Outgrowing QuickBooks and Xero: The Road to ERP
When your company begins to scale and outgrow your SMB accounting software, you need a more serious solution that can handle more complex processes along with auditing, compliance, multi-currency and multi-entity needs.
You start scoping out options and realize NetSuite is among the few ERPs that exist. You’ve heard of it before and, although it appears complicated, it also seems to be the most popular choice. This is when the NetSuite trap starts to lure you in.
As you begin to collect quotes, you realize all options are 20-100 times more expensive than your current SMB accounting software. NetSuite is one of the most expensive choices. You ask for a trial, but they reject it – in fear that you’ll realize how clunky the software is. Instead, you settle for a pre-rehearsed demo. Everything appears to work well. It’s expensive, so you think about it for a while – but as it seems that everyone is running on (or, as you later realize, is trapped into) NetSuite, you go for it.
But the spending is nowhere near done. NetSuite loops in implementation specialists who, often times, are just back-up sales people who aim to convince you that, because you’ve got such a unique business, they’ll need to come in and set everything up for you. You agree to this as, after all, your business is unique.
You then realize that you need to pay for the implementation, which is just as expensive as the software itself. You’re told it takes months, and hundreds of man hours, to set NetSuite up. You begin being charged you before the implementation team gets to work so, during this transitory phase, you’re paying for a blank screen.
The ERP Implementation: Wholly Misaligned Incentives
In case you’re wondering why it takes so long to set up or implement a piece of software: NetSuite and its implementation specialists have a backdoor agreement. They pay one another fees and kickbacks. Implementation specialists are encouraged to “close” the NetSuite sale to win the implementation business. If they do their job well, they’ll be brought into future NetSuite deals.
NetSuite is encouraged to make set-up times longer to be the favored ERP for implementation consultants, as longer implementation times equal more implementation fees.
Then here is how these “closers” trap you. Implementation teams often charge by the hour. Implementation partners are incentivized to underestimate their scoped time to “close the sale”. They know that if you agree to a project, the sunk-cost fallacy will kick in.
You’ve already committed to 1-3 years of software fees and paid for hundreds of implementation hours, and your vital systems are already partially running on NetSuite. If it later becomes clear that the implementation will not be done as expected and you need to get the system to the place you’d originally envisioned, your only option is to pay more.
Some NetSuite customers refuse to pay more fees and end up having to cut corners and create patched workarounds.
The ERP Trap: Become Dependent On Outside Consultants
Once you’ve survived the NetSuite implementation process, the same issues will reoccur whenever your business evolves. If you launch a new line or expand into a new country, you risk having to bring back the same implementers who originally set things up. In addition: they don’t shy away from doing a quick LinkedIn headcount to check how much you’re likely “willing” to pay.
Ask your fellow CFOs about their NetSuite experience: about how much they spent in total, how long it took and, most importantly, if it works as they expected. Does the product at least look good and work well?
Unfortunately, the answer isn’t the one you’d like to hear. Because why would anyone have an incentive to improve the software?
NetSuite hasn’t meaningfully changed since the 2000s. Its pages load slowly, the UI is clunky and unintuitive, and the software doesn’t integrate well with modern systems.
You often have to manually enter data multiple times, working through redundant steps. The real cost to your business is not just about the fees, but also the time and frustration of your team on NetSuite.
How to Escape The ERP Trap: AI-Native Accounting Software
Accounting is ripe for transformation, with 75% of CPAs nearing retirement and fewer new professionals entering the field.
The industry's manual workflows and outdated software solutions are ill-equipped to handle modern challenges and scale efficiently with businesses.
AI is changing our ways of working and the ways in which we interact with software, yet NetSuite is still selling software built in the 1990s. We’ve also written a blog post on how Netsuite (and other popular ERPs) get away with this, in case you’re curious.
At DualEntry, we’ve taken a different approach by handling implementation ourselves.
We’ve made our software easy to set up and ready to scale with your business. We don’t start charging you until you’ve completed your first accounting close in DualEntry.
We make money if you love our software, and we only win if you win.
Disclaimer
The content provided on this blog is for informational purposes only and reflects the personal views and opinions of the authors. It is not intended to serve as professional accounting, financial, or legal advice. While we strive to ensure the accuracy of the information presented, we make no guarantees regarding its completeness or relevance to specific situations. Always consult with a certified accountant, financial advisor, or legal professional before making decisions based on the information provided. For authoritative guidance, refer to official sources, such as the IRS, FASB, or your local regulatory bodies.
