RSM Resources

For more than 20 years, officials at Maaco Enterprises Inc. managed just fine with their homegrown accounting and business systems. Each time a new data management challenge presented itself, the midsized collision repair and auto painting company used internal IT department staff to build and maintain new custom software applications.

"We had great systems designed to do specifically what we needed," says Neil Cooper, Maaco’s chief financial officer. "The problem was you couldn’t easily piggyback onto other technology platforms."

That lack of integration capabilities, says Cooper, kept the Pennsylvania-based company from capitalizing on evolving technology and data trends — such as electronic invoicing and online expense report processing.

Rather than spending money to develop new software programs that already existed in the marketplace, the company eventually decided to replace its homemade system with an enterprise accounting solution.That approach provided core accounting functionality out of the box, and the new system architecture easily adapted to custom tools and third-party applications. The company also rewrote some of its custom applications to work with the Enterprise system so that it would not lose functionality that it had already developed.

Cooper’s experiences at Maaco mirror those of executives at countless other midsized companies, many of whom are questioning whether to stick with existing "legacy" systems or move to an enterprise-level system that carries a higher initial price tag but better long-term performance. While every company’s situation is different, experts say a systematic approach to this issue can help you find a solution that’s right for your company, both now and in the future.

What is enterprise software?

Enterprise software is designed to solve company wide information management problems. An enterprise system usually consists of a suite of products with common business applications, such as accounting, inventory management, sales order processing and purchasing, as well as tools for tracking organizational performance and building unique applications.

While enterprise software often brings to mind big-ticket products such as SAP or Oracle, those applications are usually best-suited for large, highly complex organizations. In the midsized market,the key players in enterprise solutions include Microsoft’s Great Plains software and Sage application suite (formerly Bestsoftware). These companies offer mix-and-match modules to help midsized companies integrate core data management and reporting functions.

But the choice to move to an enterprise system is not just a software decision, it’s a strategic one. Before investigating vendor choices and application options, company officials must first determine whether an enterprise system will help achieve the company’s defined business goals.

Probing for pain points

When evaluating whether or not to move to an enterprise software solution, the first step is to probe for financial,strategic or technical "pain points" within your company that may be hindering overall performance. Experts say an enterprise system may be worth considering if your company’s current IT systems are causing pain in any of the following areas:

Scalability. Is your company planning to change its business model, acquire or merge with other companies, or move into new markets or locations? If so, will your existing accounting system be able to change and grow at an appropriate speed to prevent downtime?

Upgrades. Are your current IT data management systems able to cost-effectively integrate new technologies such as Web-based transaction and collaboration tools? While it’s true that many companies are not using their current legacy applications to their fullest potential, it’s equally true that many homegrown systems are at the practical end of their technological life cycle.

Globalization capability. As globalization increasingly becomes the rule rather than the exception, can your company’s accounting systems keep pace with international currency requirements, legal considerations and financial reporting needs in global markets?

Flexibility. Can your current systems funnel the same information to multiple users in whatever form is needed? Most enterprise software applications include "digital dashboards," allowing senior executives to track their company’s key financial and operational indicators on a single computer screen. That type of "one stop" decision-making aid can serve as a competitive advantage against firms with older systems, since executives in those companies have more limited access to real-time information on such items as cash flow, sales figures and budget comparisons.

Choosing the right system

Once you’ve determined that an enterprise system fits into your company’s overall strategies and goals, the next step is to engage a reputable partner who not only knows the relative merits of different software packages, but is knowledgeable about your industry. Industry knowledge is a key component to selecting a business partner, as the technological needs of a nonprofit differ vastly from those of a health care facility or a distribution company. Working with a vendor who understands your industry will help ensure that you get a system that’s ideally suited to your business needs.

Selecting an enterprise system is by no means the end of the journey. To ensure a smoother implementation process, consider the following tips:

• Expect to spend from $50,000 to $250,000 to implement your new system. Projects with the highest levels of complexity and the largest amount of custom work carry the higher price tag.
• Consider a phased approach to implementation, both to distribute the system’s cost over time and to allow your employees time to learn about the new system gradually.
• Expect the implementation to take two to six months (including testing and training), depending on the new system’s level of complexity.
• Define quantifiable measures to ascertain your enterprise system’s effectiveness. Look for such improvements as greater profits, more streamlined workflow, better access to information or combinations of all of these elements. Defining your criteria for success in the beginning will help you evaluate the system’s return on investment — both on a short- and long-term basis.

At Maaco, where the enterprise software suite has been up and running for just over a year, Cooper says the product offers a much broader range of applications than his old legacy system. That range, combined with greater flexibility and scalability, makes him confident that the investment will pay off.

"We don’t have a large return on our investment yet, but now I have a platform I can build on to get that return, and our IT developers can focus on other tasks," he said.