to ensure you are shown how the solution meets them.

 Section  7.  Arrange a site visit
Next, it's well worth obtaining reference sites (accounts from previous customers) from the vendor. Visit them if possible, this should serve to reinforce your preferred choice of vendor.

 Section  8.  Place the contract

Once you've made your final decision, you will need to formalise the deal in the form of a contract. Beware of hidden costs, such as the vendor's expenses, mileage, and travel time charges and make sure that your requirements are part of the contract.