Life Cycle

Evaluating the life cycle of
an accounting system or ERP solution

By J. Carlton Collins, CPA

 

After many years of analyzing accounting software packages, I have come to appreciate that there is a basic human-like “life cycle” to these products. Allow me to explain. All accounting software packages are born from the idea of one or two motivated people, who roll up their sleeves and expend thousands of hours developing the initial product. Ultimately, version one is introduced, or born into this world if you prefer. The product is even given a name.

1 to 2 Years Old - Infancy

At first, all products can be described as immature. There are always missing features and missing modules. Due to less testing, the product most certainly contains bugs and flaws – which when encountered by the end user might be described as temper tantrums. We all learned long ago never to buy version 1 of anything.

3 to 4 Years Old - Childhood

The product continues to grow. Bugs are cleaned up, missing features are provided. Missing modules are added. Third party add-ons are developed. The product keeps getting better. A growing user base helps debug the product and the revenue generated by the growing user base funds better R&D as well as product support.

5 to 6 Years Old - Adolescence

The product's functionality has started growing fast, but like the feet of a lanky teenager, some features and functionality are disproportionately outgrowing others. The vendor frequently worries about the performance of their product and sometimes stays up late wondering when the financial reports will show up. In an effort to increase speed the vendor migrates the product to a faster database, and just like giving a new sports car to a teenager, they hope and pray that it is not involved in a crash.

7 to 11 Years Old - Maturity

The product reaches maturity and gains respect. There is solid name recognition. It has withstood the test of time. Advanced features and capabilities have been added to help the product appeal to the most demanding of end users. There is now a well-developed channel of supporting consultants who stand ready to service users of the product.

12 to 15 years – Old Age

As technology advances, old age begins to set in. The latest and greatest technology that once was the hallmark of the new product, has now become its’ Achilles’ heel. New technologies, new databases, new programming languages, new methods, new approaches have emerged that empower today’s newer products, and leave yesterday’s products lacking. At this stage, the product is still a capable product, but other younger products look much better and employ faster, stronger technologies. Years of added features have served to turn the product from software into “bloatware”. There may be thousands of features, but you only need 20% of them to get your job done. Yet, you must wade through the other 80% of useless features anyway.

15 Years – 20 years – Death Watch

At this stage, even Jack Kervorkian has mailed a brochure to the vendor to promote his services. Many resellers and consultants have long ago jumped to newer “Johnny-come-lately” products that feature the latest “whiz-bang” capabilities. A few remaining stubborn customers still cling to their dirty monitors and worn-out printers which process the old dying code set. Years of coding have evolved into a nasty tangle of intricate programming so intertwined that even a simple change affects hundreds of lines of code. Eventually, even the staunchest supporters realize that more can be accomplished by simply starting anew.

20+ Years – Rest In Peace

The irony is that most products never die – they live on in “maintenance mode”. What this means is that there are still thousands of customers who use the product and pay annual fees in order to receive the latest payroll tax table updates, sales tax table updates, and other product updates. The publishers who owns these products typically devote very little cash to further developing or marketing the product, instead, a skeleton staff keep the product up and running – forever I suppose. In maintenance mode, a product can actually be a cash cow, generating revenue from annual updates, check and invoice forms, training, and support. The customer base also makes a great target for promoting additional applications and services.

May our accounting software ancestors rest in peace.