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Are ERPs Keeping up with QBO, Xero, and Tech Stacks?

By:

AmplifyTech
June 2024

Questions about Enterprise Resource Planning (ERP) systems keeping up with apps, QuickBooks Online (QBO), and Xero are common. The uncertainty continues as QBO, Xero, and the technology applications (tech apps or apps) that plug and play software as a service (SAAS) evolve and modernize.

The perception that QBO and Xero seem ahead of traditional ERPs with apps like Pluto, Dext, Reach, and Fathom is widely shared. Why?

User Experience: QBO and Xero are designed with user experience in mind. Both are intuitive, and users do not require an accounting background. Traditional accounting, such as journal entries, is almost non-existent. You can even have a chart of accounts without account numbers! They offer simple layouts and are easy to use, which can be appealing to companies that do not have a dedicated accounting team. Few people would argue that the look and feel of these systems are superior to ERPs and that feeling can significantly influence a user’s confidence and comfort.

Specialization and Integration: QBO and Xero offer a wide range of specialized third-party app integrations. These apps extend the functionality of the accounting software, allowing for tailored solutions for specific business needs. Customization is not generally available; however, the apps are designed for common and best practices and can be configured to fit most circumstances.

Cost and Accessibility: These platforms often start at a lower cost and are more accessible to small and medium-sized businesses. They provide essential features without the complexity and high costs associated with traditional ERPs and generally do not require any implementation time or expense.

There’s Some Truth Behind the Perception

There are real stories of companies feeling further behind after implementing an ERP than before the change.

For most implementations, there’s change management and disruption as you get the new systems and processes live.

With a Financial First approach, where you take a step approach and implement the financial modules first, there can be a period when you have less automation and functionality within various departments or roles.

Transformation sells. Big consulting firms spout it as an absolute path forward; however, in our experience, implementations take time, and a slower linear continuous improvement plan generally manages expectations and resources best. Either way, it’s not unusual to have disruptive steps backwards as you progress toward your desired future state, and the best way to face the challenges is to set a plan and manage expectations.

A comprehensive ERP roadmap and precise timing will help your team and the users of the systems understand the journey.

In a world where data is king, the implementation serves as a great time to clean up your master data and put controls over master data moving forward that allow for better decision making. QBO and Xero, due to lack of controls over vendor and customer masters, often lead to master data that has duplicates or errors and does not track the relevant information required to make real time decisions.

Solid testing during the implementation and appropriate allocation of time and resources towards the project will prevent unnecessary delays and re-dos or rescues that further reduce functionality during and after implementations. Too often, we see people have a bias for efficiency and skip steps or rush through, which ultimately takes more time and resources and is a disaster for change management.

So, why would a company bother with an ERP with today’s vast opportunities in the plug-and-play world?

The availability and experience of the tech apps with QBO and Xero are exceptional due to their simplicity.

It’s that same simplicity that makes for a great user experience. And if your business is simple – they are the best choices. However, as organizations grow, they become more complex, and that is when the limitations become a problem with the general ledger accounting systems and their plug-and-play.

These systems require little implementation because they are designed to plug and play one-to-one. A complete tech stack can easily accommodate one legal entity. Still, once you have consolidated and managed at various levels, the functionality of the infrastructure no longer works for you.

“Mulit’s” is a crucial reason a growing entity needs an ERP. They want to manage and look at reporting and data from different angles. They have multiple legal entities, products, services, regions, departments, and other levels. Compliance reporting requirements are at one level, executive decision-making at a consolidated level, and operational management at another.

To date, the tech stacks plugin one-to-one, and once your business expands, you must sign up for multiple instances or use manual workarounds in spreadsheets. This increases your overall costs and time, making the business case for ERPs competitive.

When it comes to complex financial operations, businesses often require advanced features beyond the capabilities of accounting software like QBO and Xero. Here are some of the limitations they face in this context:

– Intercompany Transactions: Managing financial transactions between multiple legal entities within the organization can be challenging. QBO and Xero do not offer sophisticated tools for seamless intercompany reconciliations, leading to manual workarounds.

Consolidated Reporting: Larger businesses must consolidate financial reports from various subsidiaries or divisions. QBO and Xero lack the depth in functionality to generate consolidated financial statements that comply with accounting standards automatically.

