In a previous post I discussed the importance "lean thinking” while building a business. One way to facilitate lean thinking is to keep startup and ongoing administrative costs to a minimum. A large administrative cost for many companies is information technology (IT) infrastructure. Costs include not only the upfront purchase but also setup and ongoing support from knowledgable IT staff. Many free or inexpensive “cloud” (available through the Internet) tools eliminate the need for servers, networks, and most software. In my last post I described how cloud tools can replace in-house email, calendars, file management, and backups. In this post I will tackle software, including accounting, office productivity, and payroll.
Accounting software. Cloud accounting software is available for companies of all sizes, from new startups to the Fortune 500. Some large companies or companies with strict privacy requirements, such as military contractors, may need to keep their financial data on site, but I believe most companies should seriously consider online accounting software.
The Quickbooks desktop version is probably the most widely used accounting software today, but it creates headaches and risk. You must keep track of and make sure you back up the data file. You have to install new versions annually and updates regularly. You must have a physical computer or server to install it on. Online software handles all of this for you in the background, and you can log in with a browser from anywhere and from any device, including smart phones and tablets in most cases.
The companies I’ve worked with use Netsuite, Xero, and Unleashed. I set up Netsuite for a manufacturing and distribution company because of its requirement for process control and inventory management. Xero is comparable to Quickbooks and is sufficient for many companies. Xero doesn't have have robust inventory tracking capabilities, but it integrates with inventory management software, such as Unleashed.
Word Processing and Spreadsheets. Online office productivity software can replace installed software in many cases. Google Docs and Sheets, Office 365, and Zoho, to name a few, are almost as robust as Microsoft Office and have the benefit of being available at any time, on any device, and to anyone you choose. I use Google Docs and Sheets within Google Drive for almost all word processing and spreadsheet tasks. I still have Excel installed, but I only use it for the most complicated financial models.
Payroll. Online payroll service providers are so inexpensive and efficient that there is no reason for most companies to do payroll in-house. Services like ADP, Ceridian, Zen Payroll, and Intuit handle all payroll processing, direct deposit, and tax filings for a minimal monthly fee. All you have to do each pay period is enter hours (if applicable) and push a button to process payroll. Most companies I work with use Intuit Full Service Payroll. It’s incredibly simple, cheap, and flexible. Netsuite has integrated payroll in the US, and Xero has integrated payroll for some states.
I have helped several companies transition from costly and complicated IT infrastructure to inexpensive and simple cloud services. One small company with less than 10 employees had expensive servers hosting complicated accounting software, an antiquated version of Microsoft Exchange for email (with frequent down time and delivery problems), a file management system, and an Active Directory network to manage access to these services. They were paying an IT outsourcing firms several hundred and sometimes thousands of dollars per month for support. They were also spending a lot of time on in-house payroll.
We implemented Google Apps for email and document management. We moved the accounting system to Xero and payroll to Intuit. The servers or network are no longer needed, and unfortunately for the IT outsourcing firm, they haven’t been been called since.
“Cloud” tools have made starting and growing a business cheaper and easier than ever before. Using these tools eliminates the need for in-house services, networks, and most software.