Selection Steps

A proven checklist for evaluating & selecting
an accounting system or ERP solution

By J. Carlton Collins, CPA

Selecting the wrong accounting software can be a complete disaster. You could even lose your job or your business by making a poor choice – it has certainly happened many times before. Exactly where can you go to get the information you need to make the right decision? There are trade shows, seminars, and magazine articles on selecting accounting software, but they typically just tell you the good stuff. The accounting software publishers at conferences and other similar shows will provide you with a fancy brochure and show you what they have to offer, but the truth is that it is almost impossible to tell what’s missing or what’s wrong with the product. The Value-Added Resellers (VARs) will come to your office to demonstrate the product, but they usually skip over the negative points and weaknesses as well. The magazine articles all seem to gloss over the bad stuff in fear of chasing away advertising dollars.

Too often it takes a complete installation of the system and at least a month of operations to tell if the product will meet your needs – and by then, it is too late. There seems to be no independent place to go to get good help with avoiding the wrong package. This is a problem that everyone faces when selecting accounting software. The good news is that almost all accounting software packages have gotten better over the past decade, and it is now easier to end up with a fairly good product than it used to be. But still, here are some important steps you should follow when selecting accounting software:

Twenty-five Steps for Evaluating & Selecting the
Right Accounting Software Package

  1. Steering Committee (optional) - For larger companies, it may be important to establish a steering committee to oversee the evaluation and selection process. Your committee should ideally have 5 to 7 people - but in larger companies it may be necessary to include others in the process. Use an odd number of people so there are no tie votes. In some cases, this committee may simply oversee the evaluation and selection process and "steer" the people who are doing the work. However in most situations, these 5 to 7 people will actually perform the evaluation and selection work. The use of a steering committee is important because it addresses the politics of this process. For example, this provides an avenue for key people to contribute and feel like they are part of the solution. This encourages all parties to buy in to the ultimate solution chosen, rather than feel like a solution was selected without their input and forced upon them. Ultimately, the success of the new system will depend partly on the acceptance of this new system by the people who must deploy, learn and use the new system.

  2. Budget - The steering committee should prepare the a budget range and provide those parameters to the people actually performing the evaluation and selection. Without a budget range, the people performing the evaluation and selection process may waste time evaluating products that are outside the scope of the budget. At a minimum, the budget should include the following:

    1. Budgeted cost for new software
    2. Budgeted cost for new hardware
    3. Budgeted cost for implementation and training
    4. Budgeted cost for on-going support costs and product upgrades

  3. Time Schedule - The steering committee should prepare the a time schedule with targeted milestones and provide those parameters to the people actually performing the evaluation and selection. At a minimum, the time schedule should reflect target dates for the following:

    1. Date to begin evaluation process.
    2. Periodic reporting dates in which the steering committee is apprised of progress.
    3. Date by which the options are to be narrowed down to 4 or 5 potential solutions.
    4. Date range for scheduling product demonstrations.
    5. Deadline for receiving all proposals from accounting software publishers or resellers.
    6. Date by which the selection should be made.
    7. Date in which the product and services are ordered (contracted for).
    8. Date by which the implementation and training process should begin.
    9. Date by which the new system should be fully implemented and running properly.

  4. Identify the Current Problems – If you are at this stage, it can be safely assumed that a) you already have a current accounting system, and b) your current accounting system is not adequately meeting your needs – else you would not be considering a new system. The first step is to define the problems with your current system – after all if you are unable to come up with a compelling list of shortcomings, weaknesses, or issues, then perhaps you should reconsider the need to replace your current system. To identify the current problems and issues, it may be helpful to use e-mail to solicit feedback from each and every person who uses the accounting system. Assuming you are able to identify enough issues to warrant replacement of the current systems, you are now ready to move forward.

  5. Give your Current Reseller a Chance Stage – It is a good idea to share your problems with your current value-added reseller (VAR) and give them an opportunity to submit a recommendation for solving your problems and issues. If this is an option, keeping your current system is almost always cheaper, easier, and less disruptive on your organization. If the problem IS your VAR, then consider replacing your VAR with a new VAR that works with your product. In more than half the cases, a lousy VAR is the primary problem. If you don’t like your VAR, then replace your VAR – I find that doing business only with people you like is the best policy.

