In today’s blog, I wanted to touch on how a made-to-order manufacturer finally decided to commit to moving their ERP to the cloud after a black swan event that has shaken up the organization. This was a tip-off that we received from one of the Cloud ERP vendors that we partner with.

So – how is this manufacturer currently managing the many complex and distributed ways its business is running?

With pen and paper. Seriously. Good old-fashioned pen. And paper.

Could have, should have, gone with SaaS

Here’s the backstory. The manufacturer’s previous on-premise ERP system had been hacked, which disrupted its ability to function and exposed its business to significant risks. To add insult to injury, the hacker or hackers encrypted all of the compromised files and data, effectively locking the manufacturer out of them.

With no other means to continue operations, the company has had to resort to the technologically primitive stopgap measure of taking orders, managing manufacturing, and ensuring fulfillment with paper forms – and lots of legwork, calls, and faxing.

Starting over with SaaS

At the same time, its team has had to rebuild. So they are now reviewing a new SaaS ERP solution because in their minds, not only would this mean less work for their IT people, it would even be more SECURE than their previous on-premise set up.

And while they are planning a cloud ERP system from the ground up, they are also taking the opportunity to load up on a few extras.

On top of the accounting package with BOM, inventory control, OE, Purchase Order and payroll modules, they are also planning for future upgrades such as bar code functionality and serial number allocation to the BOM to minimize errors, as well as a way to create RFQ’s in the purchasing module that would convert the RFQ into a new PO.

Conclusion – Changing Views of Security

Perceptions around security and Cloud ERP and SaaS have come a long way. Four years ago, security perceptions were the number one reason that customers elected not to go to the Cloud. In a 2010 Aberdeen research survey, the desire to control upgrades surpassed security as the number one concern for ERP buyers. As more articles on cloud ERP security are published, customers are overcoming inaccurate perceptions of security. Advice to companies with on-premise servers – perhaps it might not be a bad idea to start planning for a transition to a Cloud ERP solution before a black swan comes a-calling!

In a recent marketing announcement, Intuit^® recommended Intacct^® for users outgrowing QuickBooks. We have a better alternative for QuickBooks^® users – Acumatica Cloud ERP.

Why Acumatica is ideal for QuickBooks upgraders

Acumatica provides an ERP and accounting solution that can meet your current needs and allows you to continue to grow without upgrading to another system or bringing in several third party applications.

Integrate your sales and accounting processes

Many customers upgrade from QuickBooks to eliminate the hassle of entering the same data intro their sales and accounting solutions. Intacct doesn’t always solve this problem. Using Intacct, you will have to purchase another CRM solution which could be expensive and worry about the integration. Acumatica includes both accounting and CRM in one pre-integrated package.

Involve everybody without excessive fees

QuickBooks limits your ability to involve your entire organization and external partners in process improvement. Acumatica overcomes this limitation by providing robust access controls so people see only the information they need to do their job. Salespeople, accountants, warehouse workers, customers, partners, owners, and others can collaborate to streamline business processes. Acumatica is priced for unlimited users, so you can easily add more people without counting users licenses.

Intacct charges a per-user fee, so as you continue to grow, you continue to pay more. Worse yet, you have to decide whether or not to pay a license for people who want to access the system infrequently.

Get inventory under control

Many growing businesses leave QuickBooks for the need to properly account for inventory without manual intervention. Acumatica delivers more robust inventory management, purchasing, ecommerce, sales orders, and other distribution features that are automatically linked to financial reports and inquiry screens. This gives you real-time reports with inventory levels, inventory valuation, and more.

Integrate with other systems

QuickBooks is not designed to integrate with third party systems. One of the key things to look for when you upgrade is a robust set of development tools. Acumatica modules were all built using a software development kit that you get when you purchase the software. This means that you can continue to adapt Acumatica as your needs change. Unlike Intacct, Acumatica offers both single tenant and multi-tenant options. This flexibility ensure that you can freely make changes to your solution. Your changes are maintained separately from the core application code, so you can continue to receive upgrades that do not break your customizations.

