Hidden software implementation costs: What nonprofits need to know

Benchmarking doesn’t need to be time and resource consuming. Read on for four simple steps you can take to improve efficiency and maximize resources.

Stop us if you’ve heard this one before (from your Board of Trustees or Finance Committee): “I wish there was a way we could benchmark ourselves against our competitors.”

Have you ever wrestled with how to benchmark? Or struggled to identify what the Board wants to measure? Organizations can fall short on implementing effective methods to benchmark accurately. The good news? With a planned approach, you can overcome traditional obstacles and create tools to increase efficiency, improve operations and reporting, and maintain and monitor a comfortable risk level. All of this can help create a competitive advantage — and it  isn’t as hard as you might think.

Even with a structured process, remember that benchmarking data has pitfalls, including:

• Peer data can be difficult to find. Some industries are better than others at tracking this information. Some collect too much data that isn’t relevant, making it hard to find the data that is.
   
• The data can be dated. By the time you close your books for the year and data is available, you’re at least six months into the next fiscal year. Knowing this, you can still build year-over-year trending models that you can measure consistently.
   
• The underlying data may be tainted. As much as we’d like to rely on financial data from other organization and industry surveys, there’s no guarantee that all participants have applied accounting principles consistently, or calculated inputs (e.g., full-time equivalents) in the same way, making comparisons inaccurate.

Despite these pitfalls, benchmarking is a useful tool for your organization. Benchmarking lets you take stock of your current financial condition and risk profile, identify areas for improvement and find a realistic and measurable plan to strengthen your organization.

Here are four steps to take to start a successful benchmarking program and overcome these pitfalls:

1. Benchmark against yourself. Use year-over-year and month-to-month data to identify trends, inconsistencies and unexplained changes. Once you have the information, you can see where you want to direct improvement efforts.
2. Look to industry/peer data. We’d love to tell you that all financial statements and survey inputs are created equally, but we can’t. By understanding the source of your information, and the potential strengths and weaknesses in the data (e.g., too few peers, different size organizations and markets, etc.), you will better know how to use it. Understanding the data source allows you to weigh metrics that are more susceptible to inconsistencies.

3. Identify what is important to your organization and focus on it. Remove data points that have little relevance for your organization. Trying to address too many measures is one of the primary reasons benchmarking fails. Identify key metrics you will target, and watch them over time. Remember, keeping it simple allows you to put resources where you need them most.

4. Use the data as a tool to guide decisions. Identify aspects of the organization that lie beyond your risk tolerance and then define specific steps for improvement.

Once you take these steps, you can add other measurement strategies, including stress testing, monthly reporting, and use in budgeting and forecasting. By taking the time to create and use an effective methodology, this competitive advantage can be yours. Want to learn more? Check out our resources for not-for-profit organizations here.

We’ve all heard stories about organizations spending thousands on software projects, such as Enterprise Resource Planning (ERP), Electronic Health Record (EHR), or Student Information Systems (SIS) that take longer than expected to implement and exceed original budgets. One of the reasons this occurs is that organizations often don’t realize that purchasing a large, Commercial Off-The-Shelf (COTS) enterprise system is a significant undertaking. If the needs aren’t sufficiently defined, there can be many roadblocks, including implementation delays, increased cost, scope creep, and ultimately, unsatisfactory results (delayed or unfinished projects and cost overruns).

These systems are complex, and implementation efforts impact both internal and external stakeholders. Procurement often requires participation from different departments, each with unique goals and perspectives. Ignore these perspectives at your own peril. Here are key questions to consider for making the best buying decision:

1. Should we purchase software that similar organizations have purchased?
   As vendor consolidation has diminished the number of distinct COTS systems available, this question is increasingly common. Following this approach is similar to deciding to buy the car that your neighbor did, because they seem satisfied. How can you be sure that the systems purchased by similar organizations will meet your needs, particularly if your needs are undefined? One way to identify your organization’s needs—and to avoid costly mistakes down the road—is to identify requirements during the procurement process.

2. What are the functional and technical requirements of the system?Requirements are details that help describe a software system. There are two types of requirements and you need to understand and review both:
   
   Functional requirements. These define specific functions of a system to meet day-to-day needs of an organization or department. They describe the necessary system capabilities that allow users to perform their jobs. For example, “The vendor file must provide a minimum of four (4) remit-to addresses.” Functional requirements may also define the mandated state or federal capabilities required of a system, such as the ability to produce W-2 or 1099 forms.
   
