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 Selection8 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

8 steps to Successful Accounts System Selection - Xledger Whitepaper

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to 8 steps to Successful Accounts System Selection - Xledger Whitepaper

Similar to 8 steps to Successful Accounts System Selection - Xledger Whitepaper (20)

Recently uploaded

Recently uploaded (20)

8 steps to Successful Accounts System Selection - Xledger Whitepaper