9 Signs You Should Migrate ERPs

Transitioning ERPs can feel like moving to a new home. 

It’s expensive. Complicated. Something inevitably is going to break. 

So should you tack on another point solution integration and push the boundaries of your existing ERP (the equivalent of squeezing more storage under your bed or converting the garage into a guest room)? Or is a move inevitable and it’s time to pull out the packing tape and boxes?

Few decisions are as impactful in a Controller’s role than determining which ERP is the right fit to your business. We’ve broken down 9 common signals that indicate it may indeed be time to rip off the bandaid and move forward with an inevitable ERP transition.

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1. You’re expanding globally 

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You’ve popped open a bottle of champagne to celebrate the new office opening in London— then took a deep breath, thinking through the added complexity in your accounting. 

QuickBooks’ and Xero's capabilities are fairly limited when it comes to consolidating multiple legal entities. This is especially true if those legal entities are domiciled in other countries, transacting in different currencies, or requiring localized languages (France requires a French chart of accounts, for example). 

The moment that boots are on the ground and you’re hiring locally, you’re generally required to establish a legal entity in that country. Among other things, this will often introduce multiple accounting standards, multiple layers of currency conversion, and intercompany balances to manage. 

Mature ERPs, like NetSuite, are built with multi-entity and multi-currency management in mind and can make the work involved in an ERP transition worth it.

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2. You’re running into complex inventory and supply chain management

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QuickBooks and Xero have basic inventory management capabilities at best. Perhaps you’ve tacked on some add-ons to fill the gaps. 

Even with add-ons extending the runway of lightweight accounting software, many inventory-heavy companies eventually hit the ceiling as their needs become more complex and require features like demand planning, serialized inventory, or multiple warehouse management. 

NetSuite offers robust inventory management and supply chain capabilities, making it an obvious choice for inventory-based business models.  

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3. Revenue recognition is getting complicated 

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Your sales leader runs a spiff where a quarter is discounted. Or your company is now prorating adding products to new contracts and offering premium customer success. You’ve introduced a free trial period. For many companies, especially those in the SaaS space, subscription model, time-based revenue, and multi-element arrangements related to ASC 606 can quickly put QuickBooks or Xero capabilities to the test. 

As revenue recognition increases in complexity, this can be another signal to switch— NetSuite’s capabilities to align with accounting standards for more complex business models can be a better fit. 

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4. Real-time reporting and forecasting are needed across the business

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As your company grows, your ERP data becomes critical to departments across the business, not just your accounting team. And QuickBooks isn’t built for cross-functional use cases, translating to a lot of manual excel downloads and pivoting. 

Advanced reporting and forecasting needs are another key signal to keep in mind when weighing the pros and cons of a transition. 

Mature ERPs are built with business intelligence and analytics capabilities in mind, enabling complex forecasting, budgeting, and financial planning activities to be done across departments more easily. 

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5. You have high customization needs

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Before putting the cart before the horse, the first step here is exploring options to customize with QuickBooks or Xero add-ons and integrations. Or considering if a process change can extend the lifetime of your existing system.

The truth is (but we’re sure this doesn’t apply to you), no ERP can fix a bad process. 

Still not able to tackle the workflow or reporting need? NetSuite offers highly sophisticated customization capabilities and the potential to meet nearly any business scenario with the right NetSuite Partner to guide you.

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6. You need better ecosystem integration 

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Much of your ERP's value comes from its integration with the rest of your business ecosystem. 

While both QuickBooks and Xero have invested heavily in their app ecosystems, limitations remain. If a mature ERP can connect directly with your CRM, e-commerce system, or other core tooling natively, that can be a huge unlock for teams. 

A common risk for accounting teams is that systems outside the ERP, like a CRM, start being used as a source of truth for the accounting team. Given that these systems typically aren’t maintained primarily by finance, the accuracy and controls are often variable and can add roadblocks to strong accounting processes. If a migration enables a shift back to the ERP as the source of truth, this can be a strong signal to consider a switch.

That being said, there’s no silver bullet with ERPs, so weigh the work involved in transitioning and setting up the integration compared to the status quo in your current ERP to judge if this signal will have the intended productivity boost.