   Technical requirements. These requirements identify criteria used to judge the operation of a system, rather than specific behaviors. They can be requirements that define what database the system must support. For example, “The system must support use of the client preferred database.” They may also describe security capabilities of the system, the ability to import or export data, or the ease of use and overall end-user interface.

3. Who should help define and document requirements for the new enterprise system?
   
   When it comes to documenting and revising requirements, work with your IT staff; incorporating technology standards into a set of requirements is a best practice. Yet it is also necessary to seek input from non-IT individuals, or business process owners from multiple departments, those who will use and/or be affected by the new software system.
   
   Help these individuals or groups understand the capabilities of modern software systems by having them visit the sites of other organizations, or attend software industry conferences. You should also have them document the current system’s deficiencies. As for those in your organization who want to keep the current system, encourage their buy-in by asking them to highlight the system’s most valuable capabilities. Perspectives from both new system supporters and those not so eager to change will help build the best system.
    
4. When do you revise enterprise system requirements? 
   It is always important to begin the software procurement process with a documented set of requirements; you need them to identify the best solution. The same goes for the implementation process where vendors use the requirements to guide the setup and configuration of the new system. But be prepared to revise and enhance requirements when a vendor solution offers an improved capability or a better method to achieve the results. The best way to approach it is to plan to revise requirements constantly. This enables the software to better meet current needs, and often delivers enhanced capabilities.

Be sure to document system requirements for an efficient process

There may be thousands of requirements for an enterprise system. To make the procurement process as efficient as possible, continually define and refine requirements. While this takes time and resources, there are clear benefits:

• Having requirements defined in an RFP helps vendors match the capabilities of their software systems to your organization’s needs and functional expectations. Without requirements, the software procurement and selection process has little framework, and from a vendor perspective becomes a subjective process — making it hard to get consistent information from all vendors.
• Requirements help determine specific tasks and activities to address during the implementation process. While applications can’t always meet 100% of the requested functionalities, it’s important to emphasize the requirements that are most important to users, to help find the system that best meets the needs of your organization.
• Requirements prove valuable even after implementation has begun, as they can help you test your system to make sure the software meets your organization’s particular needs before production use of the new system.

Our experienced consultants have led many software procurement projects and have firsthand knowledge about the challenges and opportunities associated with purchasing and implementing systems large and small. BerryDunn maintains an active database of requirements that we continually enhance, based on work performed for various clients and on technological advancements in the marketplace. Please contact us and we can help you define your requirements for large software system purchases.

There’s a good chance that your organization is in the position of needing to do more with less under the strain of staffing constraints and competing initiatives. With fewer resources to work with, you’ll need to be persuasive to get the green light on new enterprise technology initiatives. To do that, you need to present decision makers with well-thought-out and targeted business cases that show your initiative will have impact and will be successful. Yet developing such a business case is no walk in the park. Perhaps because our firm has its roots in New England, we sometimes compare this process to leading a hiking trip into the woods—into the wild. 

Just as in hiking, success in developing a business case for a new initiative boils down to planning, preparation, and applying a few key concepts we’ve learned from our travels. 

Consensus is critical when planning new technology initiatives

Before you can start the hike, everyone has to agree on some fundamentals: 

Who's going? 

Where are we going? 

When do we go and for how long? 

Getting everyone to agree requires clear communication and, yes, even a little salesmanship: “Trust me. The bears aren’t bad this time of year.” The same principle applies in proposing new technology initiatives; making sure everyone has bought into the basic framework of the initiative is critical to success.

Although many hiking trips involve groups of people similar in age, ability, and whereabouts, for your business initiative you need to communicate with diverse groups of colleagues at every level of the organization. Gaining consensus among people who bring a wide variety of skills and perspectives to the project can be complex.

To gain consensus, consider the intended audiences of your message and target the content to what will work for them. It should provide enough information for executive-level stakeholders to quickly understand the initiative and the path forward. It should give people responsible for implementation or who will provide specific skills substantive information to implement the plan. And remember: one of the most common reasons projects struggle to meet their stated objectives (and why some projects never materialize to begin with), is a lack of sponsorship and buy-in. The goal of a business case is to gain buy-in before project initiation, so your sponsors will actively support the project during implementation. 

