Your Unique Needs?

The myth that
accounting software needs are unique

By J. Carlton Collins, CPA

Not a day goes by that someone does not ask me for an accounting software package recommendation tailored specifically for their industry. That's what everybody wants. Unfortunately, this line of thinking is usually a mistake. Let me explain.

During my first five years as an accounting software consultant, many clients would explain that their business was "different" - their needs were "unique". Upon hearing these words, I would draw my note pad in closer and ready my pen in anticipation of some new fangled feature that I would need to track down. It took me a long time, but I finally caught on. Most businesses are NOT unique. By my informal count, 100 out of 100 businesses use standard double-entry, accrual-basis (or cash basis) accounting. Money comes in, money goes out. Employees are paid a salary. Financial statements are needed. Assets are owned, debts are owed. Oh sure, there is always a need to keep track of a little extra data here and there - the name of the boat in the case of a boat marina, for example. However, these extra needs are usually secondary and can easily be accommodated with the blank user definable fields found in most accounting software packages today.

Picture it this way. There are basically two groups of accounting software packages - Generic and industry specific. Those products that are marketed broadly to a diverse number of businesses are sometimes referred to as generic or horizontal solutions while those products that are marketed to a specific industry are often referred to as vertical market solutions. There are about 500 of the former and 3,000 of the latter. I estimate that there are about 50 or decent vertical market solutions out there (Squirrel Software for Restaurants, Shelby Systems for Churches, Blackbaud for Donor Management, etc.). However in my opinion, the other 2,950 aren't worth the sand their written on. The overwhelming majority of vertical market solutions suffer significantly from one or more of the following problems:

1. Not enough revenue base to ensure top research & development, support, and longevity.

2. Older proprietary technologies are employed.

3. Financial reporting is weak, often very weak.

4. Performance is slow on a local area network (LAN).

5. Missing modules and missing features.

6. Technical support is poor.

7. Distribution channel (installers and consultants) is sparse.

8. Vertical products are slow to adopt new trends such as e-commerce solutions, XBRL technology, integration with Microsoft Office, CRM solutions, workflow solutions, supply chain solutions, human resources solutions, fixed asset solutions, etc.

9. Vertical products are typically priced two to four times higher than off-the-shelf, generic products.

What does all of this mean? It means that despite what you think, your business is not really unique at all. I apologize if this upsets you. Many business owners tend to like to think that their accounting software needs are unique. However, when it comes to accounting for money in, money out, assets owned, and the like - things are not really all that different from one company to the next. There are 15 million businesses in the US, and they all operate under the same generally accepted accounting principles. 

It has been my experience that the generic products are by far the better, less expensive option 90% of the time compared to vertical market solutions.