Businesses outgrow MYOB. But this doesn't require an immediate replacement.


Businesses run into these MYOB limitations when they grow: 

* Performance: MYOB becomes slow and crashes too often (See Renovating MYOB: Getting better performance)

* Business sophistication: businesses with multiple entities, multiple sites or more sophisticated requirements have to resort to time-consuming manual work-arounds for missing MYOB functionality

* Business insight and reporting: MYOB doesn't provide any support for influencing the decisions which can help a business grow and deal with unexpected circumstance. MYOB concentrates instead on traditional tax-accounting reports which tell you only what already happened.

The consequences of sticking with MYOB are higher costs and lost profit.

Cost which are too high are always easy to see. They are inefficiences: paying people to spend more time than they should to do things. Indications are double entry of information from spreadhseets or other systems into MYOB, errors, lots of manual book-keeping work to keep different entities in sync, missed tax deductions, expensive effort to prepare financial results for tax returns, very slow month end closes (more than a week is slow), poor control over cash.

Lost profits are harder to see because they are things which might have happened but whic didn't. Examples may be sales you lost because you were forced to quote too high to cover risks due to poor cost insights, customers cherry picking your hidden cross subsidies, or poor investment decisions. Sometimes they become obvious simply because something happens which is too big to miss: a series of lost customers, lost sales, or an analysis of competitor behaviour. Although they are harder to see, lost growth opportunities are much more significant that cost savings. Cost savings are finite: you can only cut spending once.

Lost profits are usually a bigger reward for changing your business IT; poor business information holds businesses back from growing, but unfortunately it's much harder to miss what you never had. So most businesses approach GrowthPath (and other consultancies) when they are triggered by cost concerns. 

But there is sometimes a middle path between remaining locked in too MYOB, and investing in an entirely new system.

There are two possiblities to delay replacing MYOB: Renovation and Extension.

Renovating MYOB: Getting better performance

You can get better technical performance from MYOB. Better technical performance means more users, faster response and fewer crashes.

Any IT system which supports more than one user has to share its database. Modern solutions use software which acts like a agent representing the database, a bit like the banker in a game of Monopoly, who manages the cash on behalf of all the players. Technically, these agents are called database-servers. MYOB's biggest problem is that it does not have a database server. Each user runs a full peer of MYOB, and these peers contend to get access the file, one at a time. Once one client has the file, none of the others can use it. When the sharing happens over a network, the overhead of passing access rights between the computers on the network becomes so slow that MYOB can spend more time sharing the file rather than actually updating it. As the number of users gets above three or four and as the file size grows, problems begin as the process of sharing the file squeezes ever more time from actually using the file: like a room of shouting children, more children just means louder shouting.

For MYOB, there is no solution to the fundamental weakness of this design choice. But the effects can be minimised. The key is to eliminate the network, by having all users on the same computer as the data file, which means using a Terminal Server (also known as a Remote Desktop Server). This produces improvements that sometimes are dramatic. Read more about MYOB performance improvement. It is however a finite solution. But it may buy some time.

Extend MYOB

The other key weakness of MYOB is that it does little with all the data it captures. It's hard to share the reports, and they are traditional, backwards-looking reports.

Not too long ago, a business would bundle its core IT needs into one software package: the monolithic (all-under-one-roof) model of IT. With the ambition of provding everything you need in one package, there is not supposed to be much need to share information with other software; as a consequence, integrating with other software is expensive and difficult. As well, it means you are locked in, and essentially held ransom to large annual "maintenance" fees. 

MYOB is an example of this philosophy. It keeps track of accounts, stock, providing information to management, and it even tries to be a basic contact manager. It provides only very clumsy ways to export or import information from other systems. 

However, this software philosophy has radically changed with the advent of the web. There are standard ways of sharing information together which are easy to learn and well documented, and business IT is moving towards many systems being plugged together. At the same time, businesses see more and more IT in everything they do. Customers place orders via websites, and they expect to see stock levels and tracking information online. You may have outsourced your fulfilment, and you use social media and AdWords to reach new customers, etc. GrowthPath worked with one client which had an online store, a practice management package, an inventory system and MYOB, all manually connected. At the same time, the client's website had become crucial to the business, and they had an email marketing package as well. Yet this business was not huge: less than $10m turnover. 

If you face competition from new businesses, they may have completely leap-frogged the traditional approach. They are competing with an advantage of better, faster, and more insightful IT, which to makes things worse, may be cheaper.

It is hard to fit MYOB into such a model, but not impossible.  It turns out to be easy to extract a record-for-record copy of MYOBs data into a real database, and from there share it. Mostly, there are benefits in better reporting. The information in MYOB can be unlocked and shared with web-based tools like dashboards and analytical software, and mixed with non-accounting data. Sales people on the road can see which invoices are unpaid by which customers. Data can be combined in ways not possible in standard MYOB, allowing much better cash flow analysis. This can make some significant improvements to the way MYOB can help decisions, and it also allows automation of manually-produced reports, such as cash flow analysis, payment-decisions, stock reordering. 

Modern business analytic tools were once very expensive, but there are now good open-source solutions and cloud solutions. Without too much cost, you can have modern dashboards viewable on browsers and phones with daily updates of sales, overdues, combined with non-MYOB measures like website hits or production levels, and why not add predictive analytics, or comparisons with the same day of the same month last year? The open-source tool Pentaho is one possiblity. This means we use a one-way API out of MYOB. It's not really a true path to modern IT, but it's cheap, not disruptive, and it solves some important problems. 

The above steps of Renovation and Extension may buy you time before you have to leave MYOB. This is not really simple a matter of deferring the inevitable. The Business IT revolution under way is still in progress, and the capabilities of new approaches like the Xero, Saasu, Unleashed, Kounta etc is growing fast. These tools may struggle to meet requirements of some medium sized enterprises now, but in two years the gap will have narrowed. So buying a couple of extra years on MYOB may mean you can avoid moving to a traditional monolithic package, with large savings. 


Replace MYOB

If you are going to replace MYOB, please think hard about avoiding a successor monolithic solution. Look hard at web-based accounting tools. In core functionality they may seem weaker than MYOB: Xero, for example, doesn't have a stock module. But the point of these systems is to integrate them with other web-based tools (Unleashed for example, or a POS like Kounta). Reports can be saved directly into Google's suite of web-based spreadsheet and word processor tools. You may even ditch your servers.

Your evaluation now includes things like the quality of the API (the instructions for other people in how to connect), and ecosystem of third-party tools. 

Bear in mind that this is a major change for the traditional software industry. There are no large up-front payments, and implementation service costs are much lower. APIs using standard technologies means there is a large pool of software developers; you are much less tied to specialists in a particular system and the lock-in of a monolithic system. Many traditional vendors of ERP packages are business models which don't work with this new approach to software. 

It therefore should change how you seek advice. GrowthPath thinks the future of business IT consultancy relies much less on licence revenue and narrow technical skills, and much more on zero-commission services which are based more on optimising the performance of the business.