Control your future

Intacct commits you to ongoing operational expenditures … forever! Acumatica provides deployment and licensing options and allows you to switch as your need change. With Acumatica, if you want to add a users, you can do it yourself without the hassle of getting another license. In addition, Acumatica allows you to schedule upgrades at a time that is convenient to you.

Conclusion

Acumatica is a superior upgrade option for users outgrowing QuickBooks because:

• You only need to upgrade once – Acumatica provides for your current needs and allows you to continue to grow without switching systems or integrating third party applications. With Intacct you may need to upgrade again to get more advanced functionality.
• No lock-in – Acumatica provides you with deployment and licensing options so you are not locked-in to a system that charges you to add users as you continue to grow. You know exactly where your data is located and can get your data in any format you like. You can even copy your entire SQL database.
• Customize as needed – Acumatica provides the leading customization tools among cloud ERP providers. This gives you all the benefits of cloud plus the ability to change business logic, import and export data, and build real-time interfaces with internal systems.

To learn more and enquire about our upgrade kit, visit www.acumatica.com/quickbooks.
 
 
 
Intuit and QuickBooks are registered trademarks of Intuit, Inc.
Intacct is a registered trademark of Intacct Corporation
This post was written by Acumatica.

Resolutions Applied to Business Software

The most popular personal resolutions from the sites above can also be applied to business software. In this article we describe the tools available to help you achieve your business resolutions.

1. Lose Weight, Trim Down

The #1 personal resolution is very applicable to business software. Many ERP deployments suffer from code patches, bulky client software, and customizations that lock businesses in to old technology. Just like personal weight issues, software bloat can cause issues that develop over time. Your business becomes less responsive. Changes to business processes become more difficult. Maintenance of your software becomes more expensive and provides fewer and fewer benefits.

Following through on your resolution

Deploy web-based software to eliminate client software installations and reduce the complexity of maintaining applications on Windows, Linux, handheld devices. Just like losing weight, purchasing a new ERP system is a process that requires a plan and execution. But, the longer you put it off, the more difficult it is to accomplish.

2. Save Money, Stick to a Budget

Another common personal goal is to save money and adhere to a budget. Sticking with a budget is perhaps even more difficult in a business environment because there are many more uncertainties and unknowns. This is especially true if you are using antiquated software that cannot adapt to new business opportunities, split out costs by department/product, or integrate with other systems.

Following through on your resolution

Cloud and web-based accounting software delivers key advantages that will help your financial processes. First, the Cloud delivers real-time data and reports to your home office, remote offices, and business partners. Second, the Cloud is easy to deploy to all people in your organization. By involving everyone, you ensure that processes are not left out and get a clear picture of revenue and expenses throughout your organization. Finally, if you are still using QuickBooks and you suffer from multi-currency issues, lack of a complete audit trail, lack of integration with other systems, or lack of a centralized view of your business, then consider upgrading a more advanced solution in 2012.

3. Get a Better Job

Many individuals pledge to get a better job in the new year. For businesses, outdated software can be a major source of job dissatisfaction. Old software increases complexity and creates manual work for employees. The net result is longer hours, mistakes, blame, and less productivity.

Following through on your resolution

Upgrading to a modern Cloud ERP package can improve your job and your work environment without the hassle of finding a new place to work. Imagine performing your most tedious daily task with a point and click/press from anywhere you happen to be. Tracking sales leads, managing inventory, merging online/offline sales orders, creating accurate financial reports, and getting purchase orders approved are all examples of processes that can go from misery to automation with the right ERP software.

4. Enjoy More Time with Family and Friends

Spending more quality time with family and friends is one personal resolution that is a bit tricky to translate to business. Not many people will pledge to spend more quality time with business associates. However, improving your business life can help you achieve your personal goals.

