PKF Texas – Entrepreneur’s Playbook®: The Magic Pill

by | Mar 25, 2011 | PKF Texas - The Entrepreneur's Playbook®

Note: Running Fridays in FromGregsHead.comis a continuing series of tips brought to you by Greg Price. These run Sunday evenings during the BusinessMaker’s Radio Show on KPRC 950AM. Audio files can be found on the PKF Texas – Entrepreneur’s Playbook® page of the PKF Texas website.

Despite what others may tell you, there is a magic pill you can take that will ensure your accounting software or Enterprise Resource Planning (ERP) will produce timely, and accurate financial statements, provide internal reporting that is meaningful in operating your business, and be that tool that helps you satisfy customers.  You may have trouble swallowing this pill, and you may have to break it up into smaller pieces so you can get it down, but if you do success will follow.

It will be no surprise to anyone who has attempted to implement an ERP system that effective process development is the magic pill that will lead you to success.  So what is effective process development? Or better yet, what is ineffective process development? The latter is usually one of two possibilities.  You either change your processes entirely to meet the software functionality, or, you take what you are currently doing in the current system and change the new system to do the same bad things. 

A key to good process development is not just what you do, but when do you do it.  There is no rule that says you have to wait until you pick an ERP software before you start developing how you want particular transactions to work.  To be honest, this information will help you pick the right system. 
Once you figure out the path of this transaction, you can then determine where you can take advantage of technology to become more efficient.  For example, based on your desired workflow, do you need software that has an approval process?  Or, do you need a system that can give you out of stock warnings?  Or better yet, if you are using a website for order processing, can the software tell the website that the item is out of stock?  Does the system need to give credit warnings, or have credit rules?
By first developing this process without a system, you can determine: “What are the most important features for your organization?”  You then know what to look for when shopping for a package, and you will have an idea of how much customization to a package is required.  When you know what you need, then you can compare what a particular system has to offer.  We call this a Gap Fit Analysis.  What are the gaps between what you need and what the system offers?  You then evaluate the gaps to see what you can live with, or what you should modify.

The more prepared you are before you talk to software consultants, the better you will be able to pick a consultant that understands business process development and not just a slick salesperson.  Like we have mentioned before, the consultant is just as important, or more important as the software.
But the important part of the process is you are starting with what you need, and how your company works.   Not what you are currently doing.  But you are evaluating against what is the best way for you to run your business.  That is your magic pill!

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