In this series of articles, we are going to offer some practical advice for how to build a best-in-class accounting and finance function. The first few articles will cover accounting system selection. This article will specifically touch on system structure as it relates to selecting an accounting system.
One topic that will most likely come up in the early stages of selecting an accounting system is whether you will choose a “cloud” based system or not. We believe that in today’s work environment, it is important for a company and its employees to be able to access the accounting system at any time and from anywhere with an internet connection. Multiple people should be able to make changes and those changes should occur in real-time. With that said, if you come across a sales rep that is insisting you need to use a “cloud” based system, you most likely should disregard this advice. The best example to illustrate the point we are trying to make is QuickBooks. QuickBooks has been pushing their new cloud product, QuickBooks Online, and are trying to get as many customers as possible to move to this cloud solution from their desktop products. QuickBooks Online has advantages over the desktop version, and vice versa, but we are not going to delve into that. QuickBooks is pushing the Online product because it is a better and more profitable business model for their business. Their biggest selling point when trying to push the product is that the Online product is a cloud solution that can be accessed online. In some cases, this has some value. But you should not select QuickBooks Online solely to create a “cloud” solution. There are many ways to turn a traditional desktop program such as QuickBooks into a “cloud” solution. You can move the QuickBooks Desktop systems into a cloud environment and achieve the same outcomes. You can use Amazon Web Services, a remote desktop set-up, LogMeIn, or countless other options to create an environment where your employees can access the accounting system from anywhere and at any time.
Another big decision will be whether to buy or lease the accounting software, depending on whether the potential software vendors currently offer both options. A key consideration will be the company’s future plans and goals for the company. If the owners or management of a company are looking for an exit in the near-term, the exit may come in the form of a sale to a larger corporation. That larger corporation may integrate your company’s operations and accounting into their own system, in which case you would have been better off leasing for a few years as opposed to buying the software.
You may also have to decide between hosting the software on-premise or using the vendor’s hosted version of the software. Consider what your internal IT resources are and whether much of their time will be needed to manage the software on premise. The hosted software will likely be more expensive once you reach a certain period of time with the software, but it may be a lot more convenient in terms of access options and maintenance issues.
We hope this information can help serve as a starting point in your evaluation for potential accounting systems. It is a critical decision that impacts almost all areas of your accounting and financial reporting function. Make sure you speak to as many people as possible as you start to evaluate your options. We recommend talking to people both inside and outside of your industry, to personnel across all divisions in your company, and to unbiased service providers. Read reviews, take demos, and take plenty of time before you decide so that you have the best possible foundation for building your accounting and function.