Technology File Analysis - Simple is best for financial software
Accountants are easily satisfied when it comes to IT. All they really want is a system which gives them a KISS – Keep it simple stupid. What they often get instead is a blank response from complicated technology.
Most software houses have developed technology which displays financial information in the form of spreadsheets. While there is no getting away from the practicality of such an approach, there is also no getting away from the fact that a spreadsheet is a dull readout to look at.
But some software companies are beginning to realise that while accountants are unquestionably good at sums, they are often bad at communicating their workings to their bosses and clients. Software should not only do away with number crunching, it should also take care of clarity of communication.
The most imaginative and amusing development, tested by the City University Business School, attempts to bridge the gap by using the latest pictogram technology to represent the underlying multivariate accountancy data in an easy-to-read image. Quite simply, a company’s financial results are represented on screen in the form of a cartoon face. On the face, the mouth represents profitability, the eyebrows liquidity and the nose working capital – the main financial indices of how a company is performing. The face looks maniacally happy when the results are good and suicidal when the results are bad. Something that finance directors and auditors alike may well be able to sympathise with.
This may sound like frivolity to the serious-minded, but tests conducted by the City University Business School found that the cartoon smiley was a hit with both accountants and finance directors. Researchers paraded the smileys before 23 accountants, 52 accounting academics and 46 budding MBA students. The results were surprising. The school’s Professor Richard Taffler said: ‘The professional accountants, who you would have thought would have been wary, have – almost without exception – loved it. The response was, “what a good way of communicating with our clients”.’
In a joint paper, Improving the Communication of Accounting Information through Cartoon Graphics, G Malcolm Smith of Murdoch University, Perth and the UK’s Professor Taffler suggest that such technologies could go a long way in dispelling the confusion surrounding the presentation of much financial information. ‘Alternative methods of presentation, notably those involving the use of a facial format, may seem a little strange to existing users, but the test of their usefulness will be in the successful communication of financial messages,’ they said. The guinea pig accounts readers sent back a positive yes.
Critics would dismiss such advances as red herrings. Michael Evans, managing director of Chiswick-based software developers Timeline, said: ‘It’s the kind of executive advancement akin to showing a spreadsheet as red for danger, green for go. The real issue for IT companies is being able to cope with the way that companies are changing so rapidly.’
Evans, whose Timeline company developed the successful Metaview software package, believes that other IT companies fail their clients through their underlying lack of flexibility. Metaview allows users to enter new data at one point in the system only, which in turn automatically updates databases, spreadsheets and any other places in the financial system which would use the information. ‘The system is only what you would normally expect from a finance package, but we are the first to do it. IT companies have let down finance departments because they haven’t delivered underlying simplicity in their software,’ says Evans.
Simple to use or otherwise, Metaview still relies on spreadsheets to show viewers the underlying data. Other software products in the same field, such as the Sage financial accounting package and Microsoft’s Excel, while improving their usability, seem to have few plans to improve their readability.
Click and go
Another way of improving the appearance of financial data and the presentation of accounting rules is to adopt the click-and-go technology normally used on the Internet. The CD-Rom product Interactive Auditing Standards, produced by Neville Russell and Folio Views in conjunction with the Auditing Practices Board, attempts such a cross-over. Users can click on to highlighted text and pass through an electronic gateway to other sheets and charts offering further information.
Kim Hurst, National IT Partner at accountants Neville Russell, said: ‘We believe the innovative use of technology should be a key enabler to help users gain immediate access to relevant, timely and high-quality information. Our own work in this area has been concentrating on using technology to improve the retrieval of relevant information as well as an organisation’s financial reporting capability. The key is to ensure the system is designed to enable users to obtain and understand the information that is most appropriate to their needs.’
Hurst believes that cutting out the mass of on-screen information makes such software easier to use and addresses the criticism often levelled at financial application developers that their reporting tools produce data overload. In many cases, the more powerful the application, the less easily and effectively it can be used by operators.
But the picture is not all bleak, said Hurst. ‘There have been significant advances in the last 12-18 months by software developers recognising the need for different packages to be able to integrate successfully.’
While such technology is still in its infancy, the potential to incorporate the click and go and integrated systems approach to the presentation of financial accounting information is obvious and attractive.
Electronically provided summary financial statements, for example, of the sort advocated recently by the English ICA, could easily take advantage of such an approach.
While it may be fun to think that all financial information could be reduced to the level of a cartoon smiley face, the reality is that accountants and their clients’ needs are more sophisticated. But that does not detract from the lesson that should be taken from such imaginative leaps. Reducing on-screen financial information to its basics should not mean using a weak software package. Information users have differing levels of technical sophistication and that should be reflected by a multi-level entry approach.