Following through on your resolution

Installing a cloud solution that provides access from anywhere will help you be productive, even when you are not in the office. Approve an expense report, confirm arrival of a shipment, note a conversation with a sales prospect, and perform other business tasks. Of course, working on your mobile devices while you are ‘spending quality time with family’ should be done at your own risk.

5. Get Organized

In your personal life getting organized involves arranging personal items, cleaning up trash, and getting on top of your to-do list. In business, many of these same tasks apply. Automate your to-do list. Clean up dead inventory, old data, and unimportant tasks. In your personal life, the main obstacle is time and motivation. In business, an old ERP system is often the biggest obstacle to achieving organization. Old ERP software prevents rapid exchange of data, simplified auditing, and process automation.

Following through on your resolution

Take a couple days to define all of your business processes. Then determine essential processes, important processes, and nice-to-have processes. Next, contact your business partner or software vendor and schedule a meeting to discuss process improvement. Determine which essential tasks are being impacted by corrupted data and determine essential and important processes that would benefit from automation. Your business partner or software vendor should be able to give immediate feedback on the viability and ballpark costs associated with automating business operations.

Summary

The New Year should be a time to set business resolutions in addition to personal goals. Making a pledge to get the software you need to run your business better will improve your business. This is especially true if you are running a system that is 5+ years old. Then, once you get your business running better, you will have more time and more money to work on those personal resolutions you’ve been making.

Cloud ERP Adopters – Testimonials and Complaints

I’ve spoken with several folks who have deployed ERP systems. In a few short sound bytes, these users reveal their opinions, both good and bad. The customer names and vendor names have been omitted to protect the sources and avoid a slew of defensive rebuttals. I should be noted that these comments represent a random sampling, not merely quotes from the list of happy customers that you see on vendor websites.

We thought that connecting to a US based cloud service would be terribly slow, but it worked quite well. The software eliminates the amount of data that is transferred, making the response time faster than we have experienced with websites that contain too many graphics and flash movies.
– Distributor in Africa

The ERP software works well, but the Cloud service has slowed operations on a few occassions. I like the fact I’m not worried about IT resources, but I’m considering running the software on an internal cloud so I can eliminate occassional performance issues.
– Manufacturer in Southern US

Cloud ERP gives us the capability to summarize data from multiple locations to get summary reports at headquarters and still maintain the detail to see how individual franchisees are doing.
–Franchiser in Southeast Asia

The cloud eliminated client software so we can easily involve business partners and remote employees without the hassle of installing and maintaining software remotely. This allows us to centrally manage sales across multiple suppliers and distributors while keeping costs low.
– Online retailer in Eastern US

We have been able to customize [vendor name removed] to meet most of our needs, faster and at a lower price than we would have with any other system.
– Software Company in Eastern Europe
 

We needed to customize our [same vendor as above] software, but the cost quoted by [vendor] was more than 3 times the annual cost. This locked us into a solution that was not able to suit our needs.
– Software Company in Northern USA

The cloud allows me to try the software solution before I buy. Three years ago, I purchased a legacy system from [vendor name removed] and made the mistake of buying into a feature set that was promised in a future release that has yet to occur. The cloud lets me see existing functionality and learn quickly what I am capable of importing and customizing.
– Ecommerce company in US Central

We’re very happy with the software and quality of service delivered by [vendor name]. By removing the complexity of software we can focus on running our business. However, recently [vendor] announced a price increase that more than doubles our current price. The cost of switching to another solution is high, so we had little choice but to absorb the price increase. The price increase eliminated the savings we got by switching to the Cloud.
– Ecommerce company in US Central

Common praises and concerns

The quotes above mirror many testimonials and criticisms of Cloud ERP. On the benefit side there is access from anywhere, scalability, reduced implementation time. On the negative side there can be price/vendor lock-in, some performance issues, and software ownership issues.

