G'day it's Justin Hogg here from Right Source in the wonderful outdoors talking all things
accounting. Today I wanted to share a little bit of what a few clients have gone through recently
that the decision or the decision process as to whether they want to change accounting system, so
it's actually very interesting to look at when you're running your business,
I mean obviously you've got a core system one of your core systems is your accounting system
and sometimes you want to change it, so the reason I suppose a lot of people initially
look at changing their accounting system is one: the software, software is no longer supported,
that's one thing, another very common one is reporting, another one is looking to get out
up in the cloud and sometimes it's just they want more features, now these are all to varying
degrees a reason to change your accounting system but what I want to talk through in a bit
more detail today is sort of how to, the thought process to go through that and look behind that
a little bit more and really understand the benefits that you could potentially get from
changing your accounting system or if the benefits aren't really there so the cost-benefit analysis
and also to understand the the risks and the sort of non-quantitative aspects behind it.
So obviously if you look at some of those options that we talked about there and look at
what are the benefits of changing because you want to really quantify the benefits first up,
obviously if you're on a software platform that's no longer supported, it's come to its end of its
life, well that's a big risk for the business, you really want to move off that to something else, so
very hard to quantify in terms of the benefit but there's obviously a very large benefit in terms of
minimising the risk of the organisation, so for me that's always a very almost a
a "fait accompli" if the software is no longer supported you should really make sure you get
into a software software platform that continues to be supported, quite often that's interlinked
with moving to the cloud so probably five years ago moving to the cloud was this neat idea now
it's pretty commonplace and in fact most businesses do tend to use it,
usually looking at the cloud again it's a risk a risk-based thing making sure you
you have access to the internet and sufficient speed and where your data is being stored and
that that's usually the two main characteristics that you're looking at for the cloud but again
that's more of a risk mitigation strategy, the benefits of cloud tend to be in that area
reporting is a really interesting one when you look at the benefits because and I suppose this
is where when you're going through the benefits you at the same time also want to understand
the features of the new system you're looking for, so as we were talking about cloud just before then
if you're saying well we we have a risk because our software's on the server and really we want
to put it in the cloud so it's more secure, you want to make sure that when you then scope out
your requirements for your new software that one of the requirements is it's in the cloud because
that's one of the one of the reasons why you're changing, so when you put reporting on that I
mean there's a lot of people who are frustrated with the reporting of their accounting system,
fundamentally accounting systems aren't good at reporting, so it's always because of that it's
always an aspect that if one of the reasons you wanted to change your accounting system is because
of reporting make sure you put down that that's one of the features you want in the new system
so that you can actually test that they're there before you make the change and obviously having
good reporting can add a lot of value to your business so that's definitely a reason to change,
you just want to make sure that your new software actually gives you what you need,
usability can often be something that's talked about again that's very hard to quantify the value
or the benefit to your business in that it can definitely make users more happy and also more
users, new users coming into the system able to use it better, definitely but when you're talking
about usability you do really want to get into what do you actually mean and try to identify what
benefit that's going to bring to your business. And lastly we talk about features and quite often
for me this is the the main reason why businesses end up moving accounting systems
is because they've outgrown the features on their current one and now what can this mean? Well
it can mean a lot of different things to different people, it can mean being able to
deal with multi-currency, being able to deal with multiple entities in a large corporate structure,
it could be dealing with job costing more accurately for like in the construction game
or client management in professional services and doing that more in more detail and more
integrated approach and that type of thing, it's quite often as the business grows it then needs
an accounting system that has that better fit to the business as it grows.
So once you've had a look at the benefits it's then also good to look step back and say well
this is what I'm trying to achieve, this is what I need to happen, are those needs actually a result
of the system? And what I mean is, is the system the problem? Always ask this question because
sometimes it's not the system that's the problem and you've either potentially got poor processes
you may not be utilising the current system so the benefits or the features
you're looking for may already exist in your existing system you just don't know about them
or as it potentially can be people who aren't the right fit for your business and you're trying to
fit a system to fit the people it's not always a good approach so it's always good to step back
when you're looking at new accounting system and go well let me just make sure that what
I'm actually trying to fix is something the system can fix and it's not trying to
compensate for other issues that are happening within the accounting or the
finance function within the business. And lastly when you're doing your
I suppose your decision on whether you change accounting system and you're looking at benefits
you also need to look at costs, now obviously there's a cost of new system, okay great
there are also a lot of hidden costs when you look at this so
be aware that, I mean, for example, one thing is if you move accounting system what are you
going to do with all the data that's in your old accounting system because you need to be able to
maintain that financial data for at least seven years from a legal point of view but also from a
reporting point of view and information that's in there I mean there'll be customer invoices,
there might be customer information in there, how are you going to move that data? So is it
are you going to move that data across into your new accounting system? Well doing that obviously
there's a cost to that, if you're not going to move the data and you just want to maintain an old
accounting system well that means you're going to be paying for two accounting systems potentially
for a period of time, so take that into account in terms of your accounting system.
The next thing in terms of hidden costs is that obviously learning a new system takes
time and the implementation process takes time, so there is going to be a cost both in terms of
the initial buying the new software and putting it in and setting it up so there's a cost of time
there but then also as as your users of the system get used to it there's going to be a
decrease in productivity for a period of time as you're getting used to a new system so that often
takes time and can cost I mean sometimes it's even the requirement of bringing in extra people
to help with that learning period and that transition period so it's definitely a cost so you
want to understand these are the benefits, these are the costs, is there a cost benefit? At least
do the benefits outweigh the cost in some degree in terms of before you move ahead and you want to
understand all that before you make the decision to start moving to a new accounting system because
looking at it after you've made the decision or after you've purchased the product, it's too late then,
so you've already moved forward, it's not too late, I shouldn't say that but
you've already incurred some costs so it's better to look at this before you go and purchase your
new accounting system. So that's really about it in terms of changing accounting system, I suppose
the other final point I'd add is if your expertise isn't accounting and isn't the accounting system,
get someone to help, I mean that's always the best way sometimes it might be that the answer's
already in the system and already in the people that you have in your business and you don't need
to go through this cost and heartache of changing your accounting system. That's it for this week's
video thanks for watching if you like what you saw definitely subscribe to the channel or to
keep up to date with the videos that keep coming or check out some of the other videos, there's
definitely a lot of stuff in terms of accounting, business, not-for-profit, something you might
find useful, thanks for watching, it's Justin Hogg from Right Source, catch you next time!
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