Set clear goals for your enterprise technology project 

It’s refreshing to take the first steps, to feel that initial sense of freedom as you set off down the trail. Yet few people truly enjoy wandering around aimlessly in the wilderness for an extended period of time. Hikers need goals, like reaching a mountain peak or seeing famous landmarks, or hiking a predetermined number of miles per day. And having a trail guide is key in meeting those goals. 

For a new initiative, clearly define goals and objectives, as well as pain points your organization wishes to address. This is critical to ensuring that the project’s sponsors and implementation team are all on the same page. Identifying specific benefits of completing your initiative can help people keep their “eyes on the prize” when the project feels like an uphill climb.

Timelines provide additional detail and direction—and demonstrate to decision makers that you have considered multiple facets of the project, including any constraints, resource limitations, or scheduling conflicts. Identifying best practices to incorporate throughout the initiative enhances the value of a business case proposition, and positions the organization for success. By leveraging lessons learned on previous projects, and planning for and mitigating risk, the organization will begin to clear the path for a successful endeavor. 

Don’t compromise on the right equipment

Hiking can be an expensive, time-consuming hobby. While the quality of your equipment and the accuracy of your maps are crucial, you can do things with limited resources if you’re careful. Taking the time to research and purchase the right equipment, (like the right hiking boots), keeps your fun expedition from becoming a tortuous slog. 

Similarly, in developing a business case for a new initiative, you need to make sure that you identify the right resources in the right areas. We all live with resource constraints of one sort or another. The process of identifying resources, particularly for funding and staffing the project, will lead to fewer surprises down the path. As many government employees know all too well, it is better to be thorough in the budget planning process than to return to authorizing sources for additional funding while midstream in a project. 

Consider your possible outcomes

You cannot be too singularly focused in the wild; weather conditions change quickly, unexpected opportunities reveal themselves, and being able to adapt quickly is absolutely necessary in order for everyone to come home safely. Sometimes, you should take the trail less traveled, rest in the random lean-to that you and your group stumble upon, or go for a refreshing dip in a lake. By focusing on more than just one single objective, it often leads to more enjoyable, safe, and successful excursions.

This type of outlook is necessary to build a business case for a new initiative. You may need to step back during your initial planning and consider the full impact of the process, including on those outside your organization. For example, you may begin to identify ways in which the initiative could benefit both internal and external stakeholders, and plan to move forward in a slightly new direction. Let’s say you’re building a business case for a new land management and permitting software system. Take time to consider that this system may benefit citizens, contractors, and other organizations that interact with your department. This new perspective can help you strengthen your business case. 

Expect teamwork

A group that doesn’t practice teamwork won’t last long in the wild. In order to facilitate and promote teamwork, it’s important to recognize the skills and contributions of each and every person. Some have a better sense of direction, while some can more easily start campfires. And if you find yourself fortunate enough to be joined by a truly experienced hiker, make sure that you listen to what they have to say.

Doing the hard work to present a business case for a new initiative may feel like a solitary action at times, but it’s not. Most likely, there are other people in your organization who see the value in the initiative. Recognize and utilize their skills in your planning. We also suggest working with an experienced advisor who can leverage best practices and lessons learned from similar projects. Their experience will help you anticipate potential resistance and develop and articulate the mitigation strategies necessary to gain support for your initiative.

If you have thoughts, concerns, or questions, contact our team. We love to discuss the potential and pitfalls of new initiatives, and can help prepare you to head out into the wild. We’d love to hear any parallels with hiking and wilderness adventuring that you have as well. Let us know! 

BerryDunn’s local government consulting team has the experience to lead technology planning initiatives and develop actionable plans that help you think strategically and improve service delivery. We partner with you, maintaining flexibility and open lines of communication to help ensure that your team has the resources it needs.

Our team has broad and deep experience partnering with local government clients across the country to modernize technology-based business transformation projects and the decision-making and planning efforts. Our expertise includes software system assessments/planning/procurement and implementation project management; operational, management, and staffing assessments; information security; cost allocation studies; and data management.  

Read this if your organization is planning on upgrading or replacing an enterprise technology system.