As with legacy ERP software, customer expectations and preparation play a large part in overall satisfaction. For example, two customers using the same vendor had very different results with regard to cloud customizations. One customer reported a positive experience while another complained of proprietary tools, lack of on-premise integration, and highly specialized programming requirements. This shows that each customer implementation is different. This makes it difficult to make blanket statements that pertain to all Cloud ERP customers.

One statement that is true across client-server and cloud ERP: customers with a well defined and well prioritized list of requirements tend to have higher satisfaction from their deployment than those who figure things out as they go. This best practice is the same in the cloud world as it is in the on-premise world.

Summary

Different people had different experiences regarding their cloud ERP deployments. Most were very positive and mentioned common benefits such as lower maintenance costs, less IT hassles, and access from anywhere. In a couple cases customers complained about vendor lock-in when faced with slow performance or increasing prices. Overall, the cloud ERP experience in 2011 was very positive and folks were planning on increasing their cloud spending in 2012.

¹ The ROI Of Cloud Apps, Forrester, June 2011.

“It’s time for companies to move on. To eliminate these massive shackling on-premise systems that have been inhibiting growth and creativity for so long. Stop pushing aside innovative projects because they simply can’t be done under SAP. It’s time to get creative again, fuel growth and create the jobs that our country and others desperately need. SAP’s efficiency allowed companies to cut jobs and costs. The cloud will maintain that efficiency but re-integrate the level of creativity that these great companies once thrived on.”

The Cloud delivers many benefits to ERP software designers. Access from anywhere, scalability, reduced IT costs, pay-as-you-go, and elimination of client software are among many benefits. Building Cloud ERP systems as web-based applications, delivers even more benefits as discussed in a previous ERP Cloud News posting. However, the claims made in the aforementioned article are exaggerated and require some clarification.

A Rebuttal, a Clarification, and Support for Cloud ERP

Rebuttal: SAP in the Cloud

Although not mentioned in the article, SAP has demonstrated that it is taking the cloud seriously through the launch of Business ByDesign as well as their work on a cloud-based platform. SAP might be too expensive. SAP might be too big for mid-sized businesses. SAP might be process driven. But I wouldn’t call SAP inflexible. If your business has a healthy budget (read millions) and large volumes of transactions to automate, then you can make SAP do just about anything. See sidebar “ERP and innovation.”

Clarification: Some Clouds are More Rigid than On-Premise

The his article, Mr. Yarnold states “the dominant rigidity of on-premise ERP systems appears to be evaporating with the advent of more flexible cloud-based applications.”

Clarification: Multi-tenant cloud-based systems can be more rigid than on-premise deployments. With multi-tenancy, you gain some efficiency, but you lose control of the source code because it is shared by many users. I’ve worked with many multi-tenant applications (ERP, CRM, marketing automation) that allow you to define variables, parameters, and custom work flows – so I would not call them inflexible. If you can accomplish what’s needed with configuration (not customization), then the cloud will save you time and money. The key is knowing what you can accomplish with configuration. If your process requires core logic changes, then you will get faster results with an on-premise vendor.

Flexible Cloud ERP

The best of both worlds is an on-premise cloud implementation. On-premise clouds are more flexible and much less expensive than a client-server deployment. Modern development tools with web-based APIs eliminate client software and deliver robust applications to a web-browser. Since these applications are managed centrally, they can be designed and deployed faster and cheaper than client-server software.

Unlike multi-tenant cloud applications, on-premise clouds provide access to source code. Before starting your customization, make sure that the vendor protects your customizations during software upgrades. Otherwise, you will have to reinstall or redevelop your customized code during each upgrade cycle. A single tenant application will also allow you to upgrade your application at a time that is convenient for you. The multi-tenant upgrade will occur automatically, but at a time specified by the vendor.

Conclusion: Cloud ERP helps drive Efficiency and Innovation

David Yarnold’s article endorses modern cloud ERP software. But the article goes too far by saying all cloud systems are more flexible than on-premise systems and misses the fact that SAP is pursuing cloud strategies. I would not blame job loss, lack of creativity, and the demise of some US manufacturing sectors on ERP software.