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7. Transaction volume is growing fast

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Growing the business is great, but it usually translates to more work on the accountant's plate. As transactions scale, the increased volume to account for can be challenging to handle in QuickBooks and Xero.

While high-volume transactions can certainly call for an ERP upgrade, there are usually ways to reduce the existing volume by adjusting settings or revisiting what level of granularity is required for compliance and visibility into financial performance. 

Before considering changing systems, explore ways to refine how transactions come into QuickBooks and Xero. At the very least, it may extend the runway of your existing accounting software while contributing to an easier data migration later with a cleaner transaction history. 

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8. Your industry gravitates towards early transitions 

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While your business is unique, certain industries tend to outgrow early stage accounting software faster than others. 

On the early side, manufacturing and distribution companies quickly hit the ceiling due to the need for advanced inventory management, supply chain logistics, and production scheduling that supports complex manufacturing processes.

Software and telecom companies can rapidly scale and introduce complicated subscription management and customer success processes — resulting in revenue recognition that’s challenging enough to consider a transition earlier rather than later. 

Finally, e-commerce and CPG businesses heavily rely on a network of integrations with online sales platforms, advanced inventory and order management, and real-time sales analytics, which quickly exceed the scope of QBO or Xero.

On the other hand, professional services firms or single-location retail, restaurant, or hospitality businesses often find that QuickBooks or Xero can scale further even as they expand significantly. 

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9. Your team has the bandwidth to implement successfully (or can partner appropriately) 

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Finally, it’s one thing to determine from the above signals that an ERP transition is needed. It’s another to actually do the near-herculean task of transitioning. You’ll need to clean the data, configure appropriately, plan a phased approach and then properly train the team. 

A key signal that it’s time to transition is when more than one of the above is true, and your team can either dedicate the required resources and bandwidth or partner with an external firm that can help guide and implement the transition for you. 

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Three reasons to delay an ERP transition 

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Now with the above signals laid out, we’d be remiss if we didn’t provide a few reasons why you may be right to procrastinate. The good, reasonable kind of procrastination. 

While making the leap to a mature system like NetSuite in many cases is needed as the company scales, there are certainly plenty of reasons to keep punting a potential transition down the road. 

We won’t list a full ten, but from our experience here are a few reasons to consider intentionally putting the brakes on a transition.

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1. It may not be cost effective

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More mature = more expensive. Implementing NetSuite involves initial and ongoing costs, including licenses, customization, and support, which may not always offer a clear return on investment for smaller businesses or those with simpler operations. 

Ideally, your team times the transitions right so that the cost of NetSuite is only incurred when the upside is clear. 

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2. There is a lot of effort involved 

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To get the most out of NetSuite and similar ERPs, you’ll need to put in the work first. The transition often involves significant changes in business processes, training, and customization, which can temporarily disrupt operations before improvements are realized. 

From our experience working with customers at Continuous Scale, we see that the average transition takes 3-4 months to complete, with the bulk of that time spent cleaning up data in preparation. 

Add in any challenging sources to integrate (like Salesforce) or some of NetSuite's more complex bells and whistles, and you’re extending that timeline even further. 

Attempting the switch too early can unnecessarily distract the team from other priorities and even result in needing to increase headcount to handle additional admin complexity. 

While NetSuite can automate many tasks, you can’t automate bad processes, and complex processes often take time to implement fully.
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3. You may be able to extend your ERP runway with add-ons
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With Xero and QuickBooks, there’s a full ecosystem of potential integrations and add-ons. With tools like Numeric, teams can increasingly automate more of their work and tackle complex workflows (like multi-entity management) without investing in an ERP upgrade. 

If you can extend your current accounting software with a point solution, this can often be the cost-effective choice to help bridge the gap in functionality your team needs. 

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Timing is everything when evaluating a transition from Quickbooks or Xero to a mature ERP like NetSuite. 

Make the call too early and you run the risk of overburdening your team and budget. Make the call too late and you’ve likely incurred technical debt and wasted time on inefficient processes. 

While finding the right time to make the leap is ultimately unique to your business, by keeping an eye out for the 9 common signals above, you’re well positioned to time your migration appropriately and avoid unnecessary headaches. 

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