It can be challenging and stressful to plan for technology initiatives, especially those that involve and impact every area of your organization. Common initiatives include software upgrades or replacements for:

• Financial management, such as Enterprise Resource Planning (ERP) systems
• Asset management systems
• Electronic health records (EHR) systems
• Permitting and inspections systems

Though the number of considerations when planning enterprise technology projects can be daunting, the greatest mistake you can make is not planning at all. By addressing just a few key areas, you can avoid some of the most common pitfalls, such as exceeding budget and schedule targets, experiencing scope creep, and losing buy-in among stakeholders. Here are some tips to help you navigate your next project:

Identify your IT project roles and resources

While most organizations understand the importance of identifying project stakeholder groups, it is often an afterthought. Defining these roles at the outset of your project helps you accurately estimate the work effort.

Your stakeholder groups may include:

• An executive sponsor
• A steering committee
• A project manager
• Functional leads
• A technical team

Once you’ve established the necessary roles, you can begin reviewing your organization’s resources to determine the people who will be available to fill them. Planning for resource availability will help you avoid delays, minimize impact to regular business processes, and reduce the likelihood of burnout. But this plan won’t remain static—you can expect to make updates throughout the project.

Establish clear goals and objectives to keep your technology project on track

It’s important that an enterprise technology project has established goals and objectives statements. These statements will help inform decision-making, provide benchmarks for progress, and measure your project’s success. They can then be referenced when key stakeholders have differing perspectives on the direction to take with a pending decision. For example, if the objective of your project is to reduce paper-based processes, you may plan for additional computer workstations and focus technical resources on provisioning them. You’ll also be able to measure your success in the reduction of paper-based tasks.

Estimate your IT project budget accurately

Project funding is hardly ever overlooked, but can be complex with project budgets that are either underestimated or estimated without sufficient rationale to withstand approval processes and subsequent budget analysis. You may find that breaking down estimates to a lower level of detail helps address these challenges. Most technology projects incur costs in three key areas:

• Vendor cost: This could include both one-time software implementation costs as well as recurring costs for maintenance and ongoing support.
• Infrastructure cost: Consider the cost of any investments needed to support your project, such as data center hardware, networking components, or computing devices.
• Supplemental resource cost: Don’t forget to include the cost of any additional resources needed for their specialized knowledge or to simply backfill project staff. This could include contracted resources or the additional cost of existing resources (i.e., overtime).

A good technology project budget also includes a contingency amount. This amount will depend on your organization’s standards, the relative level of confidence in your estimates, and the relative risk.

Anticipate the need for change management

Depending on the project, staff in many areas of your organization will be impacted by some level of change during a technology implementation. External stakeholders, such as vendors and the public, may also be affected. You can effectively manage this change by proactively identifying areas of likely change resistance and creating strategies to address them.

In any technology implementation, you will encounter change resistance you did not predict. Having strategies in place will help you react quickly and effectively. Some proven change management strategies include communicating throughout your project, involving stakeholders to get their buy-in, and helping ensure management has the right amount of information to share with their employees.

Maintain focus and stay flexible as you manage your IT project

Even with the most thought-out planning, unforeseen events and external factors may impact your technology project. Establish mechanisms to regularly and proactively monitor project status so that you can address material risks and issues before their impact to the project grows. Reacting to these items as they arise requires key project stakeholders to be flexible. Key stakeholders must recognize that new information does not necessarily mean previous decisions were made in error, and that it is better to adapt than to stick to the initial direction.

Whether you’re implementing an ERP, an EHR, or enterprise human resources or asset management systems, any enterprise technology project is a massive undertaking, involving significant investment and a coordinated effort with individuals across multiple areas of an organization. Common mistakes can be costly, but having a structured approach to your planning can help avoid pitfalls. Our experienced, objective advisors have worked with public and private organizations across the country to oversee large enterprise projects from inception to successful completion.

Contact our software consulting team with any questions.

Read this if your CFO has recently departed, or if you're looking for a replacement.

With the post-Covid labor shortage, “the Great Resignation,” an aging workforce, and ongoing staffing concerns, almost every industry is facing challenges in hiring talented staff. To address these challenges, many organizations are hiring temporary or interim help—even for C-suite positions such as Chief Financial Officers (CFOs).