– Global Compliance: Businesses operating across regions must adhere to various tax laws and accounting standards. QBO and Xero might not fully support the complex regulatory requirements of every area, potentially requiring additional systems or manual processes.

– Currency Management: Global businesses must handle multiple currencies and exchange rate fluctuations. While QBO and Xero support multi-currency transactions, they do not offer advanced currency management features such as automated currency revaluation.

– Customization and Scalability: Customizing these platforms to fit specific business processes or scaling them to accommodate rapid growth can be limited. Larger businesses may find that QBO and Xero do not offer the required customization or scalability.

– Advanced Inventory Management: For businesses with complex inventory needs, such as multiple warehouses, batch tracking, or demand forecasting, QBO and Xero’s inventory management features may not be sufficient. This can lead to the need for additional inventory management systems.

– Resource Planning: Larger businesses often require detailed resource planning capabilities, including workforce planning, capacity planning, and production scheduling. QBO and Xero are primarily accounting-focused and may not provide the necessary tools for comprehensive resource planning.

While QBO and Xero are excellent tools for many businesses, their capabilities can be stretched thin when dealing with the complexities of more extensive, intricate financial operations. This is where more robust ERP systems can provide the necessary functionality to manage these complexities effectively.

The cost and time objection become less relevant when you buy all the apps to deal with the complexity or create manual spreadsheets and workarounds. The issue often is wishing you invested earlier.

How are ERPs Keeping Up?

ERPs are not necessarily falling behind; they are evolving and pushing further into supply chain management, reporting, payables automation and incorporating AI and ML to improve decision-making and personalize the user experience.

Modernizing ERP systems can be complex and expensive, but businesses that have started this transformation are better equipped to handle current market demands.

We always find it cheaper and easier to invest in an ERP early. The time, cost, and change management will be less if you get ahead of your automation needs.

QBO and Xero may appear ahead due to their user-friendly interfaces, cost-effectiveness, and specialized app integrations. And this can delay people from levelling up to an ERP.

However, ERPs are also evolving and can offer robust solutions, particularly for larger organizations with complex needs. The choice between them depends on the specific requirements and resources of the business. Investment in technology needs to be made with the desired future state in mind including business strategy and your organizational structure. Where you are going should be prominent in your planning and timing, not the current state.

ERPs continuously evolve to stay relevant and competitive in the fast-paced business environment.

Here’s how ERP systems like Acumatica and NetSuite are advancing:

Acumatica:

– Product Expansion: Acumatica has announced the expansion of its product line, including the launch of the Professional Services Edition, which is tailored to service businesses with robust billing and scheduling capabilities.

– Scalable Solutions: The company offers scalable solutions that grow with the business, as evidenced by customers who have significantly increased their revenue after implementing Acumatica.

– Unlimited User Licensing: Acumatica’s unique licensing model allows unlimited users, promoting organizational growth and employee empowerment.

NetSuite:

– SuiteCloud Developer Network: NetSuite provides developers with tools and support to build applications—SuiteApps—on NetSuite, allowing for industry-specific customizations and business process automation.

– All-in-One Cloud Solution: NetSuite ERP integrates accounting, order processing, inventory management, production, supply chain, and warehouse operations into a single system, providing clear visibility and control over business resources.

– Global Business Management: NetSuite supports effortless management of multiple subsidiaries and legal entities, offering real-time visibility at various levels and standardizing business processes across divisions.

These are just a few highlights from the emerging ERPs that AmplifyTech supports.

Both Acumatica and NetSuite are leveraging technology to provide more personalized, flexible, and scalable solutions that can adapt to the specific needs of businesses. They are integrating innovative functions into cohesive platforms and offering models that encourage growth. Doing so ensures that ERP systems remain vital for companies looking to streamline operations, make data-driven decisions, and achieve strategic objectives in a dynamic market landscape.

Sources:

  1. Acumatica Launches New Era of Business Growth
  2. Acumatica Customers Leverage Cloud ERP to Achieve Growth Ambitions
  3. New Acumatica 2020 R1 Released to Fanfare – Acumatica Cloud ERP
  4. Xero vs QuickBooks (2024 Comparison) – Forbes Advisor
  5. Connect Fathom – Financial Reporting, Forecasting, Budgeting
  6. Xero vs. QuickBooks: Which is best in 2024?
  7. Modernizing aging ERP systems

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