Shifting Gears

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Small firms are pushing the limits. How CPAs can get their SoHos up to speed.

by Richard McCausland

The wall magnets should have been a tip-off. Unwilling to use the inventory functions in QuickBooks because he thought their descriptive capacity (item name, code, and price) was too limited, Dan Hurwitz resorted to shifting magnets across a board with columns labeled “Need,” “Ordered,” and “Received.”

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“I would put ‘Mitsubishi exhaust manifold’ or whatever on a magnet, and move it through the stages,” recalls Hurwitz, owner of Falls Church, Va.-based Mach V Motorsports, a specialist supplier of turbo car parts. When the parts came in, the hunt was on for all back orders needing the component. “You’d always miss one,” which meant a dissatisfied customer—and a delayed sale.

That wasn’t all. “Of course, my simple [purchasing] system had problems when things got more complicated, like if we got a partial order [from the vendor] or the order had to be returned,” recalls Hurwitz. It’s worth mentioning that, the company carries over 1,500 items in stock.

After four years, it was time for Hurwitz to think about upgrading his accounting system. Admittedly, he hesitated. Not only was he too busy, he was also reluctant to give up a package that he found “particularly intuitive if you are not a CPA type. It has menu options like ‘Enter a bill’ and ‘Make a new invoice.’ Very simple.”

But there were all those mounting problems: no provision for return merchandise authorizations; no provision for running the Mach V Web site directly off the QuickBooks database; and a shipment error rate that was exceeding 10 percent. “It was difficult to produce even a simple income statement or a statement of cash flows since QuickBooks at the time used the invoice as its only order record,” even though orders can be cancelled or changed, notes Hurwitz.

What finally got him to switch was the package’s five-user maximum. With annual sales volume at $2 million, Mach V now has eight employees to handle, on average, 40 orders a day. Employees were playing musical chairs, waiting for an available terminal to press ahead with an order.

As luck would have it, Hurwitz got a direct mailing from Icode, whose Everest Standard Edition encompasses accounting, sales, marketing, purchasing, inventory, shipping, and receiving functionality. “They were in Chantilly, [Va.,] so I dropped in and talked to them,” recounts Hurwitz. He liked what he heard. “The integration was the biggest selling feature. It was all-inclusive; there weren’t different modules to buy.” Additionally, Mach V could easily migrate its QuickBooks data to Everest.

The deal was done. “Using Everest has transformed Mach V from a fledgling home business to a much more mature, normal operating business,” says Hurwitz.

His experience is far from unique. It makes sense, after all, that expanding businesses will eventually outgrow their entry-level accounting software.

Icode chief executive Bijal Mehta estimates that as many as 70 percent of the vendor’s 2,500 customers have migrated from off-the-shelf accounting packages such as QuickBooks and Peachtree. “Small, growing businesses start to feel the pain of trying to piece together multiple applications such as accounting, inventory, e-commerce, and point-of-sale when they reach five or 10 users,” he contends. “They realize they’re spending more time trying to manage their applications than running their business.”

David Thomas, chief executive of Los Gatos, Calif.-based Intacct, comments, “Quite a few of our customers are coming off of QuickBooks.” Typically, they need to accommodate a larger number of concurrent users, or they have multiple locations and now need remote access. Also, “They’re almost always looking for more sophisticated financial reporting, such as statistical analyses.”

If they know they’ll be out scouring for venture capital or applying for bank funding, they also want a double-entry accounting package. “They want to ‘truly’ close the books and have an audit trail,” notes Thomas.

But for all that, these QuickBooks and Peachtree emigres frequently share another trait. “They’ve invariably put [switching their software] off longer than they want to,” says Thomas, adding, “It’s painful to switch.”

Stalling the Switch

Both the QuickBooks and Peachtree operations are working overtime to ensure customers put off that painful transition for as long as suitably possible. Both have established their own self-contained migration paths. QuickBooks now comprises four editions—Basic, Pro, Premier, and Enterprise—as well as vertical packages targeted to accountants, nonprofits, retailers, contractors, and healthcare organizations.

