Difference between Add-Ons and ERP
Today’s IT market is crowded with credible and non–credible players, each offering an instant ‘band-aid’ fix to the pain-points of your existing accounting software.
The question is: when does this add-on software stop providing the promised benefits and start hampering your growth?
To get the real answer, it pays to look beyond the realm of third-party products. To see if there’s an option that not only proves to be a better return of investment, but is also future proof.
To help you, we’ve put together a quick comparative analysis between the value of add–on software versus the value of a true business management system.
Double data entry
There is a basic software truism: No matter how hard you try, data in two places will eventually be different. Add-on software and your accounting system is no exception. Slowly but surely data in two locations grow apart, this in turn can lead to a situation where you don’t know which data is correct and which data to trust. This ambiguity affects your reports and in turn, the key business decisions that come from those reports.
A business management system, commonly referred to as an ERP, can eliminate the need to work on separate software systems, offering an operational and accounting solution under one umbrella, with a single data entry point that automatically updates all the fields relating to the data entered. The benefit? Your data integrity is accurate and the information in your reports can be trusted.
Single vendor accountability
Multiple systems from different vendors often lead to a blame game, making it difficult to track down where the problem really is. In a business management system the phrase ‘it must be a problem in your other software’ becomes redundant. It provides an end-on-end solution with a single point of contact for support and training, often accompanied with the credibility of a strong brand name, like MYOB.
Need for true General Ledger integration
The movement of stock, jobs, materials, labour etc can be managed by add-on software to some extent; however, this movement can only be accurately monitored if you are able to understand its financial implication. Most promised integrations between an add-on software solution and the accounting software fail to produce critical productivity reporting, making it increasingly difficult to make key business decisions.
At the core of a business management system is its accounting and reporting functionality. Functionality that controls every resource and operation in the business from a profitability perspective with real time information, as well as a graphical analysis from easy to understand dashboards.
Implication of upgrades
Many vendors today advertise their add-on will integrate with your existing accounting systems. “We can find some way to make them talk” are often the buzzwords, and usually to some degree this is true. However, things often fall apart when the next upgrade of your accounting software is released.
Company tax, levies and payroll tax changes happen at least once a year, so it is inevitable that your add-on succumbs to the company’s need to upgrade and is often just another business opportunity for the add-on vendor to charge To ‘fix’ their ‘add-on’ to work with the new update.
A business management system is a single solution with a single upgrade path. When updates are released for tax changes, the whole system is updated and continues to operate. The same cannot be said for the ‘add-ons’.
Coping with growth and change
Today’s market is dynamic, with changing business needs and growth patterns that call for flexible business software. Most add-on software is not designed to accommodate changes in business needs and is typically an ‘at the time’ solution you can outgrow quickly.
Leaving the only option: to get rid of the add-on all together or to live with the problems. A business management system or ERP eliminates the ‘have to live with our problems as the investment is already made’ conundrum.
It offers a long-term and flexible solution that can be modified to suit the changing needs of your business. It scales in complexity, customisation and functionality, so you can concentrate on the continued growth of the business, rather than having your add-on solutions hold you back.
Conclusion
Keeping in mind the longevity of your add-on software and the general direction of the business in the next ten years or so, it’s relevant to gauge how much it would cost the business in the long run – not only in terms of direct cost, but also in terms of how much it will hold back your business growth.
All too often, here at MYOB, clients tell us if only they had known the pitfalls before going down the path of add-ons and instead invested the time in looking at a solution that would encourage their business growth rather than potentially stunt it.
