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VNU Net: Account me in

By Dave Stott, VNU Net

If ever there was an application that fails to excite the
average reseller, it has to be accountancy software. Indeed, many
people find the whole idea of business accounting a necessary evil
that is dry and uninspiring. Yet for years, many dealers have been
making an extremely good living by specialising in this area.

Since the earliest days of commercial computing, financial
accounting has been a fundamental application, and often the first
area that a business will computerise is its accounting functions.
As a result, the market has been quite constant with just a few
peaks in demand, usually caused by the introduction of government
legislation such as the implementation of decimalisation or
VAT.

However, now that issues such as the millennium bug and
statutory late payment surcharging have been addressed, demand for
accounting solutions appears to have levelled off. The question now
is whether there is still life in this market?

Capitalising on ecommerce

Naturally, as far as most accountancy software vendors are
concerned, it is the expected growth in ecommerce that offers the
greatest potential for new business. Dealers are jumping on the
ecommerce bandwagon in an attempt to capitalise on the market, but
there are plenty of other areas where accountancy software could
prove to be a big revenue earner.

According to David Hurley, managing director at Anglia Business
Computers UK, top of the list of imminent opportunities is the
globalisation of accountancy systems. “The issues that will shake
up the accountancy software market will be the ability of vendors
to be properly prepared to deploy their systems on a global basis,”
he says.

“The growth of national players dominating one sector of the
market is likely to be curtailed as takeovers and mergers continue
worldwide. This will result in the need to work with one preferred
management system as a means of consolidating within groups.”

A united union?

There is no doubt that international trade is the goal of many
businesses, but Hurley believes software just isn’t up to the job
of supporting global business.

This view is echoed by Paul Gibson, sales director at Dataflow,
who says that while most modern accountancy software is capable of
addressing the needs of trading in the European market with support
for the euro, this is really only the beginning.

“If the UK decides to enter the European Monetary Union [EMU],
many software packages are now able to say they are ready, having
achieved basic dual currency functionality, which is really the
minimum requirement,” says Gibson.

For an accounting system to be ready for the business world,
regardless of joining the EMU, it should be able to cope with any
number of base currencies.

“More businesses are spreading their net to encompass the rest
of the world. If a company has subsidiaries across the world, an
accounting package should enable each subsidiary to trade on a
daily basis in its own currency, even its own language. Then, at
the click of a button, it should allow the head office to
consolidate all or any chosen group of subsidiaries, in any
currency required from within the system. If a package cannot
achieve that simple task, or requires the process of exporting the
data to third-party packages, it cannot claim to be truly ready for
today’s business world,” says Gibson.

Accounting for efficiency

Businesses the world over are constantly looking at ways of
boosting productivity within their organisations, and many see the
integration of accounting functions with other business operations
as a path to greater efficiency. While there has been a trend
towards greater integration of accounting software with other
business areas such as manufacturing and logistics, there is still
a long way to go as far as many software developers are
concerned.

Robert Steele, sales and marketing director at Exchequer
Software, says: “Accounting software in general still does not
deliver the productivity benefits that many organisations look for.
Even the integration of recent technologies with accounting
systems, such as email and desktop faxing, are few and far between.
Yet such techniques could save companies hours each day.”

Hurley says: “I think people will move away from the concept of
the accountancy system as a discreet application. It will form just
one element of a management information system shared with other
departments, suppliers and clients.”

It is not just greater efficiency inside the firm that is
important, but also interaction with suppliers and customers. This
is where applications such as customer relationship management
(CRM) and workflow come to the fore. Many accounting software
developers are starting to concentrate on these aspects of their
systems.

Almost without exception, all businesses are facing stiff
competition in their relevant markets and the need to keep
customers satisfied has become of paramount importance. Accounting
software has had to embrace the concept of CRM to remain
attractive.

Nick Ray, business consultant at International Business Systems
UK, sees the incorporation of CRM as an essential element in
winning future business. “CRM has also been talked about a lot
recently, but more in terms of sales and marketing information,” he
says.

“Information gathered from accountancy software could be used
much more in this area, allowing you to better service customers,
for example, how and when they like to pay. This type of
information could be linked in with ebusiness, tracking and merging
the information, to use it more efficiently. Another way of using
accounting software is to find out which customers are more
profitable to you.”

The same arguments apply to workflow says Steele. “The data
inside an accounting system can be used to generate business, but
most systems were not designed for this. Exchequer recently
launched a telesales module, which helps to tell customers what
they should be buying, and this has proved extremely popular.
Similarly, our Paperless Module allows customers to receive
invoices and statements by email, which is more efficient and
improves customer relations.”

