Back in the days when personal computers (and the software for them) were new, it was exciting to see what improvements and new vendors came into the market. Those were the years when we saw features like autofill and adding accounts on the fly.

But that was then, and this is now. These days, each new year is more likely to arrive with maintenance updates and minor changes to the user interface and reports, rather than jaw-dropping "wow" features. That doesn't mean that all the software in this stratum is moribund, only that it's reached a level of maturity where the emphasis is on making sure that the application runs as efficiently and productively as possible.

Many accountants, consultants and other pundits place a particular accounting application into one of three levels -- entry-level, mid-range, or enterprise. Sometimes this positioning works better than others. Defining where mid-range ends and enterprise level begins is almost impossible, and has become even more so in recent years with the adoption of heavy-duty database software such as Microsoft SQL, Oracle, or Pervasive PSQL as the underlying foundation.

This muddies the water in relation to scalability, one of the factors that used to separate mid-range software from enterprise-level applications. When SQL is used as the foundation, the application is pretty much infinitely scalable as long as your client is willing to pay for the per-seat licensing fees and the hardware needed to support a large number of users.

While the economy may have stalled, hopefully the growth of at least some of your clients hasn't. Many companies require mid-range accounting because their businesses have grown or changed and the software they are currently using, be it entry-level or another mid-range vendor's, simply does not meet their needs any more.

While not an absolute, there are certain structural features that mid-range accounting systems have in common.

Modularity. With entry-level accounting software, different functions, such as accounts receivable (creating invoices, billing customers or clients, and receiving payments), accounts payable, purchasing and so on are all incorporated into the base package. Your client may be able to extend functionality with add-ons, but entry-level accounting systems are designed to meet most of a user's needs with only the package and perhaps a payroll extension.

Mid-range accounting systems, for the most part, take a somewhat different approach. Rather than an all-in-one application, most mid-range solutions provide a system manager that functions as a gateway to individual sub-applications, and also provides the majority of security. This modular approach allows your client to put together an accounting system that meets their requirements without having to pay for components or applications within the system that are unsuitable or won't be used. If your client is a manufacturing business, and needs bill of materials, they can have it. Are they a service business with no inventory? They don't get stuck buying or paying for it.

• Scalability. Scalability is an important feature and component of both mid-range and enterprise-level software. With entry-level accounting packages, you are generally limited to five or less simultaneous users, regardless of whether the hardware platform will support more. Mid-range accounting systems are designed to be scalable up to dozens or even a hundred or more users. This scalability comes from using a scalable database, such as Microsoft SQL, as the underlying foundation for the application. Some mid-range accounting applications also require, or at least suggest, using a server operating system, such as Microsoft Windows Server 2008 or later.

• A higher level of security. Small businesses generally have few staff using the accounting system. Oftentimes, the owner or bookkeeper is the only one who actually performs accounting or bookkeeping tasks. The security available in entry-level applications gives your client the means to restrict access to specific areas. This capability becomes more critical as the number of employees increases. Much of the business information in an accounting system is sensitive, and your client doesn't want some inquisitive employee looking up the salaries of others, or cutting a purchase-order check to a friend. With mid-range accounting, security capabilities become much more granular. Particular employees can be authorized for very specific actions. For example, your client may authorize a payroll clerk to perform data entry, but not look at payroll history or employee personal information, or generate checks or reports.

• Self-service. Once a client's business becomes complex or large enough to warrant a mid-range accounting system, it's likely that the accounting manager will not want to field frequent common requests. These might include year-to-date payroll information that an employee requests, a customer inquiring about an order status, or management's requiring sales or purchase details from a remote location. Many mid-range accounting systems can be configured to allow some tasks to be performed remotely by the inquirer themselves. This, of course, requires a very high level of security, but can save a significant amount of staff time and resources.

• Multicurrency. Even if a client of yours may not need the scalability of a mid-range system, they may need other features that are characteristic of this segment of the market. With the increasing movement to a global economy, the ability to conduct business -- whether sales, purchases, estimates, or actual transaction recording -- in different currencies is becoming a feature that's necessary. Most mid-range accounting systems provide this flexibility.

• Sold by resellers. At the entry-level, it's still possible to purchase an accounting package at retail, but the few vendors in this market space are moving to direct sales or sales through consultant/resellers. At the mid-level of accounting software, almost all sales are made through resellers, who are also the first point of contact for customers who need support. This makes it almost impossible to place a price on purchasing the software because the software itself is only a part of what your client is buying. In addition to the software license, a reseller will include installation and training fees, as well as support of one kind of another. These can easily equal or exceed the cost of just the software.

• Cloud-based or hosted. Accounting software, like many other types of applications, is quickly moving into the cloud or switching over to a hosted, or Software-as-a-Service, product. This is being hastened by a number of software vendors that offer both in-house and cloud-based versions of the same application.

Software vendors would rather charge you a monthly subscription fee based on the number of users than have you purchase a license outright. With an outright purchase, your client has the option not to upgrade every year nor purchase a service plan. A subscription plan takes away this choice. And if your client is going to pay a monthly fee anyway, why not move the burden of hardware and software maintenance over to the vendor? That way, there are no hardware concerns, and no need for an in-house staff to perform software updates or maintenance. And cloud-based or software subscriptions make a lot of sense if your client's licensing needs vary greatly thought the year. If your client is paying monthly per user, if that user is no longer there, then the client isn't paying for their license.

Many vendors at all levels, from entry-level to enterprise, are offering this option, and for some of your clients it will make a lot of sense, even though it's somewhat more expensive (though less so if your client is going to purchase a service plan and upgrade every year).

ERP OR NOT ERP?

One thing to keep in mind when you evaluate software for your clients is that the same terminology often means different things when used by different vendors or in different contexts.

One of these terms, which is often mentioned in reference to accounting software, is ERP, or enterprise resource management. This term, which became popular in the 1990s, originally referred to supply chain management. In the past several decades, its use has expanded to include all of a business' management processes. This can include accounting, customer relationship management, supply chain management, just-in-time inventory, and other critical and peripheral business functions. Because it often encompasses a wide range of business processes, be careful in evaluating ERP systems, especially at the mid-range level.

To help get you started in evaluating possible mid-range accounting systems for your clients, we looked at offerings from a number of major vendors. When evaluating one or more of these for a specific client, keep in mind that the reseller and what they bring to the table is usually as important, if not more so, than the software itself.

Denali

Cougar Mountain Software

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