Legacy ERP and Accounting Software

How old is the version of ERP or accounting software that runs your business? Did you load last year’s update? The year before? It’s not unusual to talk to businesses that haven’t upgraded their software in 5 or more years. Some businesses are still using the same software version they installed 10 years ago.

Old Software Versions Cause Problems

an old computer from 1980. 4K memory for $900

In today’s environment, software more than a couple of years old can cause technical problems. New versions of operating systems (like Windows 10) can break old software. If the new Windows version completely breaks your software, that’s really good news. Bad news is when the new version just corrupts data and you do not discover it until after the damage is done.

The Cost of Old ERP Software

But the real cost of old software is in features unused. We were finishing an upgrade yesterday from a software version that was over 10 years old, and doing quick data checks to make sure the data converted correctly. Customer balances and vendor balances in the old version compared to the converted data is a good test. In the new software version, we had an easy-to-use list that exported to Excel for comparison. In the old version, we had a report. Using these, we verified the first eight or ten balances manually, then went to the last page and verified the total. The upgrade worked fine, by the way. But I’d forgotten how much more difficult simple things were in the old version vs. the new version.

Not only that, but to finding a report in the old version took digging around on menus. We knew the name of the report (Trial Balance), but it wasn’t in the first few places we looked. In the new version, typing “trial balance” in a search box brought the report up on a list.

These two items are the real cost of legacy software: features that you give up because the old version didn’t have them, and features that are hard to find because of the construction of the old software.

I know upgrading can be expensive, but be sure to count the cost of NOT upgrading.

The One Key to the Right ERP: Selecting ERP Software – Best Practices

I met with a client the other day. He said, “You’re different from the other ERP salespeople we’ve talked to: you actually know something about the software!”

I’d like to think that’s because I’m not an ERP salesperson…but anyway…ENTERPRISE RESOURCE PLANNING (ERP)Business team hands at work with financial reports and a laptop

And that’s the key in a sentence to selecting the right ERP. You must get the technical ERP employees (consultants, implementers, developers, trainers, etc.) involved BEFORE you buy the software. 

How do you do that? First, take a look at the suggestions we’ve made over the last year about needs analysis. Start with a good needs analysis. From your needs analysis, divide your needs into three categories: (a) Features every software product should have (you have to know something about ERP or accounting software to do this), (b) Features some, but not all, products generally have (again, you need to know the market), and (c) Features that may be difficult to find or are unique to you. The third option can also include sets of features that need to be in the solution that are unusual to find in the same product. I’m thinking about something like Point-of-sale, warranty management, service, and property management all in one product.

Now here’s the key: focus only on (c) items during the RFP and demo process. You can address (a) and (b) items later in the process when you have narrowed the field.

One last thing: the salespeople probably won’t like this approach. It means you’ll control the demo and the selection process. But it’s the way I’ve helped clients select ERP for 30 years.

More on this in later posts.

Dynamics NAV 2017 – US CRONUS Account Data Needs Help

CRONUS is the sample data company for Dynamics NAV. Several months ago, when I installed the first version and started looking at the new features, I noticed something interesting: the system-generated financial statements were out of balance! Ok, let me back up a second.

Until 2017 version, there wasn’t a utility in NAV to generate a set of financial statements. Even simple statements required more than pushing a button…not a lot more, but more. So I was excited to see that NAV finally had a feature like a lot of other mid-range software. In 2017, there was a function that created rudimentary financial statements: Balance Sheet, Statement of Income, and a Cash Flow Statement. But…and it’s a big but…the financial statements were out of balance.

By the time I realized this, I had already dinked with the Chart of Accounts, so I thought I’d done something and just left it. After all, financials are financials. Nope. They were out of balance.

I realized that the way the system was generating the statements was based on the classifications of the accounts on the Chart of Accounts (COA). That was when I noticed that the classifications on the COA were wonky in the sample data. Depreciation classified as Sales, or was it Sales classified as Depreciation.

Anyway, once you fix the wonkyness in the COA, the financial statement generator is pretty cool. It at least gives you the “vertical” dimension of some standard financials.

Be sure to fix your sample data if you’re going to take a look at this feature.

New Phishing Reports

PBusinesswoman getting crazy in front of her laptophishing is becoming more common…and apparently more popular among hackers. Here’s the latest report from the trenches.

IT World Article

So here’s a question: Did you click the link above? Did you check it to make sure it went to ITworld.com or something similar rather than a domain like Youve.BeenPhished.io?

Here’s a general recommendation: if you get an email from your bank, brother, Google, Microsoft, your mother-in-law, etc., make sure you know where it’s taking you before you click it.

Otherwise, you may have been had.

Phishing – This is what it looks like

The screen capture is of a phishing email I received yesterday. It looks perfectly legit, until you read it closely.

First, it is addressed to “Dear Member” Netflix knows my name. After all, they charge my credit card every month. This is the first tipoff.

