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Accounting for a changing environment

Accounting for a changing environment

2000-2001 has been an extraordinary time. The implementation of the GST, the Y2K and an economic slowdown thrown in for good measure is a once in a lifetime occurance. It appears that businesses didn't cope with the barrage of change at the coalface. More likely than not, they bought stand-in products that would get them by until they had time to evaluate the full effect of the GST on their business models. Now, with an economic slowdown raking through the market, people are focusing on refining procedures within their businesses and looking for practical, efficient accounting software packages in the process.

Negotiating the software jungle

There are over 170 accounting software developers in Australia. At the low end of the market, consumers can buy off-the-shelf MYOB or QuickBooks packages for about $500. These suites, designed for one-man-band operations, contain the basic compliance features such as ledger, credits, debts and expenses, and operate as standalone applications on the desktop.

The next level is the Sybiz and Attache suites, which offer more functionality and begin to leverage off other inventory and stock-management systems. Traditionally, there existed an almighty chasm between these guys and the very top end of town - the costly, sophisticated SAPs and Peoplesofts, whose intensive solutions are so tightly integrated into an organisation's operational backbone they are barely visible. Now this hole appears on the verge of being flooded by developers that have discovered enormous potential in the mid-market (10-500 seats).

To demonstrate just how lucrative this sector is, let's get down to facts and figures; there are 99,000 retail businesses in Australia, 95 per cent of which have less than 20 employees, according to the Australian Bureau of Statistics for 1999-2000. Similarly, there are 38,000 manufacturing companies of which 92 per cent have less than 20 staff.

"These guys want more than compliance," says Drew Arthur, director of sales and marketing for software developer Micronet Systems, one of those firms vying for dominance in the mid-market. "They want more of the high-end features without the exorbitant price tag. They want the sales analysis and decision analysis features" What's more, they find the disruptive implementation times of the traditional mega-systems (up to 600 days in some cases) intolerable, and developers have responded by scrunching the install to a one-day-per-seat average.

"The whole business process is speeding up," agrees Peter Vasey of FinancePlus software house. "As a business manager, you can't afford to wait until the end-of-month reports to find out how your business is performing."

Accounting in the grand scheme

"There's no longer any strategic value in accounting software. No business is going to gain a competitive advantage by having a great accounting system," says Richard Johnstone, managing director of Microsoft's accounting arm, Great Plains. "But they expect it to support their supply chain and CRM, which do hold the strategic positions."

With legislative updates being released every other day, the issue of business activity statements and the GST hasn't gone away. Tim Molloy, managing director of Exonet 6 (part of the Solution 6 Group), says developers are currently issuing new upgrades every 10 days. "Eventually we'd like to get it down to one upgrade a month," he says, but in the meantime, the system must be flexible enough to handle the pace.

However, most vendors agree that the GST has become more of a "tick-box" element rather than a significant selling point. "The customers just expect the GST element to be there," explainsJohnstone, "and more often than not they want it to be transparent. Their attitude is ‘I have to lodge my BAS, I don't care how, just do it'."

Challenges: partner picking

They say the hardest decision in love, war or business is choosing one's partners, and in the world of accounting software, it's the greatest challenge of all. The nature of the solution requires not only a deep understanding of the client's business, method of operations and priorities, but also a thorough knowledge of accounting practices.

Ever-changing tax reforms are blurring the lines between technologists and accountants, forcing them to understand more about each other. "We partner with someone who understands the compliance aspect because it's not just about selling products, a lot of the time it's about adjusting the business process," says Johnstone.

"We are increasingly having to provide both customers and partners with tax reform knowledge, and often have to refer users to the appropriate channels to find out how the changes will impact their business specifically."

David Simmons, managing director of JIWA software house, goes so far as to say that if the systems integrator (SI) is a serious punter, he has to have a degree in accounting. "Accountants have been in IT for years. They are the best people to make this solution work in a business environment," he says.

"You're better off without the SI who undercuts and the customers that don't want to pay because a year down the track, when the exhilaration of the cheap price has worn off, the customer will still be having problems with the integration side of things."

For those that make the grade, the news is good. We're talking highly integrated solutions with product margins that are on par with the labour component. Labour itself is already high because of the implementation and training. As a general rule, resellers can make double on integration what the software costs.

