“It’s not at all what we expected.”
Lots of software buyers have told us exactly that when explaining why they needed to replace recently purchased accounting software.
Nobody plans to have their software purchase experience end with them furiously typing a stream of misspelled, ALLCAPS user forum rants, but there sure are a lot of those out there.
In order to make sure you don’t end up searching GoDaddy.com to see if IHateSuchAndSuchProduct.com is still available, here’s a list of 15 of the most common gotchas to be aware of when purchasing your next accounting software package.
1. Surprise limitations on user licenses.
Not every user license is a full access license. Different vendors have different licensing models. Users licenses can be limited by which modules can be accessed, task permissions levels, or read vs write privileges.
Make sure to understand what it really means when you encounter terms like “administrator” vs “standard” user. Finding out you need to spend another 20% in licensing costs to let the executive team configure their own reports isn’t likely to make anyone very happy.
2. Unexpected annual support costs.
Very often the first year of support is bundled in with the initial cost of licensing software. The bundling of support costs can easily skew expectations for ongoing costs and total cost of ownership.
“Free” first-year support is great. Finding out that being able to access version updates, security patches, and basic tech support is going to cost considerably more than you expected, is much less exciting.
3. Disabled service features.
For all the benefits of outsourcing hosting and spreading costs over time offered by SaaS solutions, many buyers still want to own their software. However, buyers who opt for perpetual use licenses should be careful to understand the functional ramifications of going “off support.”
What might seem like a feature (automatic bank reconciliation, payroll and sales tax table updates, credit card processing) might actually be a service that will be discontinued after the termination of a support contract.
4. Unanticipated automatic support renewals.
Generally, it’s a good idea to stay current with your support contract for the reasons listed above. But, if you don’t plan to access version updates and you already have a reliable alternative source of support, you may decide to forego standard support. In order to do so, additional action might be required if your vendor’s default licensing arrangement defaults to an opt-in status.
5. Insufficient approvals management controls.
Standardized approval processes help prevent accounting errors and fraud. But supporting the conditional business logic necessary to match your expectations for approvals management is an area where many lower end accounting programs struggle.
Example problem: Letting the purchasing department intern re-order office supplies probably isn’t a big deal. But not being able to require manager approval for larger is a good way to turn a stray extra zero into a big headache.
6. Database and required software licensing.
If you’re only tallying up the licensing costs for the actual accounting software, you might have some more software line items to add to find your true costs. You probably already have server and client workstation OS licenses covered. But neglecting the cost of required database software and other prerequisite programs is an easy way to make an apples-to-orange price comparison you may come to regret when shopping your alternatives.
Consider this: Buyers intending to run Microsoft Dynamics ERP software will also need to purchase licenses for, at minimum, Microsoft Exchange, Microsoft SharePoint, Windows Server, Microsoft System Center, and Microsoft SQL Server. (Note: We’re not picking on Microsoft here. Dynamics products are far more the rule than the exception in this regard!)
7. Lack of integration.
“You can definitely integrate this program with your CRM software,” says the vendor sales guy. But does his definition of integration match yours? Integration might mean real-time updates that keep data perfectly synched. Or, it might mean that you need to manually trigger a process to export data from one program to another and plan for data inconsistencies between updates.
8. Poor support.
You know those surveys where you rate the service experience you received on a scale of Poor to Excellent? Shouldn’t the scale really cap out at Tolerable?
Nobody wants to call tech support. But with software as complex as accounting software, it will happen. Long waits, communication issues, inexperienced support agents, or limited support availability hours can all turn even simple problems into major inconveniences. A call to tech support during the evaluation process and some pointed questions for your vendor can help avoid unnecessary support frustration.
9. Schedule and cost overruns on implementation.
Implementing accounting software is often one of the largest IT projects a business will undertake in any given year. The Standish Group’s CHAOS Report is one of the most well-known annual studies on IT project success rates. For years, the CHAOS Report has identifed that roughly two-thirds of large IT projects fail. Two out of the three “failure” standards, as defined in the study, are cost and schedule overruns. The study is controversial because many critics find it debatable that cost and schedule overruns really represent true failure. Regardless, it’s worthwhile noting that IT project costs and timeframes remain chronically underestimated.
Companies implementing their own accounting software are well-advised to consider that it’s a very complex task. Hardware preparation, server and workstation configuration, data conversion, approvals and permission configuration, and training are all time-intensive. Buyers relying on their providers for installation are equally well-advised to make sure that contractual safeguards are adequate to prevent unexpected costs or delays.
10. Discontinued products.
Here today, gone tomorrow. Unfortunately, many accounting programs—even from well-established developers—will match this description. A forced conversion from a program that’s being retired can bring about a budget-busting expense and a disruption to day-to-day operations.
How can you ensure that you aren’t purchasing a product that will be discontinued sooner than you might prefer? Well, you can’t totally. But asking vendors about standard practices regarding a developer’s announcement of product retirements can add piece of mind that you are dealing with a company that is conscientious about giving customers adequate advance warning.
11. Discontinued or modified features.
Even if a given product is under no immediate threat to be retired, it’s worth remembering that accounting software isn’t entirely static. Version updates provide not only functional improvements, but security patches. The fact is, when software functionality and processes change, there can be trade-offs involved. Adding flexibility to a feature may help some users, but may make the functionality more complex for others.
Nobody can predict the future, but taking a peek at past version release overviews, can give you an idea about feature stability in the program you are considering investing in.
12. Slow performance.
Many lower end accounting programs are designed to run without the need to license separate database software. As a result, the database capabilities of these programs are rather limited. The net practical effect is that with many off-the-shelf programs, as data records increase, performance degrades.
Even programs beyond the off-the-shelf market can suffer from slow response times. Inefficient code, unwieldy database queries, or a lack of bandwidth (in web-hosted situations) are all potential culprits for poor performance.
13. Records limitations.
Certain product offerings will cap the number of records that can be stored in the software, in order to keep users from running into slow response times. Users who approach records or file size limits generally face a choice between upgrading their software or removing data from the system.
Even small companies can run up against record limitations. Smaller businesses in industries where it is common to carry a relatively large amount of inventory relative to company size (retail, distribution), are particularly prone to encountering these issues. Similarly, companies with a large number of small transactions will generate proportionally more records than companies with a small number of large transactions.
14. Usage limitations.
Charging customers based on “how much they use the software” isn’t a viable option for providers selling on-premise software, as there isn’t a way to reliably monitor data usage.
Software-as-a-service options are hosted by the provider, though. As a result SaaS software companies have more options to create usage based pricing. Bandwidth and data storage limitations are common. Some providers will also restrict usage by the number of transactions or records. For instance, pricing may be tiered based on things like the number of accounts established, invoices issued, inventory records saved, employees paid, bank accounts reconciled, and so forth.
15. A lack of customization options.
Account codes, the appearance of customer-facing business documents, report templates. The desire to customize can show up in many different forms when it comes to accounting software.
Software developers walk a fine-line when it comes to product customization features. On the one hand, enabling users to make changes provides flexibility and personalization. On the other hand, increasing customization capabilities increases the complexity of the software and makes supporting individual deployments of the software more difficult. Additionally, most providers of commercial programs don’t offer access to the underlying source code in order to protect their intellectual property.