8 steps to successful accounts system selection - xledger whitepaper

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Why Business Systems Fail to

Deliver Significant Benefit

July 2015

Dave Derham

Managing Director

Dave Derham Associates Ltd

In association with Xledger Ltd


Executive Summary

It is very common these days to find executives who

are highly sceptical about the business benefits

which would result from any investment in

deploying new business systems. Sadly, in all too

many cases, this scepticism is completely justified as

a high proportion of projects do fail to deliver the

benefits anticipated at the outset.

In contrast with these failures are organisations which

do derive massive benefit from the implementation

of new systems. The question we should be asking

ourselves is:

A Series of

Whitepapers

focussing on:

System Selection

System

Implementation

Ongoing

Management

“What is happening in these successful projects which

is not happening in the ones which fail to deliver

benefit?”

The purpose of this series of Whitepapers is to shed

some light on the answer to this important question.

We shall achieve this by focusing on the topic from 3

logical perspectives:

System Selection

System Implementation

Ongoing Management


Most projects which fail to deliver positive results

actually go wrong before they even start.

To understand this, let us look at an all too typical set

of circumstances which precede a new system

implementation.

The first thing to realise is that organisations only

ever implement a new system when they feel they

have to. These projects are complicated, fraught with

pain and get in the way of day-to-day operations. No

business leader is going to leap out of bed in the

morning thinking that it would be a great idea to put

a new system into the business to transform

effectiveness. What happens in practice is that the

business either outgrows whatever “systems” are in

place to manage it and an increasing number of

problems come to the surface or the system has to be

replaced because it is no longer supportable.

In cases where the system has been outgrown, the

resulting problems can be related to the inability to

effectively control some operations or very often they

are the result of the inability to clearly measure and

understand what is happening in the business. The

consequence of these increasing mismatches

between the “systems” and the business are

inefficiency in operations, increasing headcount in

overhead activities to attempt to manage things

better and poor decision making based on inaccurate

information.

Part 1: System Selection

8 Steps to Successful

System Selection

1. Put in place an

appropriate

structure

2. Identify all

requirements

3. Beware of specifying

the existing system

4. Keep requirements

in perspective

5. Don’t get precious

about the Way You

do things

6. Avoid being

prescriptive

7. Check out the detail

at the end

8. It’s not all about

functionality


Eventually, the pain gets big enough for the subject to

be raised at a Board meeting and if enough of those

present are affected by the problems it is agreed to

set up a project to select and implement a new

system.

Having gained agreement to launch the project, the

Board need someone to manage it. Since none of the

Board members feel that they know enough about

the subject, they delegate the matter to someone

further down the organisation.

The appointed Project Manager’s first task is to

produce a list of requirements which can be used as a

basis for selecting the new system. In order to get

this done as quickly as possible they either visit each

relevant department or send a questionnaire to get

the appropriate requirements documented.

The requirements are eventually compiled into one

document and a consistent approach is taken to

describing them. The document will typically have an

introduction which sets out they key objectives of the

project, which have been passed down to the Project

Manager. Typical descriptions found here include:

“the need for better management information” or

“ability to improve efficiency of operations”.

The Project Manager then turns their attention to

potential suppliers. A list of possible suitors is

gathered from a number of sources including

research on the internet and asking for suggestions

from colleagues. The requirements document is sent

to each supplier and a request is made for them to

respond formally with their compliance with the

requirements.


Following receipt of the responses, along with

indicative pricing, the list is slimmed down and the

finalists are invited to present their system to an

invited group so that a final selection can be made.

The short-listed suppliers, typically 2 or3 in number,

arrive on the appointed days to give a presentation

about their organisation and then they go through a

detailed demonstration of how the specified

requirements can be met.

After all of the demonstrations have been seen, those

invited to participate in the events are brought back

together to have a vote on which systems is their

preferred choice. Where there is a significant cost

differential in the systems, this factor may well be

introduced for consideration of “value for money”.

Eventually, a recommendation is put back to the

Board for rubber-stamping before contracts are

signed with the chosen supplier.

Is there anything wrong with the above scenario?

Yes. This is absolutely not how those aforementioned

‘successful’ organisations set about selecting a new

system.

Let’s read on and learn how they have very

successfully approached system selection.


Put in Place an Appropriate Structure

The person put in charge of the selection and

implementation process is frequently chosen

because of their availability rather than appropriate

knowledge.

