Almost all our clients want to know the answer to this question.
What is the Cost benefit of a new system?
This is the million dollar question, when it comes to changing to a new system. There isn’t a simple answer to this question, neither is it a one answer fits all.
However when discussing costs benefits of a new system, there are a number of factors involved.
Traditional Server Costs
Most systems are still running on traditional servers. Servers are by no means cheap, and have a lot of costs associated with them. For a medium sized company, a typical server costs around $5-25,000 to initially purchase and setup. In addition to this is required software that also is quite costly depending on your needs. This can also range from $2-20,000.
Server rooms also have special cooling requirements, and is an additional cost related to the maintenance of the system. Most companies these days have external consultants who maintain and troubleshoot their servers. These consultants cost from $800 to $5000 per month.
As you can see it really starts to add up quite quickly, any upgrades/updates and repairs are all additional costs on top of the initial overlay of capital, and on top of that is the maintenance of the system constantly.
You will need to work out where you fit in the range of things, perhaps it is less than the suggested range I have mentioned, or far exceeds it. That is something you need to work out.
Most traditional accounting systems are quite old in their software architecture. What does this mean? In a nutshell it means they are like an island to themselves, and it is very difficult to connect them to other essential platforms like e-commerce, CRM’s, EDI connections, marketplaces, B2B, E-bay, Amazon and so forth. That is not to say that they don’t create custom solutions in an attempt to integrate. But most of the connections are cumbersome and not seamlessly integrated like cloud based solutions.
You might say, so what? Why do I need all these connections?
You’re absolutely right, you might not need any of these connections to currently trade.
However more and more customers expect you to be able to login and purchase directly from you.
Further to this, if you want to be able to seamlessly work on different marketing channels, ie Amazon, e-bay and trade marketplaces, and have it all consolidated and working on the same platform for efficiency. It would be very difficult to do this using a traditional system.
E-commerce stores run by shopify, magento and woo-commerce are a normal part of trading these days. However they are not a normal part of traditional system. If anything, they couldn’t be further.
What does the lack of integrations and connections mean?
It means you are leaving money on the table, lots of it and your competition is getting past you. Depending on your industry, this could be upto 50% in trade difference. However on average it is more like 15-20%. It does not take long to calculate how much that adds upto on your bottom line.
The painful reality is that some software can practically replace staff. Like some of the accounts receivable software in my opinion are better chasers of money than real staff. Have a read of my comparison on debtor management software.
From an owners perspective, it really makes a difference to replace jobs that are repetitive and streamlined. The cost benefit does not even compare.
What a new system does not do?
It does not magically start marketing for you, or create better workflow out of thin air. Artificial intelligence is the buzz word in cloud technology. But I’ll tell you what, its still a way way off perfection. What I’m trying to tell you is, that the system will not think for you. You still have to use your grey matter between your ears.
This is by no means a comprehensive list of factors to consider, but a starting point as you explore the cost benefit. So if you are considering the change to the cloud, these are certainly things to look at. If you need to have a chat to one of us, send us a message and we will get in contact with you, and assist you in your decision process.