  6. Hire an Independent Consultant (optional) – If you plan on using a third-party consultant to help you evaluate your needs and select the proper replacement system, now would be a good time to get them involved. Depending on the size of your company, the scope of the solution needed, your knowledge, and the available time of you and your staff, hiring an independent consultant can be a good move. This allows you to capitalize on the consultant’s expertise. Amazingly, a common reason for hiring a third party consultant is that it gives you someone to blame in the event that the system eventually does not work out. On the other hand, an independent consultant can be very expensive and they often only recommend one or two products on a consistent basis. The simple act of selecting a specific consultant often automatically narrows your choices down to just one or two options. Expressed a different way - by selecting a consultant, you often have already selected the product without even knowing it. I have three SAP installers who live in my neighborhood. These guys may take twelve months to evaluate your needs at $495 per hour, but they ALWAYS end up recommending SAP - because that's all they know. What does that tell you? It tells you that independent consultants are hard to come by. You might be better served to narrow down the selection first on your own, and then bring in consultants for each product. Yes, it is possible for you to conduct your own evaluation and selection process without the assistance of an independent consultant.

  7. Involve Your Information Technology Staff – before you make another move, meet with your internal Information Technology (IT) staff and obtain their advice regarding the technologies and platforms that are best suited for your company based on the current equipment and skill sets of the IT department. This may be a good opportunity to migrate to a better platform based on more current technologies. Your IT staff will be able to give you guidance on which technologies to look for in your search. Warning - today it is very popular for IT staff to recommend a Microsoft SQL server solution primarily because they think this experience will look good on their resume. For this reason, you may want to ask your IT staff to justify their recommendations in the event that they recommend a higher-end, more expensive technology platform.

  8. Ignore Your Current Hardware Platform - Too often many companies seek to find an accounting software solution that will run on their current computer equipment, such as an IBM AS/400. The problem with this approach is that it is backwards – it puts the cart in front of the horse. The best way to proceed is to find the accounting software product that best meets your needs, and only then find the best hardware to run it. If your current hardware can be utilized, that’s great. If your current hardware is inadequate, then you should purchase new hardware – the hardware is by far the least expensive component when it comes to implementing a new accounting system. Chances are very good that if you need to replace your accounting system, then it is also time to replace your hardware anyway.

    Important caveat
    - If your company has already embraced a database technology such as Oracle, or SQL Server, and you have people certified in these database and other systems built upon these database platforms, then it probably is best to select an accounting system that operates on that platform. These prior investments and strategies are too big too ignore. However, hardware represents a relatively minor portion of your accounting system or ERP solution; therefore you should not base your decisions upon any particular computer hardware you may already own - replacing hardware is simply to cheap and easy.

  9. Become Knowledgeable – You should educate yourself about the accounting software and ERP solutions that are out there. (We know that the reality is that nobody has enough time to fully do this.) The Internet can help by making it faster and easier to locate information. But you may also choose to attend independent seminars, vendor sponsored seminars, trade show exhibition booths, in addition to reading newspapers and magazine articles and reviews. Call your friendly competitors and ask them what they use. Pick up industry trade journals and study the advertisements.

  10. Compile a List of Potential Solutions - Make a list of all of the products you are aware of that might meet your needs. Include products that you are aware of, products you read about, products you hear about, products listed on the Internet, etc. If possible, talk to your competitors and ask them what they use and add these to the list as well. So that you can evaluate the products side-by-side, you may consider preparing a more elaborate list – a spreadsheet listing key information for each product. For example, your spreadsheet might include information for modules, pricing, platform, customization capabilities, certified payroll, retainage, time and billing solution, and bar coding – or whatever you determine is most important to your company. The objective here is to focus just on the most important issues and not be blinded by small insignificant shortcomings. This matrix will also be helpful in sharing information with others who may have input into the ultimate decision. For each product you are evaluating, begin tabulating a list of the features and facts that impress you about the company, the product, and the reseller. For example, you may list key awards received by the product, the fact that the company provides great support, or describe a great feature that you think your company would really benefit from. Continue to add to this list as your evaluation continues.

  11. Eliminate the Obvious Poor Choices - Start to eliminate potential products due to missing modules, missing key features, or because they are simply too expensive. Cross them off your list and notate why you did. Selecting the right package is mostly a process of eliminating the wrong packages. Generally, you can eliminate many products at this stage. Continue to eliminate products throughout the entire evaluation process.

