Axiom CPA, P.A. - Axiom CPA Blog

Accounting software blogger Austin Merritt at Software Advice recently wrote a post and solicited my feedback regarding "Horizontal" or "Generic" accounting systems and their decline in the marketplace. Austin raises some great points and I agree with him on some of the reasons behind the shift. I won't recount everything he says because I think it's worth your time to read it. I will say that I believe the five trends that Austin proposes are killing generic systems are not new. It's just that the current environment allows these trends to play out more quickly.

For instance, executives have always wanted integrated systems but when SAP was the only game in town and it took six figures to play ball they learned to live with stand-alone solutions.

IT buyers have always wanted unique solutions because they think they're special. But now the cost of new software is the cost of it's development. There are literally zero distribution costs for software developers today. The cost to customize or add a needed feature is the cost it takes a designer and programmer to change the code. One great advantage of SaaS models is their ability to iterate every day at midnight if the developer so desires.

So I do think Austin is on to something. Generic packages like Quickbooks are being abandoned in favor of so called "customized" solutions. But in most cases Quickbooks is abandoned prematurely after a sales rep from a competitor promises that their software will make life so much easier. Before you make the jump consider the following.

Customization is now a feature. "Generic" software manufacturers have built in at least a limited ability for users to "customize" the package themselves. Defining custom fields, changing the layout and structure of forms and input screens and exporting data to spreadsheets are all common features of leading generic accounting programs (yes, I'm talking primarily about QuickBooks). But most businesses don't take advantage of these features. They don't even know they exist.

Accounting software features won't fix workflow process deficiencies. If it takes you three days after shipment to issue an invoice or if closing the month is a week long process guess what? Accounting software is not your problem. Fix the processes first then decide how the software should record, track and possibly automate or shorten part of the process.

You are rarely, if ever, special. We have a tendency to think that our problems are world changing, never before seen phenomena and that the solutions must be developed by individuals possessing equal parts genius and divine revelation. Rest assured that most of the time one, or two, or five thousand users have gone before you and had to solve that same or a very similar problem. Before you jump to a completely new software package see if there is an add-on, work around or third party plug-in to help you out.

Of course all of this costs money. It will either cost you money in terms of the time you sacrifice or the dollars you pay someone else whose time is sacrificed. And this is why vertical/integrated/customized packages are picked up by companies once they pass the $1 million mark. They have money to spend. They could spend it on the three ideas above. But it's more fun to spend it on something shiny and new than it is to make the most out of that boring old software package you have been using since day one.

Don't misunderstand me. I think businesses can definitely outgrow QuickBooks. It is just that I have seen very few businesses do so in a logical and planned progression as they exhausted their options to customize features, improve workflow and use add-ons to make the most of their original purchase.

We usually see growing companies upgrade to a new "stand-alone" system. They do this to keep up with higher transaction volume, to take advantage of a true SQL back-end, and to achieve better security and internal controls.