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Brave New e-World
As the accounting solutions industry evolves at a rapid pace, be sure to plan ahead with integration strategies.
Posted Aug 27, 2000
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A version of this article first appeared in Computers & Finance, published 10 times a year in London by TBC Research. Through its comprehensive portfolio of magazines, events and research, TBC Research is dedicated to helping senior business professionals make more informed technology decisions.

At a recent finance directors' conference, I came across two accounting products that I'd never heard of--a rare treat. Both are "off the shelf" packages--one in the mid-range and one enterprise resource planning (ERP) for a manufacturing business--and both are on sale and supported today, despite having a small user base. At a rough estimate this brings the total number of UK accounting packages I have encountered in my 12 years as a consultant to over 1,000. Many have come and gone in this time, but trying to predict the winners by the end of the next decade is a tricky business.

When I first became a consultant, Tate Bramald clients were using a wide range of spreadsheets. But today Excel dominates this market. At the time, Word was only beginning to emerge as the dominant player in word processing.

In 1989 the battle for the UK mid-range finance package market was being fought between Shortlands, Omicron, Pegasus, Sage, ACCPAC, DSR Resource, Multisoft and Tetra, to name but a few.

ERP products, meanwhile, have risen and fallen over the last decade. SAP, Oracle and JD Edwards have grown rapidly, although their performances in the past year have started to falter. Baan is seriously struggling, while vendors like Geac, Walker, Cedar, Lawson, QSP and Ross are trying to find niches to protect their positions.

Perhaps market concentration is taking place more slowly with accounting software than Office products. However, the recent acquisition of Systems Union and Pegasus by freecom.net, and Solomon's and PWA by Great Plains is warming up the concentration.

Certainly, for users of the applications on the way out, the outlook is not good. Support inevitably deteriorates over time, the products' compliance with the latest technology and legislative requirements falls further behind, and the price of service rises as the vendor looks to recover whatever income it can from its falling user base. System replacement becomes inevitable. Organisations who stick with their "legacy" applications face the increasing risk of system failure as the support resources of the supplier decrease.

So how does a finance professional make the best choice of new system? In talking to clients, the benefits of dealing with a leading global vendor are overwhelming compared to country-specific suppliers. For international companies, using the same product in overseas offices has the benefit of standardised working practices, not to mention the economies of scale from shared internal support services, training and so on. The larger international software vendors are capable of achieving so much more with the greater revenues they generate, allowing them to offer enhanced support and new features with the software. So it makes sense to buy applications from global vendors wherever possible.

However, this alone will not guarantee a future-proofed choice. Even the industry giants are struggling to provide the extra features forward-thinking companies require to run their e-based systems. As a result, a myriad of new products are starting to spring up again as add-ons, further complicating existing systems. CRM systems, e-procurement, e-timesheets, Web-based reporting, integration to WAP and handheld devices are all emerging. So when buyers try to fulfil all their systems requirements from one vendor, they are often forced down the ERP path at a huge cost, and still need third-party products to achieve their "total" solution.

Integration therefore continues to be a key issue. Organisations need to tool up their internal resources to learn about the environment in which they are working. This includes database structures, data warehousing and Excel integration with these sources. It may sound a far cry from what accountants are trained for, but these are increasingly regarded as core capabilities, and can allow you to sort out short-term system deficiencies.

While some organisations attempt to outsource such skills to external consultants, in my experience this rarely works effectively and can cost a great deal of money. By contrast, internal staff on site can rapidly turn their attention to integration issues, and will be on hand as and when problems or opportunities arise, with the bonus that they cost a fraction of the external consultant. So staff up internally with these skills, preferably in the finance team, and budget adequately for training.

Ironically, the birth of these fledgling companies with their add-on products is starting a new industry all over again, with yet more consolidation somewhere along the way. And of course it is allowing some businesses to limp along with their current systems a bit longer by bolting on third-party modules or components to fill the gaps, without having to replace the whole system. This will delay the inevitable consolidation of the core finance packages, but mark my words--it is only a matter of time.

Use this space wisely--to sort out your internal systems and skills and to prepare an IT strategy for the brave new e-world. Plan a migration strategy from where you are today to where you want to be tomorrow, and don't rely on finding a vendor who can fulfil all your needs.

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