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Cloud ERP or Xero with Connected Apps: Costs and Management considerations

In the past their has been a clear distinction between what is called an accounting solution, such as XERO for small businesses and an enterprise resource planning (ERP) solution such as MYOB Advanced for larger companies. 

In recent times, this line has been blurred due to claims from Xero and other accounting software companies that their product has the same functionality as an ERP system. They also suggest that an end to end solution (such as that an ERP system can deliver) be achieved through implementing accounting software and then adding various "bolt-ons" and that this is the least cost route short and long ter. Is this a myth or does it have substance? 

What is accounting only software?

As the name itself suggests, accounting software typically deals with capabilities such as Sales, Purchases, General Ledger and Payroll and features numerous standard reports. 

What is an ERP?

The heart of an ERP is the General Ledger. But then incorporates all the functions required for Customer and Supplier Pricing, Inventory, Bills of Material and more... Transactional order processing features such as Capable To Promise, Available to Promise will be there as well as Landed Costs for accurate inventory costs with multiple warehouses and capable rules on warehouse management. 

Comparison of Features

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Lets take an example of a distribution company needing a solution to manage their growing business. Initially, when the company was a start-up a simple accounting solution such as Xero may have been enough. It's main features such as invoicing, inventory, payroll, bank connection, pay bills etc wss sufficient. However as soon as Inventory management or CRM was required how did this change the application landscape? 

Xero with Add Ons

Accounting Software - Do Beautiful Business | Xero US

Table1_CF

  • Annual License Cost: $21,156.00 (10 Users)
  • Annual Support Cost: $2,077.20 (15% Partner*) + $2,148.00 featuring standard Unleashed Premium Support**
  • ​The price does not include implementation costs. 

*An estimate

** Actual from website

MYOB Advanced for Distribution

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MYOB Advanced for Distribution includes features such as Sales Order Management, Advanced Inventory, Requisition Management, Purchase Order Management, Warehouse Management System with Advanced Financials all in on. It is fully integrated with MYOB Advanced CRM, Manufacturing, Field Service, and Project Accounting for visibility across the entire organisation.

There are other things to consider when thinking about implementing a business platform across your company such as: 

  1. One Point of Contact?
  2. Training and go-live Coordination?
  3. Training Time
  4. Does this solution resolve all the business owners pain points and needs?
  5. Does this business have options for scalability?
  6. Do these products all integrate and work seamlessly together?
  7. Are these products supported well?
  8. Are the add-on providers progressive with updates?
  9. What would happen if QBO or MYOB acquires the add-on?
  10. What happens to the workflow should the Add-On provider/Support Agent cease assistance?

Choosing between Xero and MYOB


Seeing the bigger picture and making better business decisions is crucial for business growth. While most accounting software packages are good at what they do, they are limited in scope and are unable to expand with a company. When comparing MYOB Advanced and Xero, the answer will always depend on the business problem you have, the size and complexity of your business.

In order to be appealing to smaller businesses, accounting programs such as Xero offer reduced functionality and features at an entry-level price. This also makes the systems easy to use and implement but steps in the way of growth. 

A successful small business will outgrow Xero.  The "add-on eco-system" for Xero is huge and active as companies from all over the world seek further solution capability, often expected but Xero does not offer the same level of control, precision and flexibility that growing businesses need. For example, if you are  a distribution company, Inventory Management will be crucial.

In contrast, MYOB Advanced lets you to manage your entire distribution processes with system-wide stock management – including real-time availability, lot and serial numbering, expiration dates, transaction reason codes to measure trends and spot problems, the ability to monitor goods in transport between locations, inventory bin/location control, inventory sub-items to simplify tracking and reporting, inventory replenishment suggestions and more.

When it comes to just payroll functionality, many small businesses will find Xero’s payroll and basic reporting functionality enough, indeed perfect for their situation – while larger small businesses will definitely struggle to get everything required for a reasonable price. Again due to a lack of features and flexibility offered.

On the flip side, MYOB Advanced lets you configure employees with a wide variety of pay items, including multiple wage types and hourly rates with ease. Payroll administrators can automate workflows, generate General Ledger journals and payment batch files effortlessly. It also allows for multiple pay runs to be simultaneously processed. And that’s just the beginning.


Valuing the benefits of moving to MYOB Advanced

Here are the actual headline effects where a company finally found that they had outgrown Xero and we helped them implement MYOB Advanced.


INCREASED REVENUE AND PROFIT

+ Increased sales due to better customer service, improved quality, better on-time delivery and shorter lead time

+ Sales and margin improvements due to faster time-to-market for new products and product variants, cost reductions


DIRECT BENEFITS

+ Cost savings, cost avoidance

+ Inventory reduction, including materials, parts, finished goods and work-in-process

+ Increased productivity

+ Reduced scrap, rework, expediting, and wasted materials

+ Less overtime, expediting, premium freight, and additional set-ups due to last-minute schedule changes

+ Improved visibility across the entire business to make faster and better decisions


INDIRECT BENEFITS

+ Improved retention and higher productivity from employees who are less frustrated and more effective in their jobs

+ Less panic, disruption, and chaos in the plant and in the office due to fewer last minute changes and surprises; more stable schedules; less expediting

+ Smarter moves in the market – pricing decisions, specials, product releases or changes, inventory deployment, to name a few – due to better information and insight into market conditions, customer needs and competitive activity.


Conclusion

We find most decisions are cost-based and Xero is seen to be a good cost-effective solution for smaller business, and it is!  However as the business grows, processes become more complicated and business requirements change. This is when MYOB Advanced will benefit in the long run. 

A growing business should never be restrained or held back by its accounting software. A growing business needs to be flexible, and agile enough to counter whatever may come its way. While other systems can hold you back, MYOB Advanced is equipped to help you realise your full potential and grow with you.

So whether you’ve outgrown your accounting software or you’re struggling along with Xero, QuickBooks or Pronto, MYOB Advanced can help. It’s a scalable, adaptable cloud-based business management system perfect for those businesses who have outgrown their off-the-shelf accounting system.

See the bigger picture; make better decisions, plan ahead and grow while saving time and money. 

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