Accounting Software Trends From the AICPA Tech+ Conference

Introduction of upgraded products into new markets, accounting software as a service and consolidation of partners top rankings.

July 23, 2007
by Randolph Johnston

The AICPA Tech+ conference for 2007 had significant changes to provide more depth on topics. You may want to consider purchasing the recordings of some of these sessions for your firm’s library.

One of the sessions I had the pleasure of moderating was on entry-level accounting software. I attended the session on mid-market software, and as many of you know, my K2 organization publishes a site on accounting software, www.accountingsoftwareworld.com. There were trends I learned from the accounting software vendors who presented, and since I’m so close to this portion of the industry, I was actually surprised at some of these developments. Top trends in accounting software include:

  1. More integration with Microsoft Office
  2. Better, cleaner and well-thought out user interfaces
  3. Most products are more feature complete
  4. Many products have trended toward an Outlook/Explorer interface
  5. More accounting software products use of technology like .NET and using capabilities like components to build dashboards and enable Web support
  6. Use of a database has become almost universal
  7. Third-party add-ins for specialty functions are becoming more seamless — Avalara’s Avatax for calculating sales tax is a good example of this
  8. Tighter integration of Workflow and Document Management
  9. Improved Financials with Business Intelligence (Analytics)
  10. Warehouse Management improvements and integration
  11. More sophisticated Supply Chain, Logistics, RFID, Inventory and Distribution issues are addressed inside the products
  12. Human Resources modules are becoming more common
  13. CRM integration is improving
  14. Better handling of foreign currency issues is now built into many of the products
  15. And, last but not least, pricing has gotten easier since many products are priced by the named user rather than by the module

This list tells me that the software publishers are making significant strides in improving their accounting products.

Company Strongholds in Mid-Market

Based on U.S. market share, there are two major mid-market general accounting competitors, Sage and Microsoft. The Sage family of products has breadth and depth with products like MAS 90/200, MAS 500, Accpac, Timberline and many others. Microsoft’s products include Dynamics GP, Dynamics NAV, Dynamics SL and Dynamics AX, which are admirable competitors. Other notable competitors like SAP Business One, Open Systems with TRAVERSE and OSAS and SYSPRO have also released good updates that have improved their competitive position as well. Large competitors in the mid-range space include the specialty publisher Infor, which has acquired a broad range of products primarily in manufacturing and distribution, as has Exact with products like Macola ES and JobBOSS.

Leaders in Small Business Market

The market leader in the U.S. for small business accounting is Intuit with their QuickBooks line. The entry point for this product line is a sub $100 version called SimpleStart. Although SimpleStart is good, Intuit’s mainstream products are better. QuickBooks has multiple versions including Pro, Premier, Accountant’s Edition and offerings in several vertical industries including Construction, NFP, and Healthcare. QuickBooks Enterprise Edition has satisfied a large number of companies that need up to 20 end-users.

Microsoft saw the opportunity of competing in small businesses, and in 2005 introduced Small Business Accounting, which was renamed Office Accounting in October 2006. This product has two versions, Office Accounting Express and Office Accounting Professional. Office Accounting Express can be downloaded for free and then upgraded to the Professional version to gain inventory, fixed assets and other advanced features. We expect this product to be offered as part of the Microsoft Office Live family, and Office Accounting is included in several versions of the new Microsoft Office 2007. Microsoft has created a contender for QuickBooks, and a very functional product.

Peachtree has long been the strongest accounting product in the entry level market. Peachtree is more accounting-like, and less checkbook-like than the competitors. Peachtree clearly has stronger inventory, a better dashboard, and many other features of note.

There are only a few other software products that should be considered by small businesses for accounting. Among these are CYMA, BusinessWorks and Adagio Softrak. These products have matured to have almost as much functionality as the mid-market products of the late 1990s. Significant upgrades in CYMA for each of the last four years have given this product some of the strongest inventory and costing available to upper entry-level and lower mid-market consumers. CYMA continues to be an excellent value. Featured improvements like those in CYMA are a definite trend, and CYMA has been exemplary in this effort.

New Trends

A new trend is the introduction of upgraded products into new markets. Adagio Softrak fits this category nicely. The product has been widely used in Canada for some years, and as the feature set has become more broad, it is now a reasonable competitor in the U.S. market as well. They have also provided some of the best reporting available for QuickBooks with their Adagio FX reporting tool.

Another trend worth noting was the discussion of accounting software as a service. We have seen hosted accounting software for some time, but in private showings, SAP was demonstrating and asking for feedback on their new product, A1S. This vendor has done well with SAP Business One in the mid-market, significantly cleaned up their high-end products of SAP All-in-One and mySAP, but have some significant new cards to play with their new generation software. The stated company goal of 100,000 companies using their product by the year 2010 certainly seems achievable.

One additional trend was the consolidation of partners. Publishers have tried to reward loyalty for representing their product lines, and the strong have gotten stronger. As the successful accounting software partners/VARs/resellers understand the selling and installation process better, they have opted to broaden their reach through consolidations, buyouts and taking on additional product lines. This is contributing to additional objectivity for software selection, and should help your installation process as well.

If you have not reviewed the changes in the accounting software market in the last three years, your knowledge will have fallen badly out of date. Another unfortunate trend is that the information on Web sites is becoming more “fluffy” and less useful. Some sites have excellent content, but many are Flash demos that don’t really say much. If you would like CPE in the accounting software arena, you should look for an accounting software symposium produced near you this coming fall.

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Randolph P. Johnston is Executive Vice President of K2 Enterprises, a technology consultancy serving the accounting profession. He is a nationally recognized educator, consultant and writer with over 30 years’ experience in Strategic Technology Planning, Systems and Network Integration, Accounting Software Selection, Business Development and Management, Disaster Recovery and Contingency Planning, and Process Engineering.