Selecting new financial software for your organization can be an extremely daunting task. This is especially true in today’s economic climate. Not only are you faced with far too many options to choose from, you have the added pressure of tight budgets and lean, overworked staffs. This, in turn, creates the dilemma of wanting to save consulting fees by doing as much of the implementation as possible in-house, but having neither the time nor the resources to properly do the job.
The bottom line is that with constrained budgets and lean operations, you can’t afford to make a mistake when selecting new software. Unfortunately, most organizations continue to use outdated software selection methodologies and are finding themselves in exactly the situation they are trying to avoid. The purpose of this blog is to provide you with some guidelines and processes to make sure that this doesn’t happen to you.
Before getting to the selection process itself, let’s look at a few things that you need to be thinking about before investing in new software.
1. The Technology Life Cycle
A couple of decades ago, a trio of researchers at Iowa State University came up with a socialization concept they called the Technology Life Cycle. Basically, their premise is that technology products have a life cycle (visualize a bell curve) that is dependent on how much risk customers are willing to take to adopt the new technology. For example, when a new product is first introduced, only the innovators who feel that they have to have the latest and greatest technology are going to purchase it. They are at the beginning of the bell curve. On the other end of the bell curve, there are customers that are so risk adverse, they are only going to purchase the product well after the novelty of its technology as worn off. These customers are the laggards. In the middle are the early adopters, early majority and late majority.
In the 1990’s, Geoffrey Moore wrote a book called “Crossing the Chasm” where he talked about the fact that when new technology is introduced, there is a huge chasm between the innovators stage and the early adopter stage. Sometimes products never make it over the chasm and sometimes it may take many years before they make it. An example of the latter is Cloud Computing, which we will discuss in the next installment of this blog.
To truly determine where a product is in relation to the Technology Life Cycle, you need to understand the underlying technology. Simply because a product has been around for a long time does not mean that it is obsolete. Microsoft Dynamics GP, for example, was originally designed in the mid-90’s, yet Microsoft has continued to incorporate new technologies into the solution, so that Dynamics GP is still positioned firmly at the top of the bell curve and it continues to compete well even against newer solutions.
When selecting software, think about where that software falls in the Technology Life Cycle and how much risk you are willing to take. You probably don’t want to be an innovator, but even more so, you don’t want to be a laggard. Unfortunately, many software solutions that are available today are still based on extremely old technology and fall into the laggard column. An example of this would be Sage’s MAS 90 product. MAS 90 was originally designed in the 1980’s, for instance, and still uses the same proprietary database. This creates many limitations that are not necessarily apparent until well into the implementation.
2. Open Source Software
There’s an old saying that you get what you pay for. In the case of Open Source Software, I firmly believe that to be the case. Open Source, by definition, means that the source code is in the public domain and, therefore, the applications are theoretically free. In reality, though, there are many hidden costs associated with open source software, including:
Support/assistance is harder to find and is generally more expensive because there is not much competition to hold fees down.
- The software is, in general, less reliable and less functionally comprehensive.
- The time to benefit is generally longer which means that the productivity gains and cost savings that you hope to gain from your new software are not being realized.
In some cases, open source software does have a place. For example, Linux is an open source alternative to Microsoft Windows that is quite popular for hosting web sites because of its low operating system overhead. Stay away from open source, though, when it comes to mission critical financial and ERP applications. It’s absolutely not worth the risk.
To be Continued…..
Maner Costerisan, a Michigan-based CPA firm and Microsoft Gold Certified Partner, specializes in helping Not-for-Profits improve operations and support their mission through accounting, CRM and productivity software solutions. For more information on how we can help you excel in these challenging economic times, please contact us or visit our website.