You may be thinking, “The CFO is a key business partner in advising and collaborating with the CEO and developing a long-term strategy for the organization; why would I hire a contractor to fill this most-important role?” Hiring an interim CFO may be a good option to consider in certain circumstances. Here are three situations where temporary help might be the best solution for your organization.

Your organization has grown

If your company has grown since you created your finance department, or your controller isn’t ready or suited for a promotion, bringing on an interim CFO can be a natural next step in your company’s evolution, without having to make a long-term commitment. It can allow you to take the time and fully understand what you need from the role — and what kind of person is the best fit for your company’s future.

BerryDunn's Kathy Parker, leader of the Boston-based Outsourced Accounting group, has worked with many companies to help them through periods of transition. "As companies grow, many need team members at various skill levels, which requires more money to pay for multiple full-time roles," she shared. "Obtaining interim CFO services allows a company to access different skill levels while paying a fraction of the cost. As the company grows, they can always scale its resources; the beauty of this model is the flexibility."

If your company is looking for greater financial skill or advice to expand into a new market, or turn around an underperforming division, you may want to bring on an outsourced CFO with a specific set of objectives and timeline in mind. You can bring someone on board to develop growth strategies, make course corrections, bring in new financing, and update operational processes, without necessarily needing to keep those skills in the organization once they finish their assignment. Your company benefits from this very specific skill set without the expense of having a talented but expensive resource on your permanent payroll.

Your CFO has resigned

The best-laid succession plans often go astray. If that’s the case when your CFO departs, your organization may need to outsource the CFO function to fill the gap. When your company loses the leader of company-wide financial functions, you may need to find someone who can come in with those skills and get right to work. While they may need guidance and support on specifics to your company, they should be able to adapt quickly and keep financial operations running smoothly. Articulating short-term goals and setting deadlines for naming a new CFO can help lay the foundation for a successful engagement.

You don’t have the budget for a full-time CFO

If your company is the right size to have a part-time CFO, outsourcing CFO functions can be less expensive than bringing on a full-time in-house CFO. Depending on your operational and financial rhythms, you may need the CFO role full-time in parts of the year, and not in others. Initially, an interim CFO can bring a new perspective from a professional who is coming in with fresh eyes and experience outside of your company.

After the immediate need or initial crisis passes, you can review your options. Once the temporary CFO’s agreement expires, you can bring someone new in depending on your needs, or keep the contract CFO in place by extending their assignment.

Considerations for hiring an interim CFO

Making the decision between hiring someone full-time or bringing in temporary contract help can be difficult. Although it oversimplifies the decision a bit, a good rule of thumb is: the more strategic the role will be, the more important it is that you have a long-term person in the job. CFOs can have a wide range of duties, including, but not limited to:

• Financial risk management, including planning and record-keeping
• Management of compliance and regulatory requirements
• Creating and monitoring reliable control systems
• Debt and equity financing
• Financial reporting to the Board of Directors

If the focus is primarily overseeing the financial functions of the organization and/or developing a skilled finance department, you can rely — at least initially — on a CFO for hire.

Regardless of what you choose to do, your decision will have an impact on the financial health of your organization — from avoiding finance department dissatisfaction or turnover to capitalizing on new market opportunities. Getting outside advice or a more objective view may be an important part of making the right choice for your company.

BerryDunn can help whether you need extra assistance in your office during peak times or interim leadership support during periods of transition. We offer the expertise of a fully staffed accounting department for short-term assignments or long-term engagements―so you can focus on your business. Meet our interim assistance experts.

Law enforcement, courts, prosecutors, and corrections personnel provide many complex, seemingly limitless services. Seemingly is the key word here, for in reality these personnel provide a set number of incredibly important services.

Therefore, it should surprise no one that justice and public safety (J&PS) IT departments should also provide a well-defined set of services. However, these departments are often viewed as parking lots for all technical problems. The disconnect between IT and other J&PS business units often stems from differences in organizational culture and structure, and differing department objectives and goals. As a result, J&PS organizations often experience misperception between business units and IT. The solution to this disconnect and misperception? Defining IT department services.

