System Conversions (#330)
/How do you handle a complete system conversion? Switching to an entirely new accounting system is a massive undertaking, and people screw it up all the time. In fact, controllers lose their jobs over failed conversions.
Initial Considerations
So first, as a guiding principle, this is not an area where you want to be aggressive. You don’t just swap out the accounting software on short notice, because it seems like a good idea. Spend months thinking about, looking at the alternatives, and deciding whether you can keep going with the existing system instead of switching to a new one. Unless there’s a clear benefit to using a new system, you probably want to stick with the old one.
Clean Up Existing Processes
Next, clean up what you’ve already got. If you have complicated accounting processes, you’ll somehow have to switch them over to the new system, which could turn out to be a complete mess. This could be a major concern if you have to conduct custom programming while also installing new software. Instead, try to make your existing systems as simple as possible. That way, you can more easily adapt those systems to how a new accounting software package works. If you try to do the reverse and alter the new software to match your old systems, then the odds of failure just went up.
Select Software
Next up is deciding on which software package to buy. Entire books have been written about this topic, so I’ll focus on just a couple of items. First, never go with a new software provider. You do not want buggy software, because you could get fired if the system doesn’t work. Second, make a list of the functionality that you really, really need, and make your decision based on that. Most accounting software packages contain the same features as all the other ones, so the decision will be based on just a couple of factors.
This could make your decision a lot easier, especially if you’re in a specialized industry where there are only a couple of software packages designed for it. And finally, you’ve got to check references. Preferably, go and see an active software installation. Focus on how the system processes your most important transactions. Ask about the quality of support from the software company, and whether they have a process in place for requesting feature changes.
Convert to the New System
So now you’ve picked the software, you only have the minor task left of converting over to the new system. Chuckle. There are three ways to do it.
You could shut down the old system on one day and start up with the new one on the next day, also known as the cold turkey approach. Or, you could run the old system and the new system in parallel, until you’re sure that the new system works. Or – final choice – you could install one module at a time and construct a custom interface to make it work with the remaining modules in the old system. Then you gradually install new modules over an extended period of time, gradually shutting down the old system.
Remember what I said earlier, this is not an area where you want to be aggressive. So, just shutting down the old system and starting up the new one is generally not a good idea. The only case in which you could pull this off is when your accounting system is very, very simple, with a low volume of transactions, and you can afford to have systems nonoperational for a week or two while you figure out the problems with the new system.
But that’s not possible with a business of any size. In these cases, you really need to use some level of concurrent operations, where some aspects of the old system are still running while you’re getting the new system operating.
I think the best choice is to run the old system concurrently for a few months, while you install the new system. I know, it’s a lot of work – but by doing so, you have a great fallback in case the new system doesn’t work as you expect – and in some respects, it probably won’t. So assign some of your staff to just maintaining operations on the old system, while you run the same transactions through the new system, and test the output against the old system. Then shut down the old system when you’re good and ready.
Now, I also mentioned a third option, which was converting one accounting module at a time. This approach works best for really large companies that might have to switch over the software at multiple locations. In these cases, even a parallel operations approach isn’t really feasible, because it might take them two or three years to complete the conversion. For them, the only option is probably to conduct a very careful conversion, module by module. It’s slow, it's really expensive, and it’s safe. These organizations have to hire a large group of system conversion specialists that works separately from the in-house accounting staff.
When to Use Consultants
Now, a word on consultants. System conversions are all about reducing your risk, and consultants have a lot of knowledge about doing these conversions, so hiring them reduces your risk. They are also insanely expensive. Doesn’t matter. If you’re going to do a big system conversion, you will need consultants, so budget for it.
Also, consultants have their own methodologies for these conversions, which are incredibly detailed, and take a lot of time to complete – so whatever you budgeted for consulting, expect to add a zero to the price. I’m not kidding. This process is expensive.
Department Management
And a word on how to manage the department while a system conversion is going on. Shut down all other projects you might have until the conversion is complete. This is no time to get distracted by unrelated activities. Conversions are career threatening, so treat them like they are the only issue that matters. Because it’s true. You screw up a system conversion, and it’s quite possible that you’ll lose your job. So, focus the department’s attention 100% on converting to the new system. Nothing else matters.
Furthermore, tell the accounting staff in advance that overtime is a distinct possibility, and prohibit all vacations during the conversion period. You’re going to need maximum staff time to make the new system work.
And finally, block out lots of time in advance for the staff to be trained on the new system. This should be intensive, and done right before the conversion work starts. If you skimp on the training or schedule it too far in advance of the actual conversion, then no one’s going to have a clue what’s going on.
Buy a Big Upgrade
One more note on this topic. I’ve pointed out that system conversions are expensive, time consuming, and can get you fired if you screw up. Because of these issues, whenever you do a system conversion, buy into the biggest, most robust accounting system that you possibly can. That way, the company can grow for a long time without having to deal with another conversion. Ideally, acquire a system that can handle the company’s needs even if it’s a big publicly-held company. That way, you never have to worry about doing another conversion.