Screen capture of Netflix Phishing emailSecond, the text of the first paragraph is, “We recently failed to validate your information, we hold on record for your account, we need to ask to complete a brief validation process in order to verify details.” Notice the awkward grammar and sentence structure. It doesn’t sound like someone from customer service at a big US company like Netflix. Of course, I get legitimate emails that sound like this. Most of them are from technical support, though. In the interest of not helping the scheme, I won’t correct the sentence, but you can do it if you wish.

Third–and only some email clients will allow it–if you mouse over but do not click the link, you may be able to see the text of the link as a pop-up window (tooltip) in your email client. The address is not at Netflix, but part of it is businesscen… 

This is a classic phishing scheme. An email that–on the surface–looks genuine. It has the right colors and logo. Look beneath the surface to see the details.

One other thing: even fairly sophisticated people fall for this type of scheme. The emails “hacked” from John Podesta were compromised with a phishing attack. According to one article, when Podesta emailed his IT specialist, he was told the email was “legitimate.” The IT specialist now claims it was a typo. It should have been “illegitimate.” Close but no banana…and no election victory either.

ALERT: Filing Deadlines for Employer Copies of 1099 and W-2 Moved to 1/31

For years, the deadline has been 2/28 to file W-2s. In a seminar last week on tax changes, the presenter made a point that this had been changed to 1/31. IRS made the change to combat the rash of identity theft (IRS will have W-2 and 1099 information to match to).

Here areTax accounting 1040 US Tax Form, with calculator, pen and glasses the SSA and IRS links:




Also note that the penalties for non-filing of information returns (in particular intentional disregard) have increased substantially:


Selecting ERP Software – The #1 Thing to Prevent ERP Failure – Best Practices

If you read more than one study about the reasons for ERP failure, you will know that the #1 reason ERP systems fail is lack of management support for the ERP project. That’s the reason, but it’s not the root cause. The root cause started earlier, even before the first product was identified, the first demo done, and the first proposal requested.

ERP Failure Starts…with budget setting

ERP failure starts in the very beginning of the project. It starts with budget setting. This also applies (perhaps even more) to those companies that “don’t have a budget.” Or those where the budget is, “we’ll spend as much as we have to.”

ERP Failure - Enterprise Resource Planning word cloud with magnifying glass business conceptHumor me while I develop an example. Suppose that your company is about to hire a President. In your company, this position has broad responsibility. The President is responsible for financial management, overseeing purchasing, keeping track of inventory, providing basic data on the sales force, and a list of other duties. You’re setting the salary for the person who will control and manage most of the key items in your business.

After a brief meeting, the CEO says the following, “I think if we look carefully enough, we can find an excellent candidate that will work for $25,000 per year.”

Doomed before the search starts

To put it mildly, this company’s search is doomed before it starts. Every candidate will have less than the required skills. Many good candidates won’t even apply for the position. In the end, either the salary will go up, or a less-than-desirable candidate will be selected.

Of course, you might find a retired business person who just wanted to get back in the game. But are you willing to bet your business on that?

Almost enough is worst of all

Few companies would make this error. After all, my example is so extreme it’s silly… But I’ve seen a lot of companies set a salary at $75,000 when the market required a salary of $100,000. It’s this “almost enough” salary that attracts some talented employees, just not the full slate of skills and experience the company is going to need.

Effect on management…

I mentioned that lack of management support is the #1 reason for Failure. How does that fit?

Every time I see a budget or salary that’s too low, management has set it to be comfortable. If it works out…great! If it doesn’t…well, we can recover without too much trouble.


Management doesn’t have serious skin (money) in the game from the beginning. Play the dirge; it’s going to be ugly!

Where does ERP software come in…

The same thing happens in ERP. Too low a budget restricts both the choices and management’s commitment to the project. My budget formula is just a way to get in the ballpark. The rest of the project will make it clear what the real investment should be…

…next time, how to get started.

Selecting ERP Software – Best Practices – When the budget is too low

So you read my posts on budgeting…and you came away thinking, “He’s too high! We can do it for less!” And you just might be able to do it for less. But before you try, let me relate a true story…this happened to one of my clients about 5 or so years ago. They aren’t the only story I could tell…

A Budget Too Low

The easiest way to explain this is to tell you about my client…I’ll call them E-Corp (hey, if you watch the TV series Dr. Robot, you might know them…not really)

E-Corp set a budget of $150,000 for their software. They needed a lot of software. 40 or so users. Warehouse management. EDI. …and they had a huge need for customization…

You see, the software they had was developed in-house, and they knew they wouldn’t find anything that did exactly the same thing…and the programmer retired…and then the Controller who knew what the software did announced his retirement…

I told E-Corp that $150,000 was too low….but they insisted on that budget…even though I encouraged them to double or triple it...

The last time I talked to E-Corp, they had spent over $400,000..and still weren’t through!

What Happened?

E-Corp started with a list of potential software vendors. They sent them a rough RFP and asked for proposals. Several vendors whose products I knew didn’t respond. The client asked me, “Why?” I said, “Your budget is too low; I wouldn’t have responded either. You aren’t acting serious about this.” 

