Sizing up Accounting Software: Do Low-End and Mid-Range Packages Really Differ?
By Scott H. Cytron, ABC
With the immense proliferation of software solutions available in the accounting marketplace, the choice as to which package to use for a firm or business can be daunting. Practitioners are faced with many commonalties between packages, but also are constantly bombarded with value-added resellers (VARs) and marketing literature that tout a particular solution is different from its competition.
Obviously, the choice boils down to likes and dislikes, affinity with one particular vendor, experience and knowledge. However, one aspect that sometimes gets overlooked is making a distinction among software designed for a certain size firm. For example, does a two-professional office merit the same package as one with 10 professionals? When an accountant evaluates which package would be good for his or her client, can a distinction actually be made between software designed for a smaller business versus a larger one?
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Murray Aston, CEO
BusinessVision
..."entry-level accounting software is to a bicycle as SMB accounting software is to Chevrolet; SME is to a Cadillac as high-end is to Mac Truck."
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SMB and SME Markets Provide Distinctions
Murray Aston, president and CEO of BusinessVision (www.businessvision.com), certainly thinks so; he says there is a huge difference between low-end and mid-range accounting software.
“Low-end or entry-level accounting software is typically designed for the small office/home office market, and is usually operated by one user at a time,” he says. “Entry-level accounting software is available directly from retail outlets, and does not typically get moved through the reseller channel, although BusinessVision's low-end offering, BusinessVision 32 Limited Edition, is sold only through our resellers.”
Aston finds a large number of businesses elect to use entry-level accounting software when they should really be using a mid-range product. He refers to this to a “false economy,” or a situation in which the business person does not appreciate the benefits derived from spending a little more on the product.
“Entry-level accounting software is often used as ‘after-the-fact’ bookkeeping software, simply because we all need to keep records of what we have done, along with when we did it. While this provides little analytical data to the business owner, entry-level users are not usually looking for an analysis of sales performance or cash flow. Good entry-level accounting software can handle order entry, purchase orders, sales analysis, payroll and much more, providing the user with more of a ‘business management system.’”
The crux, according to Aston, is to look at the distinctions between the “business” (small- to medium-size business or SMB) versus the “enterprise” (small- to medium-size enterprises, SME).
“Mid-range accounting software is typically used by businesses grossing between $2M - $100M each year,” he says. “Features, cost and functionality vary greatly between vendors, and the line between SMB and SME cannot easily be made based on a revenue number. Instead, it should really be determined by functionality requirements.”
Mid-range accounting software, for example, should be capable of multi-user operation (two to 100 concurrent users), and should be significantly more robust than entry-level accounting software.
“In my view, the software must support a certain level of user customization, have multi-currency capabilities, support popular costing methods (LIFO, FIFO, average cost), and have the capability to link with other business software products, including CRM, credit card authorization, e-mail and Excel.”
At the same time, Aston cautions users to look at what he calls an inverse relationship between perceived important features and product cost.
“The novice user may think that more expensive software does not do some of the ‘neat’ things that entry-level software can do, such as show a picture of an accounts payable check. Do you need to see a picture of a check payable to vendor XYZ, or do you just need to know that a check for $x was processed for vendor XYZ?.”
Aston also asks if the cost of the perceived feature actually detracts from the productivity one might expect to achieve when processing several hundred checks a week?
“Think of it this way: entry-level accounting software is to a bicycle as SMB accounting software is to Chevrolet; SME is to a Cadillac as high-end is to Mac Truck. A bicycle can turn on a dime, but it can't be used to haul a load coast to coast.” Aston’s flagship product, BusinessVision 32 Standard Edition, is the foundation of the entire product line with 18, fully integrated modules all operating in real-time. To satisfy the complete spectrum of requirements that exists within SMB/SME market place, he says the product is further sub-divided into a Limited Edition, Small Business Edition and SQL Client-Server Edition. Because all four products work off the same feature set, BusinessVision markets them through a “straightforward approach.” The parent company, Softline Software, also owns AccountMate, and markets this product using many of the same principles as it does for BusinessVision.
“We’ll certainly tailor our marketing to emphasize whichever product is the most likely fit for the audience we’re speaking to; however, it is a mistake to make too many presumptions,” says Aston. “A very small organization, for example, may need to run transactions in more than one currency right from the beginning, and would therefore bypass the Limited edition and begin with Small Business. Similarly, a number of our clients with under 10 concurrent users opt for the SQL Client-Server Edition, simply because they’re processing an extremely high volume of transactions on a daily basis, and prefer the added network ‘fault tolerance’ of the SQL Engine.”
Scalability is Paramount
Similar thinking holds true for Intuit, according to Charles Var, a senior manager for QuickBooks in Mountain View, Calif.
For years, Var says QuickBooks was associated with tiny businesses, but Intuit actually does dominate the mid-range arena.
“QuickBooks is actually more popular in the accounting software marketplace with the mid-range customer. For example, 250,000 businesses with up to 250 employees use QuickBooks, which accounts for more users than all the mid-range software solutions combined from our competitors.”
He adds that Intuit now acknowledges what most accountants and business owners knew all along - no two businesses are alike.
“What we have done at Intuit is develop products that are trying to address the growing company’s needs and the business life cycle,” says Var. “Up until two and a half years ago, Intuit designed a one-size-fits-all QuickBooks solution, and despite the product's 2.6 million active users, we recognized an opportunity to build even better solutions through the ‘Right for My Business’ product strategy.”
Businesses, for the most part, don’t necessarily fit into a low-end or mid-range solution set, he says. A company may have hundreds of employees, but a low-end solution may be more suitable. A relatively small business with few employees, such as a contractor, for example, may have to manage multiple projects. Var says we’re used to thinking of this person as a typical small business, but, in fact, the business may indeed be more complex.
The Right for My Business strategy outlined a product development direction to begin building specialized solutions for different kinds of businesses. For example, the strategy had three basic elements: 1) specialized QuickBooks solutions for different industries, 2) build and offer specialized QuickBooks solutions for larger or more complex businesses, and 3) offer business solutions that extend beyond accounting.
Today, Intuit offers QuickBooks products for accountants, contractors, retailers, nonprofits, wholesale and manufacturers and professional consultants. It recently introduced a new line of QuickBooks products for larger, more complex businesses with QuickBooks Premier and QuickBooks Enterprise.
“We also introduced critical businesses solutions that extend beyond accounting, such as a point-of-sale system for retailers called QuickBooks Point of Sale and a customer manager software called QuickBooks Customer Manager,” says Var. “Instead of buying a one-size-fits-all QuickBooks product, our customers can choose from and select a solution or set of solutions that's right for their business.”
About Author:
Scott H. Cytron, ABC, is an accredited communications and public relations consultant working in the accounting, health care, high-tech and finance industries. He can be reached at scott@cytronandcompany.com or through his Web site, http://www.cytronandcompany.com .
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