However, while recognising the need for workflow functionality
to be included as part of an accountancy software solution, Ray has
doubts about the current viability of such technology. “Workflow is
still in its early stages and users are having to look for
information, rather than software triggering action. As companies’
margins decrease, they must try to find ways to lower their costs,
and one of the ways to do this is with a paperless office,” he
says.

“There are better links now between email and business software
and there has been talk of the paperless office for years, but it’s
still some way off. There is no doubt the demand is there and at
some stage it will happen, but I wouldn’t hold my breath.”

Linux opportunities

As might be expected, the accountancy software market is
currently dominated by Microsoft Windows-based products, but
recently there has been a great deal of interest in Linux
,
mainly because customers are eyeing up the prospect of a free
operating system (OS) rather than paying licence fees to Microsoft.
Despite the recent launch of Windows 2000, is Linux likely to have
a significant effect on the market?

Gibson is cagey about the role that Linux may play in the
market. “Linux has lots of potential and offers several
opportunities for the future. But at present, Linux should be
recommended only to clients with in-house expertise as it is far
from being an off-the-shelf solution,” he says.

“Dataflow is assessing the merits of Linux, and in-house testing
has proved very promising, but the market as a whole still appears
wary of using an OS with many unknowns. If it becomes a popular
requirement among clients, we’ll be in a position to meet the
need.”

Hurley is even more doubtful about the open source OS achieving
any form of market penetration. “I think Linux may have a future in
the technical OS environment. This is where Unix was originally
targeted. But most companies realise the solidity of the OS is
crucial to their business. This will become even more crucial as
systems will need to operate around the clock in future. Our view
is that Linux will pose little threat to Windows NT in the
immediate future in our market,” he says.

But in the IT industry, the one thing that is certain is that
there is no certainty. Customers are notoriously fickle, and it
would be foolish to write off Linux as having no chance in the
market. Applications such as Lotus 1-2-3 and Wordperfect at one
time appeared to have an unassailable position in the market, but
no one hears about them anymore.

One area that vendors are seriously looking at is the potential
of application service providers (ASPs) to open up new
opportunities. International Business Systems is already committed
to the concept of ASPs, says Nick Ray. “We see application service
provision as a personal choice and will make it available as an
option to those customers who would like it,” he says. “We have
established links with IBM to provide hosting for our software, so
customers will be able to go down the ASP route if they wish.
Ultimately, we see web-based systems giving customers much greater
freedom of choice.”

Exchequer Software is also committed to ASPs, although Steele
has a slightly different approach to online accounting.
“Application service provision must be kept in context. The main
advantages will be to smaller companies that are prepared to
compromise on their level of control to improve cashflow.
Traditional accounting bureaus should partner ASPs, as it will give
their clients facilities to dial in and view management figures,
without having to enter the data,” he says.

However, Gibson is not totally convinced the ASP route is the
way ahead. “ASPs offer an interesting approach to accounting. If it
takes off, companies will be able to use an accounting package
without ever having to buy one. This could prove to be very
attractive, but one area of concern is where the issue of security
comes into play,” he says.

“If a business is careful enough to keep its accounting and
financial information secure, it will surely refuse to allow an
unknown source to have control and access to its accounting system,
as much of the data will be confidential and commercially
sensitive. As with all new technology and ideas, there will always
be people willing to try, but proven security and reliability will
be required if the ASP model is to catch on.”

Demanding times

Still, the demand for accountancy software from the thousands of
new businesses that are springing up each year should not be
underestimated, according to Steve Attwell, channel manager at Sage
Software. “The need to keep proper accounts is a legal requirement,
and fledgling businesses are therefore an ideal opportunity for
many resellers. Many small businesses are daunted by the costs of
employing an accountant and would rather invest in a decent
accounts package.”

The potential for growth in the small and medium-sized
enterprise market has been given a further boost thanks to UK
Chancellor Gordon Brown’s recent Budget, which reduced the burden
of investing in new technology for small businesses. At least the
capital cost of computer equipment can now be written in the year
that it is purchased, which should provide a boost to the
market.

Taking all things into consideration, accounting software is not
quite as boring and mundane as it first appears, and the time may
be right for resellers to jump aboard the accountancy software
bandwagon and make inroads into a growing market.

Conclusions

  • ecommerce offers the greatest potential for new business to
    accountancy software vendors, although there are other areas where
    accountancy software could be a big earner
  • the accountancy software market is dominated by Windows-based
    products, but there is a great deal of interest in Linux, which is
    likely to have a significant effect on the market
  • there is a perception that software isn’t up to the job of
    supporting global business, although most modern accountancy
    software is capable of addressing the needs of trading in
    Europe
  • interaction with suppliers and customers is important and many
    software developers are starting to concentrate on applications
    such as customer relationship management.