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Implementing a New Accounting System - Myths vs. Realities

PORTLAND, OR, Sept. 11, 2007 --The process of selecting and implementing a new accounting system is not an easy one. First, a committee has to decide on the software. Then the contract negotiation process begins. Once that phase is completed, the final, and often most difficult part of the process, kicks in - the implementation. "This is where the hard work really begins," says systems and business consultant Doug Sheehan. "All kinds of alternatives need to be weighed - do you handle the implementation with in-house people? Or outside consultants? Do you leave the whole process to the software vendor? Or someone else? The answers to these questions can make the difference between a smooth or bumpy transition from one system to another."

Sheehan's company, Investment Conversions & Consulting, Inc., has helped insurance companies, municipal bond dealers, and bond investment departments in banks get new accounting systems up and running for over a decade. Based on this experience, Sheehan has developed what he calls the" Reality Check-List" for project managers charged with implementing new systems:

Myth #1 - The vendor can do it

Reality - "This idea works better on paper than when it's played out in real life," Sheehan warns. "The thinking goes like this: 'If I'm going to implement any new piece of software I'm going to have the vendor do the implementation. They have a vested interest in making sure it works.' That's simply not the case." In fact, he points out, that myth comes from the mistaken assumption that the vendor is motivated to get you up and running quickly and efficiently. "The truth is that the vendor gets paid whether or not you implement their software," he says. "And the people they send out to do the implementation are earning more money for their company the longer it takes to get you going." He also points out that those sent out by vendors to do the implementation often know only one way to do things. "You want someone who's in the business of implementation. Someone who's done it before and knows how others have made the most of the system. Someone who's motivated to do things faster and more efficiently because that's what they do for a living so their reputation depends upon it," he advises.

Myth #2 - I can do it myself

Reality - The question here isn't whether you can do it in-house but should you do it in-house? "Systems people often believe that it's in their charter to implement new software," Sheehan says. "They think the best way to learn what software does is to work their way through the implementation of that software. The problem is that their in-house people have probably not done this sort of thing before. They don't know of alterative ways to accomplish it and that means they won't be particularly efficient in doing it. The conversion to a new system is a one-time event. Chances are that the in-house people are never going to do this again. So the company is paying a lot of money for salaries for them to learn on their dime. "Before falling for this myth, Sheehan advises looking at the total cost of doing a conversion in-house. He says a more efficient use of in-house resources is working in tandem with an outside vendor experienced in conversions. "Conversions, when done right, require a mixture of external and internal help. Use a combination of people from inside and outside. The outside people are much more experienced in creating the project plan and doing it efficiently than the inside people would be working alone," he points out.

Myth #3 - If I have too many vendors it's counterproductive. They'll fight with each other and with our people

Reality - This myth stems from the old adage, "Too many cooks spoil the broth." The truth is that a healthy combination of software vendors, in-house experts and conversion specialists make the most sense. Everyone's going to have their own ideas about what works, and it's in the best interest of the client for the conversion specialist to act as "referee" based upon his or her experience with a variety of conversions. "The conversion specialist's job is resolving conflicts," says Sheehan, whose company has handled over 14 large conversions and many smaller ones in its decade of experience. "Conflicts between in-house staff and software vendors are bound to happen. As a third party, the conversion specialist thinks of his job as standing up for the in-house staff when they disagree with the software vendor. This is especially true when they don't know how to present the necessary information to get the attention they need. Sometimes, the vendor is right, and the client doesn't believe them, and we have to explain why the vendor is right. Our experience will tell us which approach makes sense. That is what a referee does."

Myth #4 - The software vendor sends out senior people for implementation.

Reality - Sheehan says this can be the most damaging myth of all. "Software vendors need to have their best people in-house developing software," he says. "They put their new people on implementation to train them. If you buy into this myth, expect to have' Joe Fuzzy Cheeks' handling the implementation. He probably won't have the breadth of knowledge you'll need. He will, most likely, be a youngster who only knows what the vendor senior staff told him to implement the system, and he may have never done it before. This inexperience will, most likely, cause the project to go longer, or require more effort by the in-house staff."

Myth #5 - The vendor will send people to my site for several weeks to help my organization understand how to deal with the software and resolve all my data issues.

Reality - The reality is that the vendor is only going to do whatever conversion work they do in their own offices. They will send you a database and tell you it's your job to bring it up-to-date and test it. They will spend little time on-site. They will think they don't need to test the software because they assume it works.

"The truth is: software always has bugs in it and you need to know where they are," says Sheehan. "Your people will inevitably have to develop workarounds to help you deal with these bugs. You'll also have to find ways to modify the software if it doesn't fit with the way your organization does business. It takes 'boots on the ground' to figure out all that stuff."

Myth #6 - I just need someone -anyone --who understands project management and generic implementation to do the conversion. They don't need know anything about our industry.

Reality - Sheehan disagrees with this myth heartily. "All of the hard issues that need to be tackled in a conversion relate to the business' use of technology. Doing it right has everything to do with understanding the industry. An experienced project manager can be part of the team, but you need someone who understands business and technology to make the most of the new system."

Myth #7 - My systems people already know a lot about the business and this process will teach them more

Reality - It took years for your systems people to understand your business issues with adequate depth. Do you have years for them to learn the best way to integrate the new system with your business? Is that the best use of these people? "Your systems people have better things to do with their limited time," points out Sheehan. "They have day-to-day responsibilities that need to be met. Don't be surprised, though, if they lobby to get involved with the conversion process. A lot of what they do is repetitive and the conversion process will look more interesting to them than their daily responsibilities. It's true. Conversions require creativity and knowledge. For IT people it would be a very attractive kind of project. The question is this: is that the best thing for the organization?"

Sheehan points out that a lot of these myths are embedded into the culture of many companies. Often, c-suite executives take them as truths because of this. "We urge all decision makers to look at the ultimate outcome when deciding how to handle a conversion," he concludes. "The goal for all of us should be to get the organization up and running with the new system so that it's back to business as usual - only better."

About ICC

Investment Conversion and Consulting, Inc. (R) (ICC) helps institutional investors implement investment management back-office solutions. ICC has been called the financial industry's "merger veterans, having created and put into play many of the best practices used today in investment accounting systems integrations. Since 1993, they have integrated the investment systems in some of the most high profile mergers in the industry. The firm also offers systems' consulting services support for the investment accounting and operations functions of major insurance companies and other institutional investors. They provide business analysis, technical analysis, software solution recommendation, vendor selection, and improved processes for management and operations. The firm's proprietary software tool, IRDB(R), enhances management and operations related reports for clients. For more information see www.iccinc.com.

For more information - contact ICC.