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ERP Without Accounting? 08/11/2011

Posted by TBoehm30 in ERP.
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ERP (Enterprise Resource Planning) is usually defined as more than one software module that helps you run your business.  Usually that means that accounting is connected to another aspect of the company.  The manufacturing would automatically load the cost of goods produced into the accounting module.  The invoices can automatically be generated from the Sales Orders.  It saves time for the accountants.  It is also far more accurate that any sort of manual effort, and more timely than intermittent interfaces.

I work with a number of accountants.  They were shocked to learn that I am about to implement an ERP system without including the accounting module.  I was told that they wouldn’t try it.  They didn’t see the purpose.  They said that the risk outweighed any reward.

I started thinking about that.  Would this really be worth it?  Could we make it work?  I once read an analogy that an ERP implementation was like heart surgery.  Holding to that, would we want to perform heart surgery, but only fix 3 of the valves?  You know you’ll have to open the patient up again eventually, to fix that 4th valve.

If I am the doctor in that analogy (my dad would be so proud that I am following in his footsteps), then I have to make the call.  If the patient isn’t going to survive a full operation, then maybe we split the procedure into 2 separate operations.  We perform half now, let the patient recover, and then perform the next one when he is ready.  Hopefully the first operation will fix enough so that the patient will make it to the second one and then a full recovery.

OK, enough with the medical analogy.  I am not a doctor, I don’t play one on TV or the internet, and I know very little about performing surgery.

I do, however, know when a company needs to get off of its current software system.  When Excel spreadsheets are so big that the computer freezes trying to make a change, it’s time for a fix.  When you spend more time dealing with data problems than you do handling your ‘real’ job, it’s time for a fix.  When the system you’ve got doesn’t show you the data required by your corporate entity, it’s time for a fix.

So, we optimistically set the schedule too tight.  The accountants have been completely distracted from the project by other responsibilities.  The processes cannot be changed in a timeline that everyone will agree on.  Our only choice was to delay the project.  Our only choice, that is, until we came up with the brilliant idea of only turning on operations.  We will avoid accounting and finance for another few months; until the patient is healed enough to continue.

ERP without accounting just sounds silly; but we can make it work.  We will use the ERP system mainly for tracking inventory (yes, the cost and price of materials will be tracked, but not as the system of record).  We will be able to get new reports that will show what the company is producing, what they need to produce, and when they need to produce it.  We will eliminate the need for extremely large Excel spreadsheets by using a real database.

We then get 5 more months (3 if you remove the weeks that people will take off for the end of the year holidays) to prepare for accounting.  The accountants will have more time to figure out how to best use the new system.  They will have more time for validation and system testing.  They will have more time to design the reports they will need on the new system.

So, yes, I think we can make it work.  Yes, I think it’s worth it. Do you?



1. businesscorner20 - 08/11/2011

I don’t understand why not include the accounts department. As all phases of operation (purchase, production, inventory, sales) produce accounting data, I think that to include accounts department in project preparation stage will ensure the workflow and data generated can integrate to accounting module / meet accounts department need.

TBoehm30 - 08/22/2011

Thanks for commenting BusinessCorner20.

We do want to include accounting. The problem is that the project is being delayed, and we need some relief in operations. We have determined that the best way to handle it, is to reduce the scope of the project.

We will go-live on a separate database for operations now; then in March we will go-live on Production with accounting.

Of course they are important, and you are correct about workflow and generated data. We just have restriction in time and resources and are doing the best we can for the company as a whole.

2. ERP Without Accounting? « ERP.BlogNotions - Thoughts from Industry Experts - 08/22/2011

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