How valuable are they to the business if they have so

much spare time?

The person nominated is very seldom a very senior

manager who has an understanding of the critical

issues that the business is facing at that point in time.

Unfortunately it is also common for Board members

to avoid involvement in such projects either because

they do not understand the strategic importance or

because they want to distance themselves from

something which they fully expect to be problematic.

Highly successful projects start off on a different

premise. The strategic importance of the new system

is recognised and a Board-level Sponsor is usually

nominated.

A Project Manager with appropriate experience is

then chosen either from inside the business or from

outside, and this person works very closely with the

Project Sponsor to ensure that the key objectives stay

in focus.

1

The strategic importance

of the new system is

recognised and a Board-

level Sponsor is usually

nominated.


Identify All Requirements

When gathering requirements, the Project Manager

frequently seeks input from everyone in the

business except Board Members.

This may be due to a lack of confidence or it may be

down to their view that this is an operational level

matter and the Board do not need to be troubled

with it.

It should be remembered that most projects only

came into existence because the level of pain in the

organisation became great enough. Does it not

therefore make sense for the Project Manager to

initially work with the Board to investigate in some

detail what arose to give birth to the project?

This will result in very specific key objectives being

produced. For example rather, than the typical woolly

statement of “we need better management

information”, a list would be produced of the specific

types of information which are needed at all levels to

effectively run the business.

In this example it would also produce the need to

understand how easy it is to set up a new system to

capture and deliver the necessary information, as

well as modify this when significant changes occur in

the business.

2

The Project Manager

should initially work with

the Board to investigate,

in some detail, what

arose to give birth to the

project.


Beware of Specifying the Existing System

The departmental representatives who provide

requirements to the Project Manager typically

generate information based on what they already

know i.e. how they do things at the moment.

This means that a great deal of time is spent collating

system requirements which are largely a detailed

description of the current computerised and manual

systems used within the business.

Little, if any, consideration is given to how efficiency

could be improved by doing things differently,

particularly where it may result in the need for a

reduced headcount.

The end result of a selection process based on such a

premise is the selection of a modern system which

does just what the old system did and which offers no

significant business benefit.

This is a relatively frequent occurrence.

3

Little, if any,

consideration is given to

how efficiency could be

improved by doing things

differently - particularly

where it may result in the

need for a reduced

headcount.


Keep Requirements in Perspective

The problems which need to be addressed will be at

very different levels within the business and have

hugely varying consequences.

For example, addressing the problems experienced by

an accountant in managing depreciation of fixed

assets has completely different consequences to

providing the Chief Executive with constantly up to

date information on which elements of the business

are making money and which aren’t.

One of these may save a few hours of clerical time

each month whereas the other enables early

intervention to maximise profitability of the entire

business.

Each of the requirements needs to have recognition

of its relative impact on the business. This is

particularly important because there is no such thing

as a perfect business system and each product will

have its own strengths and weaknesses.

The important thing is to identify the strengths with

the greatest impact on the big problems.

4

The important thing is to

identify the strengths

with the greatest impact

on the big problems.


Don’t get Precious about the Way You do Things

In any business there are processes that

differentiate the organisation and generate business

and there are processes which are there because of

habit. When selecting a new system it is critically

important to be able to separate these very different

situations.

Processes which are critical to the success of the

organisation absolutely need to be implemented

without compromise. In many cases this means

building them as bespoke systems.

However, most processes involved in support

functions do not need to be carried out in precisely

the same way that may have been in place for years.

There are often very good reasons to change

procedures in line with commonly accepted practice

for the sake of efficiency.

It is relatively common to find that suppliers have

been chosen on the condition that they will modify

their packaged software to enable it to behave just

like the previous system.

In the vast majority of cases this is absolute folly as it

will frequently result in delays and arguments in the

implementation process and will lead to inevitable

problems with future software upgrades.

Before any modifications to standard software

packages are even considered, tough questions

should be asked by the Project Sponsor to clarify the

consequences of living with the standard software. In

the majority of cases the answer will be that a bit

more work is required to use the system.

5

Most processes relating

to business support

functions do not need to

be carried out in precisely

the same way they have

for years.


Avoid Being Prescriptive

Rather than putting in a great deal of effort into

being prescriptive about how an entire new system

should work, why not invite the potential suppliers

to present how they would address the really

important business issues.

This enables meaningful discussion and brings fresh

thinking to problems.

