Accounting Software is Growing Up
By Richard Oppenheim, CPA.CITP
The past is always a prologue to what lies ahead. Looking back there was a time that accounting procedures were not supported by computer technology. Over the years, technology has created lots of innovative software and hardware to assist the processing of accounting transactions.
As the years of technology upgrades and enhancements moved along, accounting software has been a beneficiary of the expanding improvements to hardware and operating systems and application programmer skills. In the dark ages of personal computing, the early 1980s, Intuit unleashed version 1 of Quicken to support accounting transaction management.
During this time, early 1980s, our CPA firm had a small business bookkeeping department. The purpose was to manage the paper transactions, write checks and balance the books of non-audit clients. In 1984 we tried a novel approach. We purchased the Quicken software specifically to provide check writing support. It worked. The bookkeepers were able to substantially improve efficiency, accuracy and overall effectiveness for the support of our clients.
Fast forward to 2006 and we can recognize the substantial changes to accounting software from that long ago creation. This included the addition of data base design, huge printing options, links to online accounts such as credit cards and bank transactions. Most of these developments are well documented and known to all.
The next question is where do we go from here? What is going to happen with accounting software in the years ahead?
When considering Accounting Software, there is a fundamental analysis that is undertaken by people who understand both the needs of the business and the features of the software. The following summary is intended to create an outline for the exploration of what is in the going forward pipeline for accounting software.
Feature | Now | Future |
Suitability For Your Business
| While straight out-of-the-box can work for a lot of folks, your business may need unique stuff such as regulatory reports, multi-phase transactions and more
| How is the business changing in terms of: # of locations, who is responsible for accounting transactions; where does the data reside and so forth. |
Features
| Data input, reports out, links to external accounts | Does the data reside in one or multiple locations?
What is the speed required for inputting and updating transactions?
How many links to external data sources are available?
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Integration with other software
| Tax, contact management | Business operations, manufacturing, customer services support, web based access and controls.
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Training and Learning Curve
| Self learning guides, online education, classroom | So easy to use, no training necessary.
Education embedded within the software components
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| Support | Will the vendor be around, how will the programs be update with adherence to new regulations, upgrades to computer hardware and operating systems | How is the data managed? How many different programs can get at the actual data and transpose the data for use in wide range of applications
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Scalability
| Typically not a concern as long as the computer has sufficient memory to execute the program AND a large enough hard drive to store the data | How will the company expand and what resources will be needed to support the increasing number of processes. Will the program be able to execute through the web or across a growing number of computers where each computer will need to access the accounting data stored on a central network, often concurrently.
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| Costs | One time purchases and ongoing upgrade fees | Possible leasing concept of paying monthly forever.
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Legend has it that Accountants started in their work counting widgets and beans of all sizes, shapes and flavors. This counting concept has worked well as basic criteria for lots of different software companies creating useful and useable accounting software. The path ahead is going to offer more and better ways to handle, manage, and control business operations from an accounting point of view. This is where accounting software must go. It is no longer sufficient to just track transaction history and report on what was. Rather it is essential for accounting software to expand to manage the entire enterprise and while reporting transaction history, provide substantial operations support for going forward.
In my view, this is one of the unstated purposes of Sarbanes-Oxley and other regulations that are here or soon will be. Accounting, internal controls, management reporting are all being cobbled together so that the fair presentation and accuracy can portray where the company is and where it is going. Further, this process is true for companies of all sizes, small, medium, large, or huge, as the complexity of conducting business in a wide-spread internet centric world continues to expand.
To date, accounting software has been all about financial management and reporting. Better and more functional controls will require the Accountant to have a more open understanding of where the money from related transactions is entered and reported. Software to support this and other views will be needed. However, just assembling an integrated suite of applications that enhance the accounting function is not the only end goal. Managing the changing, fluctuating, expanding, shrinking, merger-oriented, multi-location business is the goal. Further, it needs to be understood how people, employees, contract workers, regulators and customers, will all have some participation in the process of data entry, data analysis, data reporting, and data control.
One example is the integration of Customer Relationship Management (CRM) systems. There are several very competent stand-alone systems such as Goldmine from Front Range Solutions and ACT! from Sage Software. But it is not that better CRM integration is necessarily needed, many companies have installed generic and custom programmed CRM systems.
There is still a more complex issue to consider. That is the onslaught of the cyber connected business along with the digital tidal wave of data from all sources. Both the CPA firm and the firm’s clients will be facing these issues as the 21st century rolls along. The convergence of cyber geography and digital data access and storage will help companies grow to new markets and/or utilize personnel from all parts of the globe. Whether the company is small or huge, people will work from locations that can be remote across country borders, in multiple states, in multiple towns within one state or even within the same town. Connecting all these workers to a common set of processes for accounting and other resources is good business.
There are three ways to establish this connectivity to support the business and accounting management needs across the broad reach of internet centric business environment.
1 Establish an internal computer network
Linking all computers and applications together is a daunting task and requires experienced and competent technical skills. Knowledge needed includes: hardware, networking software and security, and communications protocols. For large companies this support already exists. Small and medium sized firms often do not have this technical support on staff. This means that all support would have to be acquired from outside vendors.
2 Use an off the shelf networking / hosting system
While there may be several companies that supply this device type, Chili Systems has a terrific bundled package. The Chili Box, with red side panels, comes ready to set up and network up to 15 machines, handle email traffic, and manage internet access to employees with a high level of internet intrusion firewalls and security. It is capable of networking both PCs and Macs, and with 80 gigabytes of storage space can hold common data files and backups. It can also manage your own domain and web sites. The Chili Box retails for $500.
3 Use a web based office management system
Web based accounting and CRM systems have been around a few years. As we look forward what is needed is the web based business management system. One excellent example is the suite of products from HyperOffice Systems. HyperOffice includes more than 10 features including Web email, document management and file storage, online calendars, online contact management, and project management tools. As HyperOffice is Web-based, there is no software to install or maintain. The desktop-like user interface makes the HyperOffice Suite easy to use from the start. Each user gets their own sign-in name and password The system can be accessed from any web connected computer using an authorized login. The monthly subscription fee can vary based on services but is estimated at $8/user/month.
This last item (#3) falls within the category of “Software as Service” (SAS). Even Microsoft has trumpeted this capability so that programs no longer have to reside and be maintained on individual computers. Moreover, with travel and multiple locations on the increase, having the ability to access the data from a wide range of computers can be extremely beneficial. For example, when you are distant from your very own computer, it can be important to be able to access your web based mail, customer information, documents, or other web based data.
Each of the above choices promotes the facility to back up your data among different locations. Now it should be obvious, if you select choice one or two, you are responsible for setting up off-site backups. The unfortunate folks along the gulf coast found that horror first hand.
Conclusion
The future of accounting software is a long and winding road. As business and regulations and transactions become more complex, there is much to be done to support the small and medium sized business. It is not just a new method of making entries or better reporting or better security. Accounting will encompass the entire enterprise: Transactions; Environment; Facilities; People; Business Planning; The Economy; Government; Marketing; and the Community.
Accountants are at the top of the knowledge worker chain. They need to be productive and have a consistent set of procedures for collaboration about the company and its business operations. New and improved accounting software products will support the online workplace and its need for data and person-to-person communication.
About Author:
Richard Oppenheim, CPA.CITP, has used and written about technology for more than four decades. He currently provides advice through the Oppenheim Business Group. He can be reached at richopp@oppenheimgroup.comor through his Web site, http://www.oppenheimgroup.com .
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