ERP software is designed to make business processes (sales, orders, manufacturing, accounting, invoicing, etc.) more efficient. The cloud accomplishes this by offering rapid scalability, pay-as-you-go pricing, and eliminating the burden of client-software.

When choosing a cloud solution, the ability to customize and connect with other systems is critical. Core accounting processes are rules-based and need to be flexible and open, but not innovative. ‘Creative accounting’ usually leads to big problems and falling stock prices. However, inaccessible and unconnected accounting systems are just as dangerous. Innovative manufacturing processes, line-of-business applications, support processes, and other business advantages need to be easy to plug-in to the core accounting, ordering, inventory, and management processes offered by the ERP system.

ERP systems should make businesses more efficient and provide them with the tools to innovate. Cloud and web-based systems offering SaaS and on-premise deployments provide the flexibility and efficiency required to reduce the cost of innovation. This allows new ideas to be implemented faster and sooner than legacy software solutions – making Cloud ERP systems both efficient and innovative.

Recent weather events including flooding along the Mississippi and Missouri Rivers, tornados from Northern California to Oklahoma, thunderstorms from Illinois to New York, and heat alerts in the Southeast have demonstrated the impact of ‘bad clouds’ on business and data availability.

I’ve often heard the phrase “you have to fight fire with fire.” Today many businesses are fighting clouds with The Cloud. In the case of one Oklahoma manufacturing firm, the solution to business problems involved using the Cloud to centralize data in a secure location that is impervious to the impacts of local disasters. By using the Cloud, DDB Unlimited (www.ddbUnlimited.com) was able to automate financial processes, streamline operations, eliminate accounting costs, and process orders faster.

Building a Cloud Solution

AIM Solutions in Dallas, TX helped DDB Unlimited, a rugged enclosure manufacturer, take advantage of Cloud technology. The solution was designed to automate business processes while simplifying infrastructure requirements.

DDB Unlimited manufactures rugged enclosures

After some investigation, DDB Unlimited determined that the Cloud could unify several operations in a single system. The Cloud eliminated manual accounting practices, providing an out-of-pocket savings of $80,000/year. In addition, the Cloud ERP solution did not require client software so installation was fast and maintenance does not require touching each computer or mobile device.

The Cloud solution came with import and export tools so existing data – including the chart of accounts, current account balances, customer, active orders, and much more could be easily imported. The solution was up and running in about one month.

Weatherproofing Financials

By replacing papers and forms with electronic orders, businesses such as DDB Unlimited have become much more efficient. However, when installed locally, a computer driven solution is just as susceptible to natural disasters as papers stacked in a filing cabinet. In addition, a faulty hard drive can have the same impact as a tornado when not properly backed-up.

The Cloud enables businesses to store their critical data offsite in a fault-tolerant datacenter with multiple sources of power and bandwidth. Data is replicated in different fault zones so a single disaster does not hinder business operations. DDB Unlimited’s manufacturing plant can still be impacted by local weather conditions, but it’s financials and business operating data are secure in a weatherproof electronic vault.

Documents as well as transactions

In addition to company financials, the Cloud can store critical business documents. Intellectual property, business processes, sales list, and company records can be maintained in a safe location. These documents can be linked to transactions to provide an audit trail and simplify the auditing process.

Don’t wash away the technical experts

The Cloud does not eliminate the need for technical experts. Access to the Internet and application configuration are still required.

The cloud allows technical experts to spend less time managing servers and more time helping solve business problems and analyzing business data. This allows IT employees to shift from being an unwanted expense to become an integral part of company profitability.

Are financials useful if your plant is impacted by a natural disaster?

