Learning from history

03 Oct 2014 Voices

With the emergence of the cloud, the number of accounting software options is growing fast – just as it did in the 1990s. John Tate provides some lessons from those former times.

With the emergence of the cloud, the number of accounting software options is growing fast – just as it did in the 1990s. John Tate provides some lessons from those former times.

Over the last couple of months there have been a number of interesting new publications on accounting software. One is a Guide to accounting software for not-forprofit organisations, written by Adapta Consulting, and another is the Small business accounting software guide, produced by accountingweb.

Across the IT industry as a whole, the leading areas of current focus are the cloud, mobile technology and big data. As a result, accounting software vendors are rushing to develop their offerings in these areas.

Will you benefit?

An immediate question for your charity is whether you will actually benefit from the use of one or more of these technologies. If so, will your existing accounting system provide the new functionality you wish to embrace?

Accounting software vendors now offer online demonstrations of their products to give you a better idea of ‘the art of the possible’.

Some existing vendors are updating their systems to offer features embracing these new technologies. However, please beware – there are many new entrants to the market.

The accountingweb guide, for instance, lists almost 40 products – most of which are less than five years’ old, and over half of which are cloud-based products. If you feel you should look at a new accounting system you are entering quite a minefield with so many new products on offer.

This gives me a strong sense of déjà vu as, once upon a time (in 1989), I started a business advising on and implementing PC-based accounting systems. The PC revolution led to a huge number of new accounting products. In the early 1990s, some research I carried out identified 180 different packages in use from a sample of around 900 organisations.

What are the lessons that can be learned from that period?

Organisations looking to select a new accounting system in the 1990s tried to evaluate potential products using a number of criteria – including price and cost of ownership, functional fit, ease of use, quality of service and the financial stability of the vendor.

Reviewing potentially dozens of products was a time-consuming and difficult exercise. Suppliers became very adept at ‘selling’ their solutions, often over-promising and underdelivering. All too often the best salesperson won the deal – rather than the best product.

User satisfaction surveys of accounting software products through this period showed, all too often, that customers were not happy with either the products or the service they were receiving.

Industry commentators at the time argued that there were an unnecessarily large number of products on the market. As well as making the selection process difficult this led to a variety of other issues.

Many vendors were too small and lacked the finances to invest adequately in new product development; users became frustrated as their requirements for new features were not met; and, to cap it all, vendors frequently went out of business – creating chaos among the user base.

Turning full circle

Eventually, the market consolidated, the accounting system selection process became easier and user satisfaction grew. Then along came the internet and the cloud, and with them a load of new products.

So coming back to the present day, here are my three pieces of advice:

  • Don’t replace the accounting software you have already got unless you have a solid business case for doing so. The cost and hassle of putting in a new system is considerable and should not be embarked upon lightly;
  • Try before you buy. Make sure that the product you are thinking of acquiring really does what you want, before you commit to the purchase. Too many people have discovered, too late in the process, that the product they recently purchased was not all that they expected; and
  • Remember a new accounting system will only work with the right processes and people. Ensure your project plan covers the impact of the change in these areas.

John Tate is a business consultant, IT adviser to CFG and a visiting lecturer at Cass Business School.