Best Practices for Selecting Nonprofit Accounting Software: Documenting Requirements

This is the second post in our blog series: Best Practices for Selecting Nonprofit Accounting Software – The Importance of Documenting Your Requirements
Accounting Software Selection Requirements

No one wants to do it but documenting requirements from process owners, stakeholders and executive leadership will make or break the selection and implementation success of a new accounting software solution for nonprofits.

If done well, it will enable organizational growth. If done poorly, it could lead to hundreds of thousands of hours of wasted productivity (not to mention damaged reputations) that could otherwise help you advance your mission.

Documenting requirements will help you get executive support for the project, select the right accounting software solution, help with comparing vendors, and be your yardstick for measuring the system following implementation. Requirements are also essential for ensuring that your vendor configures the system according to your contract and to maximize ROI.

Project Charter

The place to begin is to draft a project charter that establishes who will lead the effort, who has to participate, who the stakeholders are to help define requirements, and who is responsible once the system is implemented for training, testing, upgrades, etc. Once this charter is approved by the board and/or executive leadership, it’s off to the races. Without this in place, the selection could stall because people will not treat the project as a priority.

Requirements Gathering

We’ve heard it so many times before: “we’re ready to sign a contract for new accounting software because our accounting person really likes the vendor or the IT guys did their own research.” This approach often leads to disaster because it fails to capture all critical requirements of a solution for your business.

Instead, you need to first define the requirements for the new system from all stakeholders, process owners and executive leadership, then prioritize them by must have and nice-to-have. Otherwise, you run the risk of getting a plain vanilla configuration because the software implementation team may be tempted to get your project done as soon as possible so they can move onto the next project. The outcome typically ends with your people going back to using spreadsheets and systems they had in place before.

Vendor Selection & Implementation

Prioritizing requirements can then serve as the basis for a scoring model that assigns different numeric values to how well you think each prospective vendor will meet each requirement. In this way, you’ll have a quantifiable way to compare products and the vendors themselves when proposals come in.

Once your new accounting software is ready to go live, going back to ensure each requirement has been satisfied will help determine when the system is fully implemented or if further work needs to be done.

Post-Implementation

Successful requirements documentation will also serve as the basis for training new employees and for regression testing when new software updates and upgrades are implemented.

Financial auditors will also be interested in how your organization migrated existing data into the new system so you’ll need to demonstrate equivalency between the old and new systems. It’s a best practice to create an audit trail from the project’s onset to prevent the auditing team from having to do so. In fact, the better the audit trail, the lower your nonprofit’s future auditing costs will be.

Because your board members and executive leadership will change over time, you will likely need to defend the use of your accounting software to new people. So, unless you want to go through this whole process again, all of this documentation will help show that the software’s selection was an objective process that included the right people in the decision-making and meets all stakeholder and process owner requirements.

Formality Is Your Friend

When documenting software selection and implementation, when is enough, enough?  While it can be time consuming, it’s far better to err on the side of caution than winging it without documentation. This will save you countless headaches and help you maximize the ROI of your new accounting software over the next 5-10 years.

Contact us to learn more about replacing legacy nonprofit accounting software

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ERP professionals providing insight and advice for not for profit organizations.