But because they got a response from a SAP dealer (BusinessOne), they thought they’d go forward. They did demos and discovery. They specified customizations. They drank the Kool-aid, as they say. And then came the proposal. $288,000. The client called me to check the proposal. “Can you help us get it down?” I reviewed it.

“This proposal is too low,” I said. “The fees are all estimates. You’ll never finish the project for this. The fee to product ratio is 50%, and you have data conversion AND extensive customizations.”

“What does the budget need to be?”


They told themselves (and me), “We have the technical ability to get this done for this price.” Only one of us believed them. It wasn’t me.

I told ’em so

The last time I talked to them, they had implemented the software for 2 of 5 business units (the easy ones), and they had spent $400,000 and were two years over schedule.

I can only tell you the truth. I can’t make you believe it.

Selecting ERP Software – Best Practices – Setting the budget

In the last post, I gave you some rules of thumb about software cost. In this post, let’s see if we can come up with a budget for a software implementation.

What you need to know (or estimate)

Before you calculate a budget, you’ll need to answer a few key questions:

  • How many users will you have? I suggest that you count or estimate two different user counts (which might be the same). First, the concurrent user count. That is, how many people will need access to the system at one time. The easy way to estimate this is to count the people that will use the system all day, every day. Then list the people who will use the system only some of the time. You’ll have to decide how many of the “some time” users will be using the system at any one time. One helpful question in the past has been, “Suppose some of our users can’t get on the system (because we are out of users). What is the business effect? The second user count will be named users. A named user is someone who needs a login in the system. The named user count will always be at least equal to the concurrent user count, usually more.
  • Will you convert data? If so, what kind and how much? We divide data into master file data, beginning balances, open documents, and history. Master files are things like customers, vendors, and inventory items. Beginning balances are open payables, open receivables, general ledger balances, and item cost and quantity. Open documents are things like sales orders that have not been shipped and invoiced, or purchase orders not received. History is…well…history. Things like past purchase history (what the customer bought last month or last year), what items were ordered from vendors. Our recommendation is that you keep the old system up and running for a year or two and access history from there.
  • Is the data to be converted both clean and easy to get? If your data is in Microsoft SQL Server, and you constantly clean up customers and vendors, the answer is “Yes.” If you’re using an old system that you’ve had for 20 years, have lots of history, and will need help to extract the data, the answer is “No.”
  • Do you need anything outside the scope of the pricing discussed in the last post? This would be features like manufacturing, service, point of sale, etc.

Looking  for a budget not a price

Before getting into the calculations, let me emphasize that we’re looking for a budget, not a price! Just because we set the budget for the wedding dress at $5,000 does not mean that we have to spend $5,000. We might spend only $1,000. But here’s the key point: I use a budget to eliminate products in the very first step of a selection process. If the vendor can’t tell me that they can deliver a solution within budget, they’re history.

This means that it’s important that the budget be reasonable. And that’s what this calculation will give you. Next post we’ll discuss what happens when the budget isn’t reasonable.

Setting a rough budget

This method is based on two observations about software projects. First, the more users there are, the more implementation is needed. Second, the more users, the more complexity that tends to be introduced into the implementation. This means that in most cases, the more the cost of the on-premises software, the more complex the implementation, data conversion, and customizations will be. And that assumption is what this formula is based on.

This isn’t a quote, and I can’t guarantee that you can implement a system for this amount, but here’s a reasonable budget formula:

  • If you need anything outside the scope of the features in the last post, use the amount $3,500 per user for on-premise software or $225 per month per user for cloud software. Otherwise, use $2,500 for on-premise software and $150 per month per user for cloud software.
  • Multiply the on-premise software number by the number of concurrent users. So if you have 10 concurrent users, you would either calculate $35,000 or $25,000 depending on the features you need. This number is the base number for calculating data conversion, implementation and customization.
  • To determine your data conversion budget, take this figure times 50% if you convert master file and beginning balance data only. Multiply by 75% if you convert open documents. Multiply by 150% if you plan to convert history.
  • To determine your implementation budget, take this figure times 75% if you think you’ll need very little help, 125% if you think you’ll need some hand holding, and 150% if you plan to redesign processes for the new software.
  • To determine your customization budget, multiple this figure by 25% if you just need a couple of reports designed. Multiply by 75% if you think you’ll need to change the way the software works in minor ways. Multiply by at least 100% if you expect to need extensive customization.

If we plan to convert master files and beginning balances, we need some hand holding, and we don’t plan to customize anything other than a couple of reports, we can come up with a budget. So, here’s how the base calculation would work for 10 users of the basic distribution software we discussed in the last post:

One of these:

  • Software budget (on premises): $25,000 ($2500 x 10 users) OR
  • Software budget (Cloud): $1,500 per month


  • Data Conversion: $12,500 ($25,000 x 50%)
  • Implementation: $31,250 ($25,000 x 125%)
  • Customization: $6,250 ($25,000 x 25%)


On-premise: $75,000

Cloud: $50,000 plus $1,500 per month.