The absolute best time to implement an ERP system is also the most inopportune time–a month or two before the founders open their doors for business. But that’s typically not practical as the cost would be exorbitant out of the gate.

With numerous ERP implementations under my belt, you may be surprised when I believe it’s time to move from QuickBooks. The cost is high, but this decision will stand out as one of the most important you will ever make as a small business owner.

Everyone Is an Expert

I cringe every time I hear a CEO tell me he’s been told he/she should move to “this” or “that” [ERP] system. The first question I immediately ask is, “How well does that person know your business?” After some hesitation, the typical response is, “Very little.”

My first two clients back in 2001 used Peachtree and QuickBooks, respectively. I confess that I was a financial snob back then. I laughed at those systems and even poked fun at them.

Ultimately, I realized that subjecting small businesses to intricate systems would prove burdensome. The majority of businesses can operate sufficiently using these pre-packaged solutions. This rings particularly true when there is an option to incorporate an additional tool for inventory management, job costing, point of sale, and various other functionalities.

3 Reasons You Don’t Need That ERP System (Yet)

I was once the CFO and Controller for an award-winning newspaper and custom print publisher. I’ve already lost count of how many disparate systems we had. While we used Great Plains (now branded as Dynamics), we only used it for our general ledger. We had separate systems for job costing, newspaper subscriptions, classified ads, payroll, and at least two smaller systems.

But wait, we had an ERP system–Great Plains.

The fallacy lies in assuming that all ERP systems are capable of fulfilling every requirement. Consequently, I believe it is crucial to examine why the following reasons fail to validate the decision to transition to a new ERP system.

Fallacy One – I Need More Reporting or Better Reporting

This one is humorous. Yes, we had Great Plains, but the default reporting was terrible (and still is, albeit Great Plains has undergone a name change). My team used FRx for financial reporting. For data mining, we exported the data and used either Excel or Crystal Reports.

Under no circumstances should you move to a new ERP system for better reporting alone. If you do, you’ll still need BI tools in addition to the system you are implementing. Why do that when you can pull the data from various systems and park them in a data repository? You can then use tools like Tableau or QlikView to analyze your raw data.

Is this a perfect solution? No. But it’s far more inexpensive than the alternative.

Fallacy Two – I’m Frustrated with Duplicate Tasks and Duel Data Entry

I’m a process junkie. I like simplification and efficiency in every workflow throughout any organization. Duplicate work or rework is frustrating. Most ERP vendors will show you how to eliminate such work. Is this a reason to upgrade now?

I guarantee you will spend $250,000 or more for your first ERP system regardless of your industry. That number may look high, but I’m including VAR time to help with the implementation and training. You will soon learn the family names of your trainers as they continue supporting you over the following twelve months.

Thus, the cost of inefficiencies may be far lower than implementing the new system. Keep in mind that the learning curve will be high, and that plays into the overall cost of the new ERP system, too.

I’m not saying never to migrate. What I am saying is that you can afford the cost of inefficiencies until you are certain you will yield a significant return on your investment.

Fallacy Three – The Entire Management Team Is Fed Up with QuickBooks

Similar to the points above, I’m emphatic with this reasoning too, but only to a certain extent. Do some Google searching on failed ERP implementations, and the results will be striking. The grass is not always greener on the other side of the fence.

If the team is fed up with QuickBooks, it’s time to start justifying why a new system is needed and what the requirements are. That takes time, and the fact that it takes time means the problem may not be as severe as it appears to be.

I’m not defending QuickBooks. I’m guarding against a move to a new system when the management team is not ready for a major culture shock. For every problem you currently have with QuickBooks, there is a workaround. It may not be pretty, but you can make it work.

Let’s use CRM as an example. If you have many customers or clients, your greatest asset is every piece of data and metadata about those customers and your sales history with them. QuickBooks will start drowning as sales data mounts in that system. In that case, I’d highly recommend a CRM/sales automation solution like Salesforce or Pipedrive and sync it with QuickBooks.

I realize this may not be practical in all cases. The bigger point is to research options seamlessly integrating with QuickBooks before making the large outlay on a new ERP solution.

When Is it Time to Move to an ERP Solution?

The short answer is to wait as long as possible. Long enough until the duct tape on the current disparate systems no longer works, and interaction with your customer base is starting to suffer. Long enough until your growing and complex systems and processes like inventory management are breaking your current system.

As mentioned earlier, you need to document your specifications for a new system and be as specific as possible. You need to be able to clearly articulate how your new workflows will improve over your current processes.

If you work in ecommerce business, retail, professional services, and manufacturing, hire an expert to analyze your current setup and let them help you in the selection process.

I still like to poke fun at QuickBooks, and for good reason. But your life will never be the same once you head down the ERP migration path. That’s especially true if you get it wrong.

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