The benefits of defined IT services

1. Increased business customer satisfaction. Once IT services align with customer needs, and expectations are established (e.g., service costs and service level agreements), customers can expect to receive the services they agreed to, and the IT department can align staff and skill levels to successfully meet those needs.
2. Improved IT personnel morale. With clear definition of the services they provide to their customers, including clearly defined processes for customers to request those services, IT personnel will no longer be subject to “rogue” questions or requests, and customers won’t be inclined to circumvent the process. This decreases IT staff stress and enables them to focus on their roles in providing the defined services. 
3. Better alignment of IT services to organizational needs. Through collaboration between the business and IT organizations, the business is able to clearly articulate the IT services that are, and aren’t, required. IT can help define realistic service levels and associated services costs, and can align IT staff and skills to the agreed-upon services. This results in increased IT effectiveness and reduced confusion regarding what services the business can expect from IT.
4. More collaboration between IT and the organization. The collaboration between the IT and business units in defining services results in an enhanced relationship between these organizations, increasing trust and clarifying expectations. This collaborative model continues as the services required by the business evolve, and IT evolves to support them.
5. Reduced costs. J&PS organizations that fail to strategically align IT and business strategy face increasing financial costs, as the organization is unable to invest IT dollars wisely. When a business doesn’t see IT as an enabler of business strategy, IT is no longer the provider of choice—and ultimately risks IT services being outsourced to a third-party vendor.

Next steps
Once a J&PS IT department defines its services to support business needs, it then can align the IT staffing model (i.e., numbers of staff, skill sets, roles and responsibilities), and continue to collaborate with the business to identify evolving services, as well as remove services that are no longer relevant. Contact us for help with this next step and other IT strategies and tactics for justice and public safety organizations.

While new software applications help you speed up processes and operations, deciding which ones will work best for your organization can quickly evolve into analysis paralysis, as there are so many considerations.

Case in point: Software as a Service (SaaS) model
The benefits of the SaaS model, in which a vendor remotely hosts an organization’s applications, are fairly well known: your organization doesn’t have to shell out for costly hardware, the vendor tackles upgrades, backups, data recovery, and security, and you have more time and money to focus on your business goals.

There are multiple factors to look at when determining whether a SaaS solution is right for you. We’ve compiled a list of the top three SaaS considerations:

1. Infrastructure and capacity
Your organization should consider your own people, processes, and tools when determining whether SaaS makes sense. While an on-site solution may require purchasing new technologies, hiring new staff, and realigning current roles and responsibilities to maintain the system, maintaining a SaaS solution may also require infrastructure updates, such as increased bandwidth to sufficiently connect to the vendor's hosting site.

Needless to say, it’s one thing to maintain a solution; it’s an entirely different thing to keep it secure. An on-site hosting solution requires constant security upgrades, internal audits, and a backup system—all of which takes time and money. A SaaS model requires trust in your vendor to provide security. Make sure your potential vendor uses the latest security measures and standards to keep your critical business data safe and secure.

2. Expense
When you purchase major assets—for example, hardware to host its applications—it incurs capital expenses. Conversely, when you spend money on day-to-day operations (SaaS subscriptions), it incurs operating expenses.

You should weigh the pros and cons of each type of expense when considering a SaaS model. On-site upfront capital expenses for hosting hardware are generally high, and expenses can spike overtime when you update the technology, which can be difficult to predict. And don’t forget about ongoing costs for maintenance, software upgrades, and security patches.

In the SaaS model, you spread out operating costs over time and can predict costs because you are paying via subscription—which generally includes costs for maintenance, software upgrades, and security patches. However, remember you can depreciate capital expenses over time, whereas the deductibility of operating expenses are generally for the year you use them.

3. Vendor viability
Finally, you need to conduct due diligence and vet SaaS vendors before closing the deal. Because SaaS vendors assume the responsibility for vital processes, such as data recovery and security, you need to make sure the potential vendor is financially stable and has a sustainable business model. To help ensure you receive the best possible service, select a vendor considered a leader in its market sector. Prepare a viable exit strategy beforehand so you can migrate your business processes and data easily in case you have any issues with the SaaS provider.

You must read—and understand—the fine print. This is especially important when it comes to the vendor’s policies toward data ownership and future migrations to other service providers, should that become necessary. In other words: Make sure you have final say and control over your data.

Every organization has different aspects of their situation to consider when making a SaaS determination. Want to learn more? It’s a snap! Contact the authors: Clark Lathrum and Matthew Tremblay. 

