Be aware of the hidden costs
Evaluating and purchasing accounting software can be a daunting undertaking. There are so many options to choose from, that often the choices seem endless. Looking for the perfect match for your business or organisation can seem like an impossible task, however choosing the right software can help improve your bottom line, and increase your business efficiency by reducing performance and reporting issues that you may face each day. Being armed with important information about hidden costs means you make a more informed decision about the accounting software that is best for your business and your budget.
We all understand that the purchase of any new product or service, often involves a price tag. However with many IT solutions, the purchase price of the software is tied to many other hidden costs that need to be considered and budgeted for during the software evaluation process. One of the challenges that many organisations face is working out the total cost of ownership of an IT or business software solution. Here are five hidden costs to consider when budgeting or evaluating a business software solution.
5 hidden costs to consider:
1. Hardware costs – It is important to consider whether the software being evaluated can be supported by the existing hardware and IT infrastructure of the business, or whether new hardware will be required.
2. Installation costs – There may be a cost associated with the actual physical installation of the software. Will a consultant need to undertake this process for you? How long does the average installation take, and approximately how much will it cost?
3. Training costs – Training costs need to be considered also. How many staff members will need to use the new software? How much training will they need, and what sort of budget should be set aside for this? Again, training should be a key consideration when allocating a budget towards the purchase of a business software solution.
4. Ongoing support and maintenance – Many software vendors charge an ongoing support and maintenance fee, this charge is to ensure that your software is kept up to date and complies with Local, State or Federal requirements. It will cover things such as legislative changes and ongoing enhancements and upgrades to the software. The fee can range anywhere from 10% – 45% of the software value per year. So it is worth factoring in this cost if any ongoing support and maintenance charges apply.
5. Data transfer or conversion – Does data from the existing accounting system need to be transferred to the new system? Is there an easy transition across from the old system to the new system? This also needs to be taken into account, as it may mean some down time for your business or there may be additional fees associated with the conversion process.
Choosing accounting software – where to start?
Every organisation has its own unique set of requirements when it comes to Accounting packages, however some key questions to ask to determine whether your organisation is suited to an off-the-shelf solution or a larger Enterprise Resource Planning (ERP) system include:
Suited to off-the-shelf
- Organisation is in a single location
- Small customer base
- Small employee base
- Limited or no stock requirements
Suited to larger or ERP solution
- Multiple office locations
- Multiple warehouse locations
- Multiple currencies, complex pricing
- Advanced stock control required
Step one in the selection process should be determining your business requirements. What do you need or want from your Accounting or ERP solution. What are the gaps in your current systems or processes? What features do not meet your expectations? Identify your needs and wants first, what are your current needs? Think about your future needs, capacity for growth is important in any selection process. What might your business need in the future? Once you have determined your business requirements, use your resources such as the Internet, online business software guides, work colleagues or your accountant or financial advisor to find out more about what’s available in the market place.