If a natural disaster destroys your plant, does it really matter if your financials survive? The answer of course is yes. Insurance frequently covers your plant and allows you to rebuild in the event of a disaster. Putting a value on your financials, sales lists, customer orders, and critical business data is difficult, so it is frequently not insured. Often this uninsured data is what adds value to your business (many companies are purchased for only their customer lists and intellectual property). By using the cloud, you can effectively “insure” this part of your business. In the event of a natural disaster, you can still access your information using a computer from any Internet connection.

Contact us if you want a copy of the 2-page DDB Unlimited case study.

Tip 1: Your training should become education

You will no doubt start by creating a how-to-guide for your software, this is great but don’t fall into the trap of thinking that just talking your users through this will be enough. Just because a software solution automates a lot of the ERP process does not mean the users do not need to understand why they need to perform each task. A little extra time spent learning about the background details of the system will make the transition more efficient over all.

In the first instance understanding what the software is doing is important to help users with the transition, many users will have become very familiar with the companies previous solution. It can be difficult to change behaviour and if the users do not know why the change is better for them and the company they are more likely to resist, seeing learning how to use the ERP software as extra work enforced upon them. Helping employees feel part of the change can make it a lot easier and even exciting.

After the software is implemented, knowledge of how the system works can also help avoid errors. If a user does not know, for example, what happens when they enter a sales order and how this affects manufacturing or the customer mistakes can be more likely; however with a sound understanding of the entire process a user will find it easier to remember what they need to do. It will also help to give users a more personal connection to the end product. Users will feel like they are helping to create something rather than feeling like a meaningless cog in a machine.

Tip 2: Education doesn’t finish

Software solutions like ERP software and a movement towards an information society is changing people’s attitude towards education; you need to incorporate this into your training. Education should be on going and incorporate both self teaching and assisted teaching. It is no longer enough to just run a class after the software is first implemented and then declare the training done. Software is constantly changing and as result learning needs to be an ongoing process. It is therefore important to make sure you keep revisiting your training and improving user proficiency.

The reliance on the internet for self teaching also means users are now more comfortable teaching themselves at their own pace. This should obviously be complimented with traditional training and access to face to face help if they need it. However having lessons they can look up whenever they need to can be very important and useful for the user.

One of the benefits of cloud software is that you can ensure training documents are constantly up to date. Everyone can always access the best available material.

Having this constantly ongoing education will also make it easier for any new employees to quickly get up to speed with your software.

Tip 3: Mix your training styles

Just like with any other kind of training you need to be aware that there are many different learning styles; as explained above these should include instructor lead learning with keep-able materials. The materials should include both text and images as different learners absorb more from the different formats. This should be more than just preparing a manual for your ERP software, it’s also important to include guided activities to help the users learn as many users will be active learners who gain most from doing.

For some users the time spent with the instructor will be the most useful, there should be an opportunity for the instructor to lecture; passive listening is when a lot of people absorb information best, but also an opportunity for interaction and discussion geared towards active learning.

With cloud software you can also include discussion forums allowing users to keep in touch and work together on their training the best way to learn can often be as a team, teaching and learning from each other; and as mentioned above this shouldn’t need to stop at the end of the training.

Tip 4: Allow opportunities for informal training

The formal atmosphere of the class room isn’t ideal for everyone; make time for users to discuss problems they are having informally. This could be in a more social situation after any training has happened, or perhaps visiting the users whilst they are actually working with the software so you can informally help them with any difficulties.

Tip 5: View education as an investment

It can be too easy to let your training feel like just another expense which needs to be done to tick a box, but this is not an area to take short cuts in. Training is an investment and the more you put into training the more you will get out of the software, no matter how much time and money your new ERP software could save a business, it is only as good as the users who operate it, they need to be proficient and happy with the software to demonstrate the great investment it offers.

Expertise shared by:
IRIS Exchequer accounting software provides strong support for your finance team, its wholesale and distribution management software covers all wholesale and distribution operational requirements, from stock forecasting to managing returns and automating processes to maximise efficiency.

