Modern accounting software is essential for companies, but many are stuck in the past in this area and must move on, as Dariush Mogtader of Dataflow explains...
Accounting software does not have a reputation for setting the world alight. For financial directors and their departments it is an important tool, while for IT managers it is probably a necessary evil.
But when computers first found their way into companies some 30 years ago, accounting was the first process to be computerised and still remains the core application for any business. However, while other areas of corporate IT have made major strides forward in the past 20 years, many companies are still using the same accountancy software that they first acquired in the 1980s.
These packages still perform a useful job but were not designed for modern technology or business demands. Accounting software now needs to integrate seamlessly into other business software and support companies as they move inexorably into the age of ebusiness. Above all, it needs to harness the power of modern IT technology, including more powerful hardware platforms and operating systems. It's time for a change.
One of the reasons why many companies had not made the leap forward was the fear of the millennium bug. The majority of UK businesses using 1980s accounting technology took the decision to go for a low-cost, quick-fix option to get them into the new millennium, with the minimum of risk and investment. Having survived Y2K, many intend to spend time assessing the market, looking for the right system now.
So what are the choices? The traditional mid-range accountancy market based on Microsoft's early DOS-based operating systems characterised by green screens and heavy use of the keyboard, has been dominated by a small number of major players such as Sage and Pegasus. These were designed for technology vastly different to that of today and while such systems have served their users well, they are struggling with the pace of change.
Many of the market leaders have simply up-graded their products by bolting on new modifications such as a graphical user interface and quick fix 'half-way house' ebusiness solutions. So while these may look like modern solutions, this Window-dressing approach can have a negative affect on areas such as performance, stability and customisation.
Size isn't everything
The best way to exploit the latest technology such as Microsoft's 32-bit Windows operating system, is to start from scratch, as a number of smaller players in the accountancy software market have done, such as UK-based Dataflow.
This was designed using powerful Windows development tools to support a client/server architecture. The application runs on any Windows 95, 98, 2000 or NT desktop, while the database such as the latest industry-standard Microsoft SQL Server or Borland's InterBase, run on the server. This means data integrity, a step-change in performance, fast integration with other business software, scalability from five to 100+ users, greater ease of use and more flexibility and customisation.
Accounting software has been largely a stand-alone application. Today companies want to be able to link in their accounts systems into third-party applications such as payroll, asset management and HR packages. And for reporting purposes and day-to-day operations, the ability to drag and drop accounts data into other productivity applications such as Word, Excel and email packages is a big advantage.
Companies in specialist markets have their own core business applications – manufacturing companies may run ERP/MRP (Enterprise/Manufacturing Resource Planning) software. Logistics companies have their own operational applications, hotels have reservation systems and project management software is used in sectors from construction to the law.
The ability to integrate seamlessly with these applications is a major benefit. For example, manual user intervention is no longer required when transferring data from one vendor's application to another vendor's application, which eliminates the chance of data being lost or duplicated.
Ready for ebusiness age
Ebusiness or ecommerce are definitely topics of debate in company boardrooms and IT departments. And while accounting is pretty fundamental to these developments, the profession and its major vendors have not been quick to respond.
But, at the end of last year, industry body The Business & Accounting Software Developers Association (BASDA) published proposals that would allow companies to conduct seamless, electronic transactions over the internet. The electronic Business Interchange Standard (eBIS-XML) formulated by BASDA means all accountancy data will be transported in one language, so companies can read each others' information when it is sent. They will be able to automatically process orders by email or directly from ecommerce web sites. This type of transaction was manually re-keyed as exchanging electronic orders was not possible other than by using expensive and inflexible EDI-based systems.
It is early days for eBIS, but at least vendors now have the basis of an industry-accepted standard to work with. The companies already with 32-bit technology will be able to react first and deliver the most elegant and flexible solutions.
Most companies can no longer rely on home markets. If they thought they could, the internet will change their minds. Global competition is also driving the increasing number of national and cross-border mergers and acquisitions.
Modern accounting systems must support both multi-company and multi-currency operations. While a reasonable number of accounting packages offer multi-currency support including Euros, only a few provide multiple-base currency support – the ability to support accounting in any number of base currencies simultaneously, to handle not only day-to-day requirements such as posting sales and purchase accounts, but to consolidate results from many different local currencies into any currency.
Transactions are calculated in all base currencies on entry, and are instantly available for enquiry and reporting by clicking on the alternative currencies. Invoices and cash can be entered to an individual Accounts Received or Accounts Payable account in any currency, matching any currency transaction with any currency payment. Multiple-base currency support also allows companies to operate in their national currency and report in alternative currencies separately or together with other group members. A US-based global company can receive financials from around the globe in local currencies and instantly create reports in US dollars.
In the good old days for software vendors, customers accepted what was on offer and were grateful. But today, customers demand solutions tailored to their own business requirements.
While this is a problem for the die-hard DOS vendors, companies that have embraced Windows technology throughout are in a strong position to give customers what they want.
Also, customers can now customise their own systems without specialist knowledge thanks to fully modifiable screens and databases. Customisation can vary in complexity. For some companies, simply changing the description of fields, their position and order of input, and the look of the screens to reflect particular facets of their business is all that is required. For others, the ability to add new fields to static data such as customer account details, or new analysis fields to transaction processing make the difference between a system that works for them and one that does not. There will be companies that require extensive customisation, which entails new screens interacting with the standard product. A well-designed Windows product will make this possible. One of the problems of customising software is that the modifications were lost when the next software upgrade came along.
Bells and whistles
We have looked at some of the key requirements of a modern accounting solution and the benefits offered by the latest packages. Other features to look out for are: drag-and-drop error correction and replication; security to account level in all ledgers, search and sort facilities on any data item; flexible account structures which do not have to be duplicated in a multi-company environment; consolidation at all levels at the press of a button; integrated email facilities and finally, "as at" reporting combined with quick and stress-free period end routines that do not hold up current period processing.
The message is look carefully before you leap. Accounting software is not just for Christmas and will probably need to support changes to business requirements and advances in technology for at least ten years. So when it comes to looking around, look behind the Windows front end and vendor hype to see if the software on offer is just old technology dressed up or a true modern solution for the new millennium.