Vendors also recognise the importance of having a channel to champion the brand in Australia's competitive market place. According to Micronet's Arthur, customers choose products by three different methods: they pick one off the shelf at a retail outlet; they are referred by peers or their accountant/consultant; or they do their own research through traditional methods, such as the Yellow Pages, industry publications, the Internet and so on. Subsequently, Micronet, Exonet and Greentree are three development houses looking to double their channel partners in the coming months. e-business: integrating disparate systemsDon't be fooled into thinking the recent tech-stock crash destroyed e-business forever. It is still very much considered the ultimate tool for efficient and thorough business operations, and customers expect their newly installed system to be up to the task. The urgency that saw companies trying to swallow enormous integrations at break-neck speeds has certainly passed - businesses know they don't have to be e-enabled tomorrow. They may not want the e-commerce element switched on next week, or even inside 12 months, but they sure as hell want to know it can be done. These days it's a case of slow and steady, with a small piece being rolled out at a time.

The small issue which integrators are currently struggling with is getting the data to a common point. As companies grow, they have a tendency to gather a myriad of individual systems, applications and databases that operate independently of each other. A common epidemic of last year's pre-GST rush saw businesses purchasing inexpensive, off-the-shelf accounting applications that met the GST-compliant criteria. Then they have their inventory software, their Web-page generator, and the list goes on.

"On top of this, a lot of companies haven't updated their data because they're too busy focusing on their business issues," adds Johnstone.

When the client decides to move to a more sophisticated system that unifies operations and lets them "talk" to each other, the data in each individual pocket has to be examined. For the sake of manageability, only the vital data is moved across to the new system while the old data is left in the old.

"It's a matter of asking how much information the customer is really going to use and dropping off the stuff they don't need," explains Chris Gage, business development manager for Great Plains.

According to Jiwa's Simmonds, the cut-over is more difficult to handle than the customisation of the package, which these days is usually done by ticking boxes and flicking switches at the installation stage. With a large percentage of JIWA's customers in distribution, the very thought of shutting down for a couple of weeks to perform the data transfer is terrifying. So developers are adding data-transfer utilities to reduce the cost and fuss to customers, he says.

The Web as a point of access, anywhere, anytime, is also gaining momentum. "From the e-business aspect, interconnectivity is a live issue," says Johnstone. "At the moment it's still mostly client server, but it's moving towards Web-driven options using XML."

Molloy feels that Web enablement is where many brands will fall from grace. "Most products are still struggling to get from a text-based system to a Windows-based system, when the market is already moving from Windows to an e-business world," he says.

ASP offerings are also coming into play. But, if you're looking to venture into the ASP segment, it pays to know your stuff, because the market is rife with companies promising more than they can deliver. Micronet is one of the few developers that has chosen to wrangle the telcos and take the ASP concept further than a vague "yes, our product is hypothetically capable of doing it even though we've only sold two since the beginning of time". In all fairness, Arthur says the blame is not with the software developers. "Until the telcos go the last mile on the bandwidth issue, thin client is the way to go," he explains.

Keep it real: managing utopian expectations"There are two ways people do business," explains Gage. "They know how the business runs or they're just running it by habit. The first one will be a smoother project to manage every time."

"Setting realistic expectations is something the industry doesn't do particularly well and the biggest problems arise when that is not addressed. We're managing expectations continually throughout an installation because, 99 times out of 100, the customer will come at you with a complete curve ball halfway through about the software doing something you never said it would."

"It pays to be pragmatic about what you can and can't achieve. That way you can always surprise yourself by achieving things that you didn't think were possible."

Arthur agrees, saying the bulk of Micronet's installation period is spent in "discovery", a two-day meet-and-greet, talking to the people who do the actual warehousing, inventory and so on, to find out what they do and what they need. The company also indulges in a thorough training and education cycle, which is a combination of classroom and one-on-one training, topped off with personalised user manuals. Arthur concedes that while the development of an educational matrix is essential to getting the most out of the product, it is up to the customer to make the commitment.

Surprisingly, getting the most out of it doesn't necessarily mean using all of it. Kate Holz, managing director of software developer ACCPAC Australia, believes that most people will only use a small percentage of a package's capability. The real crux is whether or not they're using the right part, she says.

In this respect, Holz feels consumers are not the only ones requiring education, and has set out to attack reseller training from a variety of angles. ACCPAC uses a multi-tiered approach complete with exams for certified consultants; a professional services group, providing SIs with hands-on practice so they aren't learning on the job; as well as sales and computer-based training. "We really want to minimise the number of times ‘green' people are implementing, because the quality of the install reflects on the brand," she says.

The future

Resellers and developers seem to bracing themselves for some serious consolidation of brands and players. Software applications are already starting to team up - for example, CRM with accounting. In addition, development houses will start to swallow up their strong SIs to gain greater control of the customer base and consolidate the skill set.

Technological changes, particularly in wireless devices, will continue to be an issue, and systems that don't have the open architecture to deal with these changes will soon be locked out of the market. "The biggest mistake developers make is not staying abreast of the changes," says Simmons. "The next hill is just over there."


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