Accounting software packages: it's a jungle out there

Accountants are not over the moon about their finance systems. This is
despite packaged software being around for nearly 30 years.

Charity Finance surveyed 300 organisations in the not-for-profit sector on
the use of IT. Just 11% rated their accounting systems as very good, while 45%
viewed their systems as average or poor. Nearly one-third were considering
replacing their systems in the next year. Not impressive reading. While this
research only looked at one ‘vertical’ market, I believe this picture is
repeated in the commercial world.

Compare this to other packaged software, such as spreadsheets or word
processors. User satisfaction levels are much higher and the market has
concentrated into a few applications. By contrast, there are thousands of
accounting software packages on sale or in use worldwide.

So what of the future? Will the existing vendors deliver a knock-out product
that will rule the world? At the entry level, Microsoft has launched a package
that is getting some interest. But the product is focused on the UK and US
markets and there appear to be no short-term plans to roll it out globally,
which will limit penetration.

Sage continues to focus its growth strategy on acquisition. For example, at
the end of last month, it acquired UK construction software specialist Tekton
for £21m. One interesting aspect of this purchase is that Tekton’s software,
EVision, is based on one of Microsoft’s accounting products ­ Dynamics NAV. Sage
has made its money by acquiring dozens of products and generating good profits
from the user bases. Sage is not at its heart a software developer.

Another recent story was the acquisition of Armstrong Consulting by Access
Technology Group (owners of Access Accounting). Armstrong Consulting has a focus
on the professional services and service management markets and is a reseller of
Access Accounts.

So, if companies like Sage and Access are going to focus their growth via
acquisition, will we ever get the killer application? One wonders whether the
only chance of this happening is with a new player. Google? Salesforce? Who
knows?

John Tate is the IT adviser to the Charity Finance
Directors Group. He blogs for Accountancy Age on IT issues at
technologymatters.accountancyage.com