How to Choose Between Accounting and ERP Software

We have developed a new Guidebook that helps you understand whether you are ready for an ERP package or best served by staying or upgrading an Accounting package.

As you come into the final stages of the financial year and plan for next year, is the software that runs your business maximising:

  • Your Business Opportunities
  • Your Staff Productivity

We have identified 5 drivers that help you understand your current status and the best way forward. The new Accounting or ERP Guidebook is available for download now.

 

When and Why You don’t need an ERP

An Enterprise Resource Planning System(ERP) aims to deliver in a single system the capability to manage and automate most if not all of a companies business processes. But let’s be frank – sometimes you just don’t need an ERP – it can be an overkill.

Firstly, let’s look at why ERP was initially built and why they are very useful. ERP systems are made up of a range of functions such as finance and accounting, manufacturing, supply chain, warehouse and human resources. In many businesses these were separate systems and moving information between them was difficult(if not impossible). Interestingly, some industries just didn’t buy in to ERP eg Banking was very early into CRM but quite late to ERP, only now starting to implement.

ERP systems were designed to:

Deliver a single system with all of these functions, by creating a Central Database, where information is held, integrated and shared easily.

Herein lies the great strengths and weaknesses of ERP systems:

  • Sometimes a business does not need a single system – it sometimes needs a number of systems
  • The functions of an ERP are usually described as “best in class” or bench-marked – this can mean that ‘everyone’ does things the same way, so there is no differentiation or competitive advantage
  • A central database is a great idea, until you want to add a new field ( and then see the potential impacts and costs to that small change)
  • Often the different functions only use a very specific parts of the database, and share little data.
  • Integration was strong within the ERP system but often weak when working with other systems
  • Sharing of information was rarely as good as it was marketed.
  • These systems are implemented by consultants – but many projects were just too big for mortals to manage

In recent times there have been a range of technology changes that have resulted in a different world:

  • New web-based  technologies have made integration much easier
  • Businesses have to be much more fluid than they were – being more nimble
  • Custom development is back in vogue – building the software to your business exact needs 
  • A Best of Breed strategy is also back in vogue – choosing the best solution for an area and then integrating with another system
  • End-users have become used to using Social media tools like facebook and linkedin – so want their business tools to work in the same way

ERP vendors have realised many of these are happening and now sell their solutions separately or integrate better using Business Intelligence tools and Integration platforms.

So where are the break points, when does it make sense to be running a single system and when many. I think it somewhat depends upon the size of the business but the following could be separated:

  • Accounting – can be stand-alone
  • Manufacturing, Warehousing, Logistics, Purchasing
  • Supply-Chain( only if you are big)
  • HR ( although payroll often outsourced)
  • CRM (keep Sales, Marketing and Service together if you can)
  • BI/Analytics

For more information, read our Do you need ERP Guidebook and ERP Checklist for features and functions whichever route you choose.

Microsoft Dynamics SL for Government Contractors

Microsoft Dynamics SL (formerly Solomon) is great for project accounting and project management, making it ideal for the professional services industries. Hence why this article highlights its strengths in government projects.

A noted need is:

For government contractors, a top priority is to comply with requirement that they provide full detail of the direct, indirect, and overhead expenses associated with each line item they invoice to a government agency as it relates to the services and products they provide.

IF this type of functionality is needed for your business, add it to this ERP Needs Checklist and rate and rank the competing solutions to find the best fit.

For an understanding of how the different Microsoft ERP solutions are positioned, read this quick summary.

Accounting in ERP with SAP Business One

The core reasons for utilising ERP packages include getting better (and faster) results to Financial and Accounting areas of the business. This SAP Business One video discusses these.

ERP For Small To Medium Businesses – Simple ERP

This section applies to Small and specific Medium Businesses – if you are a medium or large business see ERP Solutions.

ERP for Small Business

A typical business will go through a range of growth phases. Moving from an accounting package and ten spreadsheets to an ERP is one of them. A typical scenario is where a company has a simple accounting needs served by MYOB and needs additional capabilities to support growth. There are a number of options:

  • Simple ERP
  • Full ERP

Clarify the reasons you need ERP to ensure you find a successful solution here by downloading the free ERP Checklist that will help you safe time in defining your requirements.

Simple vs Full ERP solutions for small business

A Simple ERP and a Full ERP come from different places and have different objectives. I may well upset some vendors here, but there is usually a lot of overlap between what a Simple ERP can do and what its bigger rival can do. Some of the vendors of Simple ERP will probably argue that they are not ERP at all, but being popular is not our objective. A Simple ERP is often based upon a strong and robust finance base, then has been extended into other areas such as stock control. An ERP package has usually been designed and built as a complete package.

Depending upon your business, a Simple ERP may be good for today but not support future growth. Whereas an ERP may be overkill for your current and future needs. In this market there are a lot of companies who wholesale/retail products which may well only need a Simple ERP solution. Another area that delineates the market is Human Resources and Payroll. HR modules are common but many Simple ERP and ERP vendors only offer a Payroll export feature.

In these scenarios its open for you to consider either an on-site or Cloud based ERP solutions.

A supporting Guidebook for this area is the Accounting or ERP Software Guidebook.

Vendors to consider

MYOB Business/Enterprise

Attaché

Sage

SAP Business One

Microsoft Dynamics ERP

NetSuite

Accounting Software vs ERP

When it comes to knowing whether your company needs an Accounting Package or ERP package ask yourself two questions:

  1. What are your plans and when will you grow?
  2. What is your business?

You can also download the free ERP checklist here to help you clarify the reasons you need ERP to ensure you find a successful solution!

Accounting Packages

Accounting Packages deal with accounting, with summary, analysing and presenting financial data and information on a company. The software records the accounting process and accounting operations of a business within its functional modules. The financial statements comprise the balance sheet, income statement and statement of changes in financial position can be easily prepared using accounting software.

The accounting software has different functional modules. Some of them include the general ledger that supports the financial operations of the company, accounts payable when the company between its bills and pays money it owes.

The different categories or types of accounting software are:

  1. small / personal accounting software that are primarily intended for home users. They are simple and inexpensive with simple operations such as managing budgets.
  2. the accounting software are low-end markets for small businesses, which are capable of serving a single national market.
  3. the accounting software market are companies with medium to large enterprises. These software are able to meet the needs of multiple national accountancy standards and facilitate accounting in multiple currencies.
  4. high end accounting software in ERP.

ERP Packages

Typically, a small business will start with an accounting package and as the business grows look towards an ERP system. However, I am aware of a two-man company that intended to grow quickly and saw ERP as an enabler of that. Similarly, if you intend to be a wholesaler or distributor and work with large retailers it may well make sense do do ERP so that you can exchange information rapidly and automatically with this important customer.

Modern ERP packages move beyond just accounting and cover areas such as stock control, distribution and e-commerce.

In the four categories of accounting software above, typically examples 3 and 4 to be served via an ERP package. It is now becoming quite common for small businesses or around 5-10 staff to take up an ERP package -especially if they handle products, be that manufacturing or value-added distribution.

Discover what basic features every ERP solution needs to help your business perform today!