 

Cloud and SaaS – Enterprise Capabilities Included

I saw a line in an article recently that drove home a good point regarding the power of SaaS and Cloud computing for the small-to-mid sized company. Though the line is far from being headline material or delivering an earth shattering new observation it does simply says it as it is:

For many small-to-mid-sized companies, SaaS and Cloud-based ERP systems offer features and capabilities available to billion dollar companies at an affordable price.

When I think about improving inventory control, enhancing the bottom line or building solid customer relationships as lifelines to a healthy operation, I am reminded of the important benefits that a comprehensive enterprise-wide business management solution can provide, to any company, and of any size.

Today’s ERP software options

Until recently, small-to-mid-sized companies had very few options available to them that would provide the information needed to run their businesses, without the high costs and complexities associated with traditional ERP software. Today however, companies have choices that include software as a service (SaaS) as well as traditional software deployed on a Cloud computing service. To me, SaaS and Cloud computing makes a lot of sense for small-to-mid-sized companies that have need for strong ERP functionality, but lack the IT knowledge, IT infrastructure, or financial resources for an enterprise-wide business solution.

Choosing a Cloud ERP provider

But in order for this to make sense for the smaller company, they must also be smart about choosing the right SaaS and Cloud computing provider for their businesses. I believe that companies should ask their prospective SaaS and Cloud providers the following important questions.

• Web Interface: Does the solution offer a true web-interface allowing access from anywhere, rapid enrollment, elimination of client software, platform independence (PC/Mac/Linux), and mobile device access?
• Deployment Options: Is there a choice of deployment? Can the vendor provide both a SaaS offering and/or the option to deploy the Cloud ERP on-premise, or also host the solution on a virtual or dedicated server of the user’s choice?
• Deployment Flexibility: Can you switch from SaaS to on-premise? As your company’s needs change, will the vendor allow the company to change from a SaaS deployment to an on-premise deployment and back?
• Licensing Options: Are you locked into recurring fees for the life of your business or do you have the option to purchase a license. If the vendor increases pricing, are you locked-in to the solution or is it easy to get your data and switch providers?
• Ease of Customization: How easy is it to customize the solution, even by non-programmers? It is also important to know how the customized areas are impacted by system upgrades. Is it easy to interface with other on-premise or web-based systems that the company needs?
• Scalability: Does the software offer unlimited users, without additional costs and capacity constraints? Can the solution scale quickly? Verify that you don’t need to purchase additional hardware as you add users.
• Security: How do they provide Data Controls and Security? Do they meet the physical, transmission, storage, access, data, and application security needs of banks, health-care, and government organizations? Are there security features such as access controls, data encryption, and server based processing built into their system?

Summary – Act Big

When it comes to successfully managing a business, small-to-mid sized companies have the same needs that larger companies do, but many times not the IT knowledge, infrastructure or monetary backing in place to operate what they need. Because SaaS and Cloud computing offers small-to-mid sized companies comprehensive features and capabilities available to billion dollar companies at an affordable price, SaaS and Cloud computing truly does make sense for smaller companies competing in the same marketplace as their largest competitors.

The FASB issued two rules (EITF 08-01 and EITF 09-03) that modify revenue recoginition procedures for affected firms which begin their fiscal year after June 30, 2010.

EITF 08-01, Revenue Arrangements with Multiple Deliverables, allows companies to account for delivered items as separate accounting units if specific conditions are met: (1) The delivered item(s) has value to the customer on a stand-alone basis. (2) If the arrangement includes a general right of return relative to the delivered item(s), delivery, or performance fo the undelivered item(s) is considered probable and substantially in control of the vendor. (Source: Journal of Accountancy)

EITF 09-03, Certain Arrangements That Include Software Elements, allows companies to remove tangible products from the software revenue recoginition guidelines even if both hardware and software function together to deliver a product’s essential functionality.