Did you know that there was more than a 40% increase (from $4.3 billion to $6.0 billion) in civil penalties assessed by the IRS regarding employment tax, for the 2016 fiscal year?

A recent report from the Treasury Inspector General for Tax Administration calls for more cases to involve criminal investigation by the Department of Justice. This is significant because the requirements needed to prove a civil violation under Sec. 6672 are nearly identical to the requirements of a criminal violation under Sec. 7202, and a criminal violation can result, among other penalties, in imprisonment for up to five years.

The issue of employment taxes encompasses all businesses, even tax-exempt entities. For fiscal year 2016, employment tax issues were involved in over 26% of audits of exempt organizations. One main reason why employment tax is a major issue? Its role in funding our government: employment taxes make up $2.3 trillion dollars (70%) of the $3.3 trillion dollars collected by the IRS for fiscal year 2016.

And noncompliance is a major issue, with roughly $45.6 billion of unemployment taxes, interest and penalties still owed to the IRS as of December 2015. This trend of increasing noncompliance, combined with the vital role employment taxes has in funding our government helps explain why the IRS has increased focus and enforcement in this area.

Should your independent contractor truly be an employee? Did you properly report fringe benefits as taxable income to the individuals who received them? Knowing the answers to these questions can help you stay in compliance with the law. If you have any questions about your employment tax situation, or how we can help you ensure compliance on this and other tax issues, please contact your BerryDunn tax advisor.
 

We all know them. In fact, you might be one of them — people who worry the words “go live” will lead to job loss (theirs). This feeling is not entirely irrational. When an organization is ready to go live from an existing legacy system to a new enterprise system, stress levels rise and doubts emerge: What can go wrong? How much time will be lost? Are we really ready for this?

We’re here to help. Here is a list of go-live essentials to help you mitigate stress and assess your readiness. While not all-encompassing, it’s a good place to start. Here’s what you need:

1. A detailed project plan which specifies all of the implementation tasks
   A project plan is one of the most important parts of an implementation. A detailed plan that identifies all of the implementation tasks along with an assigned resource for each task is critical to success. The implementation vendor and the organization should develop this plan together to get buy-in from both teams.

2. A completed system configuration
   New system configuration is one of the most time-consuming aspects of a technology implementation. If you don’t complete the implementation in a timely manner, it will impact your go-live date. Configure the new system based upon the best practices of the system — not how the existing system was — for timely implementation.

3. External system interface identification
   While replacement of some external systems may be a goal of an implementation, there may be situations where external systems are not replaced or the organization has to send and/or receive data from external organizations. And while new systems have advanced interface technology capabilities, the external systems may not share these capabilities. Therefore it is imperative that you identify external system interfaces to avoid gaps in functionality.

4. Testing, testing, testing
   End-to-end testing or User Acceptance Testing (UAT) is often overlooked. It involves completing testing scenarios for each module to ensure appropriate system configuration. While the timing of UAT may vary, allow adequate time to identify solutions to issues that may result from UAT.

5. Data conversion validation
   When you begin using a new system, it’s best to ensure you’re working with clean, up-to-date data. Identify data conversion tasks in the project plan and include multiple data conversion passes. You must also determine if the existing data is actually worth converting. When you complete the data conversion, check for accuracy.

6. End user training
   You must train all end users to ensure proper utilization across the organization. Don’t underestimate the amount of time needed for end user training. It is also important to provide a feedback mechanism for end users to determine if the training was successful.

7. A go-live cutover plan
   The overall project plan may indicate go-live as an activity. List specific activities to complete as part of go-live. You can build these tasks into the project plan or maintain them as a separate checklist to promote a smooth transition.

8. Support structure
   Establish an internal support structure when preparing for go-live to help address issues that may arise. Most organizations take time to configure and test the system and provide training to end users prior to go-live. Questions will arise as part of this process — establish a process to track and address these questions.

Technology implementations can significantly impact your organization, and it’s common for stress levels to rise during the go-live process. But with the right assessment and preparation, you can lessen their impact and reduce staff stress. Our experienced, objective advisors work with public and private sector organizations across the country to oversee large enterprise projects from inception to successful completion. Please reach out to us to learn more about preparing for your next big project.