  12. Evaluate Product Features - Next, make a complete listing of the unique features, which your company requires and compare this list to the features provided by each product. There are several good software programs that aid you in this process. By far the least expensive and most comprehensive program on the market is The Accounting Library. This product can be purchased for $395, $995, or $1,295 by calling 800-272-4085 or by clicking here. The Accounting Library lists over 4,000 accounting software features. Simply place a checkmark by each feature that your company needs, and the Accounting Library will rank the top 150 products according to the product that best meet your needs to the product that least meets your needs. You can also print a "Missing Needs Report" that will summarize the features you need that are missing from each product. Based on your review of the features, you can easily eliminate obvious poor solutions from further consideration. I highly recommend this product to potential customers as well as resellers and consultants.

  13. Visit Internet Sites – Next, visit the Internet sites for each accounting software product remaining on your list. If your list is still lengthy, pick your best four or five options and concentrate on them for now. Print out the information, organize it in a binder, and study it in detail. Use a highlighter to highlight the key points you identify, as it is likely that someone in your organization will probably review your documentation at some point the future.

  14. Request Brochures and Evaluation Code – Next, call each accounting software publisher and request their latest brochure information and an evaluation copy of the software. Watch out, this will trigger accounting software sales representatives to come calling on you.

  15. Feature Requirements – At this point, use all of the knowledge and insights you have gained so far to prepare a list of requirements, which the new system should provide. Actually, you should have been preparing this list all along and adding to continually it as new features and capabilities are identified. This should be a short list only one or two pages long listing the most crucial of needs. For example, multi-currency support, consolidation capabilities, serialized inventory, and e-commerce capabilities might be listed here.

  16. RFP Stage (optional) – An RFP is a "Request for a Proposal". Typically this means that you supply accounting software publishers and resellers with a list of the feature requirements you need and questions you have concerning their product. They respond back with an exhaustive report/proposal explaining whether they do, or do not, provide those features. Their proposal will also contain detailed pricing, time lines, and methodologies for accomplishing the implementation and training process. The publishers and/or resellers may spend a great deal of time evaluating your organization and interviewing your personnel in preparation of the RFP. For most companies, RFPs are not a necessary step, however some organizations don’t see it that way. Some management officials are from the old school, and believe that RFPs are an absolute necessity. Further, government agencies are required to undergo the RFP process. To be on the safe side, find out whether management expects you to go through the RFP process before deciding to forgo this step. Warning! Many of today’s accounting software publishers are not equipped to respond to RFP’s, they simply do not allocate resources to this function. Therefore if you do decide to issue a RFP, often the only accounting software publishers who respond represent the more expensive tier 1 solutions. Those accounting software publishers who represent the newer, leaner, meaner, less-expensive solutions are less likely to respond. In other words, the RFP process virtually assures that you will be selecting a more expensive tier 1 solution. You should be aware of this possibility.

  17. Identify Top Resellers - By far, the number one complaint in the accounting software industry is "poor resellers". Because this is the single-most important element in the successful implementation of an accounting system, you need to take extra care to make sure that you identify the best resellers and consultants. If you call the company and ask for a referral, the accounting software publisher will typically pass you off to the next reseller on their list, and you may get stuck with a less experienced installer. Don't make this error. Here at Accounting Software Advisor, we have published a complete section devoted to helping you understand how to find, evaluate and select the right reseller to meet your needs - we recommend only those resellers who have passed our rigorous due diligence standards. You can view our listing of our approved top resellers here: http://www.accountingsoftwareadvisor.com/reseller/byproduct.htm.

  18. Product Demonstration – By this point, hopefully you have identified the best resellers in your area for the products you are considering. Next, you should arrange for these resellers to demonstrate their products to you. They should take time up front to ask you extensive questions about your company and your needs. This will help them better understand what you are looking for and they can then tailor their demonstration to your particular needs. (If they don’t take time to talk to you up front, watch out - you are probably dealing with an inexperienced person.) Allow them make their pitch - they all have a canned sales pitch, and by damned, they will all make you endure it. Hopefully the reseller will use live software to demonstrate the product to you, but sometimes slides and overheads are used as well. Take the demo for what it is – a sales pitch. Before it is over, hit them with your toughest questions. Make sure to ask them about their available time, their installation methodology, their track record for getting the systems up and running properly on time, and a list of 3 to 5 references whom you can call to check up on their work. You may even ask them to install an evaluation copy of the product on your computer so you can further evaluate the product on your own time.

  19. Hands On Testing – Some resellers will provide you with evaluation access to their accounting solution, either through a loaner computer, Citrix access to their servers, or by installing the accounting system on your computers. If you access to the prospective accounting software system, this would be a good time to evaluate it hands on. Keep in mind that you will be testing software that you do not know how to use. If you are unable to make something work the way you want it to work, don’t assume that it won’t do it. (Most software publishers receive thousands of suggestions to add features that are already present in the system.) Simply write down the problem and address it with your reseller the next chance you get. Make sure to update your list of good and bad points for each product. Include subjective points about performance, look and feel, ease of use, etc.