Practical Examples

1. Software with Maintenance Plan

A company sells a software product bundle which includes software that installs on a personal computer and a 1 year maintenance plan. The revenue for the maintenance plan needs to be deferred over a period of 12 months, while the revenue allocated to the software can be recognized immediately.

2. Appliance, Software, and Warranty

A company sells an appliance, software on the appliance, and a 1 year warranty for $500. The revenue for the appliance and the software can be recognized immediately, but the amount attributed to the warranty must be deferred over 12 months. The amount that is recognized immediately depends on the value assigned to the appliance and software.

Suggested Design for your Accounting Software

Your accounting solution should be able to create deferred revenue schedules for each line item on your customer invoice. This includes the ability to break each line item into an amount that can be immediately recognized as well as an amount which can be deferred according to a revenue recognition schedule.

Your revenue recognition schedule must be flexible enough to begin at the start, end, or middle of a period. In addition if you should have the ability to recognize revenue when payment is received for “uncertain payments” and build custom schedules.

Note about the author: Valery Hill has been implementing ERP software for over 15 years. Her specific areas of expertise include Oracle Financials and Acumatica accounting and ERP software.

“Starting October 1, 2010, government agencies will start enforcing a new President’s directive signed this month on April 9th, requiring sub-award reporting pursuant to P.L. 109-282 the Federal Funding Accountability and Transparency Act. This is a direct result of continuing efforts to achieve higher levels of accountability, transparency and compliance in the government contracting and non-profit communities.

Now, what exactly is this new sub-award reporting, and how is it going to impact recipients of Federal Grants and Contracts?

• All agencies shall implement the requirement to collect sub-award data by October 1, 2010. Recipients, sub-recipients, contractors, and sub-contractors should be prepared to report on applicable grants1 , contracts, and orders awarded, as soon as practicable after the sub-grant or sub-contract (or a subsequent change to the sub-grant or sub-contract) has been made, but no more than 30 days after that event.
• Sub-award reporting will apply to sub-grants and sub-contracts for the first-tier sub-awards. The following example illustrates a first-tier sub-grant. The Department of Energy awards a grant to the State of Arizona and the State of Arizona awards a sub-grant to the city of Phoenix. In this example, the Department of Energy currently submits information to USAspending.gov on the Federal award to the State of Arizona. The new requirement to collect information on sub-awards will now require the submission of information on the sub-grant from the State of Arizona to the city of Phoenix and subsequent posting of that data onto USAspending.gov. In the case of a federal contract, a first-tier subcontractor is any supplier, distributor, vendor, or firm that furnishes supplies or services directly to a federal government prime contractor.

ERP and Financial System Impacts

Government contractors and non-profit organizations should take steps to ensure compliance with this, and other, new requirements. While it is expected that most organizations have adequate Financial systems in place to track grant and contract expenditures at 2nd. and 3rd. tier level, this new deadline provides an opportunity to make improvements in financial systems and policies and procedures necessary to be ready for the October 1st. deadline.

Impact on your ERP and accounting system

Some popular accounting applications available through retail stores provide a cheap alternative to fund accounting, but they lack the features necessary to comply with the ever increasingly complex requirements of OMB circulars and FAR guidelines. Choosing the right software application is an strategic decision that should address all these issues. Modern cloud ERP systems offer powerful, easy to use, web-based accounting and financial solutions which allows government contractors and non-profit organization to automate with ease and efficiency many of the recurring tasks associated with cost allocations, government reporting and expense tracking. The benefit of a cloud system is that you can get started quickly without installing software or purchasing expensive hardware. Companies such as Acumatica deliver cloud solutions as a service but allow you to later migrate on premise if your requirements change.

Recommendation and how you can learn more

A system’s review can be performed to assess your organization’s current capabilities, and expose the areas that can be subject for changes, enhancements or improvements, including your accounting and financial software.

Contact a value added reseller (VAR) for additional questions and answers on this and other essential topics of compliance, accountability and transparency. If you need a VAR recommendation, email the editors of ERP Cloud News.