Likewise, Peachtree Accounting is one family member in a line that includes Peachtree First Accounting, Complete Accounting, and Premium Accounting. They are supplemented by vertical editions or industry-specific kits designed for accountants, manufacturers, distributors, and not-for-profits.

Moving Up to?QuickBooks? Peachtree?

Upward product migration depends, of course, on where the customer is starting from. Sometimes, QuickBooks or Peachtree might be able to provide the fuller solution for which a client is searching. That certainly has been the experience of Stitely, Karstetter & Greenfeld in Chantilly, Va., a certified consultant for both retail products.
When Best Software opted to retire its 16-bit version of BusinessWorks, Hoppmann Communications, a Chantilly-based supplier of audiovisual equipment, sought out Stitely, Karstetter for help. Hoppmann brought along a wish list of functional enhancements they would like as long as they were software shopping. The list included improved custom reporting, stronger password security, and-very important-the ability to edit transactions, recalls partner Frank Stitely, a certified Peachtree and MAS 90/200 trainer and consultant.
"We brought Peachtree Premium Accounting to their attention because it was a fairly new product," says Stitely. "We showed them that they can get real good inventory control as well as job costing all in one place." Best's 32-bit BusinessWorks Gold was also a strong candidate, but Hoppmann chose to go with the Peachtree package.
Stitely explains, "The ease of use of Peachtree and the fact they didn't have to give anything up [because of tight data integration within the Best product family] were two of the main factors" for Hoppmann's choice. Also, upgrade pricing meant they could get the software and payroll tax service for four users for a thousand dollars and change.
The recent introduction of Peachtree Premium for Distribution also swayed their choice. "I think that may be the next step for them," says Stitely.
Partner Wayne Greenfeld, director of IT services for SKG and a QuickBooks Professional Advisor, cites another client, HPA, which provides management, marketing support, and capital to high-potential enterprises. Initially, the firm was using Intuit's Quicken, "because that's what the owner felt comfortable with," having used it to handle his personal finances. But as the investment firm grew and acquired a couple of subsidiaries, its owner turned to SKG for assistance.
Greenfeld remembers, "Right away, we pointed out he would do better with a true business package" that could accommodate inter-company transactions, more sophisticated financial reports, and tighter security controls. HPA is now using Intuit's QuickBooks Pro.

These strategies appear to be working, to judge from recent financial statements. For its most recent fiscal year ended July 31, Intuit reported that QuickBooks revenue grew 24 percent over the prior year. Meanwhile, for the six months ended this past March 31, Peachtree’s parent, the U.K.-based Sage Group, cited “continued strength” among U.S. entry-level products, with Peachtree attracting 45,000 new customers in the period and growing revenues by 11 percent.

Without question, lots of QuickBooks and Peachtree customers are sticking with those products, especially as multiple versions with enhanced and industry-specific functionality make their way into the marketplace. But what happens when even those packages are not enough?

Earlier this year, Best launched a Customer Migration Center in Atlanta. “A small business owner, particularly someone on Peachtree, is looking for help as to their next step” when they believe they have reached the functional limits of their existing package, notes Susan Searle, senior vice president in charge of customer sales and marketing. This is a fairly common dilemma, since “small business owners are trying to stretch every business management process in-house” to conserve expenses.

Peachtree users are counting on the center to help them. “There’s a lot of hand-holding as we work through all their questions and fears,” comments Searle. “We ask, ‘What are the issues that are facing you today, and how might we solve them by moving you to another platform?’”

The center’s role is to lay out the options that are available before referring the customer to a Best-authorized consultant. “We make sure we leave [the final software decision] open to the partner,” who has the advantage of local, in-person contact, notes Searle. That decision could involve tapping into unrealized functionality within the existing package, or upgrading within the Peachtree family, or stepping up to MAS 90/200/500.

A few years back, HerbaSway Laboratories in Wallingford, Conn., a supplier of liquid herbal and dietary supplements, decided to run some radio infomercials. They were enormously successful, and sales volume tripled in one year. That was too much for its legacy Peachtree system.

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