Suppliers will bring insight into how their system can

be used to improve efficiency and provide easier

management in areas which had not even been

considered.

It is essential that top level management is involved in

this type of discussion. It is also important to give

suppliers access to top level management in order to

be able to formulate their thinking.

6

Suppliers will bring

insight into how their

system can be used to

improve efficiency and

provide easier

management in areas

which had not even been

considered.


Check Out the Detail at the End –

Not the Beginning

Assuming that potential suppliers have a track

record of being implemented successfully, then it is

completely reasonable to assume that their system

will be able to handle most detailed operational

requirements one way or another.

Investigation of such detail can be done at a later

stage and these should be kept in context.

The consequences of non-ideal functionality should

be carefully weighed against areas of major business

benefit.

Where short-listing is carried out based on responses

to prescribed functionality, this will frequently

eliminate the most creative and beneficial future

partners.

As stated previously, much of this prescription is

looking backwards rather than forwards.

It is important to carefully investigate the market and

talk to suppliers which appear to be in tune with the

real challenges which the organisation is facing.

7

Where short-listing is

carried out based on

responses to prescribed

functionality, this will

frequently eliminate the

most creative and

beneficial future

partners.


It’s not just about Functionality

8 Where systems are

performing support

functions, from which

there is no major

strategic gain, then what

is the point in spending a

huge amount of effort

and cost to have them

different to everyone

else.

A new system needs to deliver functionality which is

essential to the business - but it must do this with an

appropriate level of management overhead and

ongoing costs.

Systems have not all be designed with the same goals

in mind. There are many extremely customisable

applications (often with code being written to do the

customisation), which can be made to do virtually

anything during the initial implementation. However,

this level of initial customisability can mean that

change later on is very difficult and costly.

Highly customisable systems also tend to have more

complex technical structures, and require a high level

of ongoing management, as well as large resources

deployed when testing new releases. Ongoing

management of the system can also require a lot of

manpower.

Some systems on the market have been specifically

designed to have more of a “best practice” approach

to functionality and are not customisable. These will

have massively lower costs of implementation,

upgrading and ongoing management than heavily

customisable applications.

Some software providers, such as cloud-based

Xledger, have taken this concept even further and

have recognised that business management systems

should not be a major drain on companies’ resources.

As a result, the focus of the design has been to

provide very fast implementation, low ongoing

management overhead and automation of many key

business processes.


What is important is to recognise the role that the

software plays within the business. Where systems

are responsible for differentiating the organisation

and generating business, then it is essential that they

can be customised to be far better than those

adopted by the competition.

However, where systems are performing support or

back office functions from which there is no major

strategic gain then what is the point in spending a

huge amount of effort and cost to have them

different to everyone else. It seems to make sense to

make these systems run as efficiently as possible with

minimal cost and effort.


Dave Derham

Associates Ltd

Swallows Barn

Severn Road

Pilning

Bristol

BS35 4HW

dave.derham@btinternet

.com

Xledger UK

10 Victoria Street

Bristol

BS1 6BN

Tel +44 (0)117 3291050

www.xledger.co.uk

About Xledger

Dave Derham is a business strategy consultant who has spent most of his working life in the IT sector. Dave spent several years with Hewlett Packard before joining a fledgling software business which, as a Director and key strategy developer, he helped to steer into becoming a major international business systems provider. Dave has witnessed the selection, implementation and ownership processes of several hundred business systems over many years. He has witnessed a wide range of results from dismal, costly failures to enormous successes. At the core of Dave’s philosophy is the belief that if organisations adopt clear, deliverable strategies then not only is the business more profitable, but everyone inside the business is far happier as well.

Founded in 2001, Xledger is a privately held software company with international operations in the UK, US, Norway & Sweden. They provide revolutionary Cloud Finance & Project Accounting systems to organisations that want to focus on running their business – not their business systems. The company have helped over 6,000 distributed and project-based organisations in 30 countries achieve significant benefits in greater flexibility, improved control and understanding of their businesses along with significant savings in both cost (25% - 75% savings) and management time. Please visit www.xledger.co.uk for more information.

About the Author

mailto:[email protected]

mailto:[email protected]

http://www.xledger.co.uk/

http://www.xledger.co.uk/

8 steps to successful accounts system selection - xledger whitepaper

Software

new system implementation

existing system

new business systems

successful system selection

implementation of new

business benefits

system selection8 steps

business leader