Planning for a computerized accounting system.

Selecting accounting software is a major responsibility that takes a considerable amount of careful planning. After all, if the selected program fails to meet the organization's needs or the accounting staff is not adequately trained to operate it, the business could be thrown into turmoil, losing much time and money.

This article lays out a series of steps and checklists to help an organization's accountants conduct an objective operations evaluation so the right program is selected--meeting both the enterprise's current and future needs.

In preparing such an assessment, management should realize that several candidate software programs probably will have to be tested before a final choice is made and that each assessment probably takes a minimum of a week--even longer for complex programs. During that time the testers must learn the program's fundamentals and try each function to see if it meets the organization's needs. Many software vendors provide a free or low-cost demonstration package for this purpose.

WHERE TO BEGIN

As a first step, management should name an accountant or, better yet, a team made up of accountants and computer experts to conduct the assessment. The team should work with each department in the organization that will either use the program or contribute information to it.

Learning a new accounting package is not easy; therefore, as part of its assessment, the team should examine the accounting and computer skills of the people who will be using it. If they lack sufficient knowledge, separate training programs should be established; often a software vendor can help with training. The team can use exhibit 1, page 49, to document information on user personnel and their experience. From this checklist the team can determine who needs further training, both basic and system specific.

SAFEGUARDING DATA

Security must be considered early in the assessment. The team should ask such questions as: Which areas will need restricted access through passwords? What data must be restricted? Who needs access to each file and application program and why?

A security checklist, such as the one in exhibit 2, page 49, can list all vulnerable accounting software modules and data files and each user. It's easy to work up a security format simply by referencing the checklist and giving passwords to a user when necessary.

During this evaluation, the team also should identify any physical changes that should be made to the offices where the software will be run and the files stored. Questions to ask include, Should access to the facility be restricted? Are fire safty features adequate?

This is a good time to examine other physical features in the office even though they are not directly software related. For example, does the facility have proper lighting for computer-screen viewing and ergonomic furniture to minimize physical fatigue from working long hours at work-stations?

SOFTWARE LINKS

The team also should consider all the other nonaccounting software used by the organization. There are significant advantages to computer systems that can interface with popular spreadsheet, database or word processing software. Among other things, such links allow users to customize accounting reports with relative ease. The team should list all the application software used by the organization now or planned for in the future, and each department can determine whether a link would make its work more efficient.

OPERATING EFFICIENCY

One measure of efficiency in an accounting department is the time it takes to enter data into the computer and subsequently to generate the necessary reports, checks, invoices and other types of output. In order to gather details on this information, the several checklists in exhibit 3, page 50, ask for details on the data that will be used in the system and the types of output it will be generating. This information also will provide important clues on how many work-stations and printers will be needed to process the various volumes of information.

The team should keep in mind that general ledger modules vary in sophistication, capacity and flexibility. Since most accounting packages require this module as a basic software building block, the team should be especially sure it is suited to the company's needs. The responses to the questions raised in exhibit 3 should help identify the minimum features needed in this module.

BEYOND BILL PAYING

The accounts payable module must be able to do more than just track and pay bills. For example, it may have to handle discounts and partial payments and to manage multiple checking accounts. Consequently, to gather the data to determine what additional functions are required for this module, the team must, among other things, identify all checking and temporary investment accounts, their purposes, authorized signers and normal and minimum balances. A checklist such as the one in exhibit 4, page 50, helps to gather this information.

The team also should estimate the number of computerized and manual checks prepared each month to determine whether the software can process them within a resonable time. The group should be aware that printer speed can affect processing time even more than the software.

An ideal accounts receivable module should do more than just issue invoices. It may have to manage collections, identify customer buying behavior and assist with credit evaluation. Exhibit 5, page 51, helps to gather the necessary data to be sure that this module has the capacity for those extra jobs.

Most organizations have special needs they would like their accounting software to handle. For example, a company may want to track payments to its sales staff; exhibit 6, page 51, documents the necessary data for that assessment. Exhibit 7, page 51, is helpful in deciding how much shipping and billing documentation the software must be able to handle.

The assessment team should be aware that most programs are good in some accounting areas and weak in others, so some compromises may be necessary.

TIME TO EVALUATE

Of course, the checklists shown here do not cover every area a company must evaluate, but they serve as models for constructing a customized list.

Once the checklists are completed, the team should extract the software features it considers critical. This becomes the minimum-needs-assessment data and should be used in the initial screening to eliminate software packages that don't measure up. Only after this stage can the team begin online evaluations to compare each program with the others.

Careful planning before investing the time to evaluate a program decreases software-search costs and improves the likelihood the right questions will be asked and fatal errors avoided.