  20. Legal Issues – Before making any final decisions, you should have your legal department review all documents and contracts, including the on-going support agreement. I know this seems obvious, but often it is overlooked. Check to see how much maintenance costs you are required to pay on an on-going basis; what measures you can legally take in case the software does not work; find out who owns you data (a sly trick that some nasty publishers have employed to keep you married to them); etc.

  21. Consider Hosting - Consider having the file server system hosted instead of purchasing the system outright. Hosting is a proven solution that results in significant costs savings, faster implementation, tighter security, and other benefits. Companies such as Mareechi based in Dallas, Texas (whose president, Lance Black co-edits the hosting section of our web site) will host your computer system at their location. Their staff includes experts who are Oracle and SQL Server certified, experts in security issues, and experts in wide area networking and remote computing. Other proven hosted options include ACCPAC Online and NetSuite.

  22. Consider Financing – There are many financing companies available who specialize in financing accounting software and computer systems. With these companies, it is possible to spread the purchase costs over many years through lease payments which result in a better matching of cash flow and benefits received. There may be tax advantages as well, depending on your circumstances (for example, if your company has already maximized it’s section 179 depreciation deductions through the purchase of other equipment, then leasing may result in larger deductions on your tax return).

  23. Visit The VAR & Vendor (Optional) – Next consider traveling to the headquarters of the accounting software publishers and tour the company. Attend the executive briefing and satisfy yourselves that the company has the resources and strength to meet your on-going needs. Do the same for your reseller (if you have not already done so). This may seem like an unnecessary step, however your solution may cost millions of dollars. A little due diligence may go a long ways towards helping you avoid a costly mistake. (As a side note, it seems that many prospective customers find it more important to visit the facilities of Best Software and Epicor which are located in sunny southern California, than other facilities such as Great Plains which is located in Fargo, North Dakota. I wonder why that is?)

  24. VAR Bandwidth Availability – before making a final decision, find out how much bandwidth and availability your reseller has related to implementing the proposed solution. If you plan to implement the system in fifty different locations, request a Gant Chart depicting the time line for implementing each location and the personnel who will be used in each location. Force the reseller to think this process through before you make a final decision – else they may no be aware of availability issues that will ultimately affect you. In some cases it may also be important to find out the names of the staff the reseller plans to use to implement your system. In this manner, you can check up on them and make sure that they are indeed highly qualified before you sign the dotted line.

  25. Call References – The most important step you can take is to call references. Presented below are a few simple questions that you may want to ask of previous customers:

    1. Do you use XXXXX Software?
    2. When did you install it?
    3. How long did it take from start to finish?
    4. Who performed the installation (reseller and names of consultants)?
    5. Did they do a good job and install the system in a timely manner?
    6. Are you satisfied with the product?
    7. What problems have you had with the product?

These seven questions are usually all you need, as they will flush out any problems with the resellers or the product. Be careful to make sure that the reference is being honest with you. Some references will not say anything bad in fear of a lawsuit. Others may not really be valid references; instead it may be a brother-in-law or close friend on the other end of the line. Therefore, be on the look out for suspiciously short responses or people who are not able to describe specific details of the engagement. If you reach 3 consecutive good references that you are comfortable with – then in our opinion, that product and installer have passed the final test. Also, if you receive negative feedback, it may be helpful to try to distinguish between a "Good product/Bad reseller" versus a "Bad product/Good reseller" situation.

Decision Time

At this time, you should be in a good position to select an accounting software package. If you have more than one package left on your list, make a decision based on guts or instincts. If you still can’t decide, choose the product that is easiest to use on a day-to-day basis, the product that is built on top of the most promising technology, or the product that offers the strongest reporting. Otherwise, flip a coin. We believe that the actual price of the software is not really relevant (within 200% or so). The real cost of accounting software is the time required to get it up and going and the time required each day to implement manual work around procedures to compensate for missing features and reports.


The reality is that the apparent winner may reveal itself long before you complete all the steps described above. Still, it is a good idea to run through all of these steps just to be on the safe side. Some companies can make this decision easily in just a few months with the assistance of a consultant. Other companies must endure a much longer ordeal to arrive at the best choice. You alone must make the determination as to how much effort is warranted to select the best accounting software package to meet your current and future needs.

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Accounting Systems Selection Checklist