Is ERP an expense or an investment? Moving to MYOB Advanced [Part 2]

Investment vs Expense – The Appropriate Mindset for Looking at ERP

 

This is the second in a series of five posts which is intended to assist customers who are considering moving off MYOB AccountRight onto MYOB Advanced. Beyond the functional differences between the two products, there are a number of other elements which need to be considered when comparing MYOB AccountRight with MYOB Advanced (or more generally when comparing a small business accounting package with an ERP system). These posts are written by someone who used to work at MYOB and is aware of the challenges faced and opportunities presented when migrating from one product to the other. The intention of these posts is to allow for more informed decision making for someone who is considering ERP for the first time.

Investment vs Expense – The Appropriate Mindset for Looking at ERP

The topic that I would like to address in this post is one of mindset.

A small business accounting package will generally cost less than a $1000 per annum with negligible or non-existent set-up costs.  With its relatively low cost, it’s easy to look upon the money spent on a small business accounting package as an expense.

An ERP system, due to its configurability, will cost significantly more than a small business accounting package; but I believe that an “expense” mindset is an inappropriate one with which to view expenditure on an ERP system.

Let me explain …

Because ERP software is configurable it can be set-up in a manner that allows you to standardise and automate your workflows. This then frees up your human capital to engage in more productive work.  Viewed through this lens, expenditure on an ERP system should be seen as an investment in improved productivity. And it’s not just the initial money that is spent on configuring an ERP system that should be looked upon as an investment. The configurability of an ERP system is inherent, meaning that it can continue to be adapted over time to help realise greater and greater productivity gains.

The best way to look upon an ERP system is the same way that you would look upon a valued employee. A valued employee will deliver value to your business well over and above the cost of his or her salary. It would be the height of folly to adopt an attitude whereby you never entertained a pay rise for such an employee or declined to invest any further in his or her training and development. You make these expenditures because it ultimately benefits your business to do so.

[BONUS READ: 5 Reasons Why MYOB Advanced Is Leading The Australian ERP Scene] 

If you’re thinking that it sounds self-serving for a company that sells and supports ERP systems to claim that you should be happy to spend further money on an ERP system then I can only point to an observation that I made countless times in my previous role as a Channel Manager for a company that sold mid-market ERP software: The happiest ERP customers were those who were always asking “How can I get more out of this system?” or “How can I use this system to gain an edge over my competitors?” They viewed their ERP system as a competitive tool and/or a platform for improved productivity.  The unhappiest ERP customers were those who were never able to look at expenditure on their ERP system as anything other than a begrudging expense.

The difference between the two types of customers is one of mindset.

The increase in cost when moving off AccountRight onto MYOB Advanced will be tangible. The set-up costs for MYOB Advanced will be at least $30K and in-most-cases higher than that depending on the complexity of your requirements. But typically the benefits derived from investing in an ERP system will dwarf the money spent on installing and supporting the system. In other words, the ROI will make it all worthwhile – and that is what should be kept top-of-mind when evaluating an ERP system.

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