Account me in

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.