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.
Cougar Mountain Software
Cougar Mountain Software probably doesn't have the name recognition that it deserves. Like Gateway and Dell, it started out primarily selling by mail order. For much of its early life in the 1980s, it was best known for its point of sale and back-office solutions. Cougar Mountain still offers POS, but it's not the focus of the company any more - just one of several accounting systems that the company sells.
For years, Cougar Mountain sold two lines of accounting software, with Denali being the premium product. Currently Denali is the only product line offered, though the company has announced that it eventually wants to add additional components to provide true ERP capabilities.
Denali's current capabilities are such that it's easy to qualify the software as being more capable than entry-level. The system is modular and modules include a System Manager, GL, AP, AR, Order Entry, Purchase Order, and Inventory. Point of Sale is a separate product but directly integrates with the Denali system. Also available are Payroll, Bank Reconciliation, Bar Code Integration, and Sales and Financial Dashboards.
Cougar Mountain offers several options besides outright purchase. One option, which they were among the first to offer, is a server with the software already installed and configured, called SinglePoint. Another is a cloud accounting option based on what modules your client needs and how many users need to be supported.
One problem with accounting software, especially if it's being run in-house, is maintenance. If there's an upgrade, an update, or a problem that needs to be found and fixed, your client either has to perform these tasks themselves, or schedule someone else to come to their office and do it. Service plans are part of the answer, but some don't include on-site visits.
Many of the more popular mid-range accounting vendors are starting to offer their software through cloud-based subscriptions. And Web-enabled software, accessible by management and authorized employees, has been available for years.
Intacct is one of a few companies in the mid-range segment that designed its software as a cloud-based application from the start -- it doesn't offer an in-house version and never has. Because of this approach, Intacct provides all of the benefits that have been detailed in this roundup - no hardware or software maintenance and support is shifted away from the client. Intacct promises outstanding availability and a disaster recovery program that promises your client that, in a disaster, no more than two hours of data will be lost.
As with almost all mid-range accounting systems, Intacct is modular, so your client can build just the application system they need. Modules include General Ledger, Accounts Receivable, Revenue Management, Cash Management, Reporting and Dashboards, Multi-currency Management, and Global Consolidations. Other modules your client might need include Sales Tax Management, integration with Salesforce, Project Accounting, and Time and Expense Management. Intacct's Inventory is robust, and can be configured for specific conditions that your client may have. Standard templates for all of the modules make set-up quick, and are easily customized.
While your client can set you up as an administrative user to allow you to make adjustments and perform closings remotely, Intacct can also provide you with an Accountant's Edition that lets you manage multiple clients using Intacct, as well as providing you with tools that aren't normally part of the customer-oriented offerings. The Accountant's Edition is offered through the American Institute of CPAs and CPA2Biz, which can also supply your clients with Intacct solutions.
Dynamics GP, NAV and SL
Next to Sage Software, Microsoft has the most bewildering selection of accounting/financial application systems in the industry. There are three different series of Dynamics, each of which is descended from software developed by different companies that Microsoft acquired. Microsoft is hardly unique in building a product portfolio by acquisition -- Sage did exactly the same thing.
The three versions of Dynamics are Dynamics GP, descended from the original Great Plains Dynamics, Dynamics SL (originating in Solomon Software) and Dynamics NAV, using technology from Navision. Each of these bears little resemblance to the original products acquired by Microsoft, and each is targeted to different types of users.
Dynamics GP barely qualifies as mid-range. It's basically the foundation for building out a complete enterprise-level ERP system that can compete for some clients with offerings by SAP and Oracle. Dynamics SL is targeted towards those users that need more extensive capabilities in the areas of distribution, services and projects.
The closest product of the three that can be considered truly mid-range is Dynamics NAV, and even that can easily be ramped up into the enterprise market segment. Dynamics NAV provides the standard modular accounting capabilities and extends these with supply chain management, human resource management, project management and service management.
Keep in mind that all Microsoft Dynamics products need to run on an MS Server platform, so there are additional administrative costs involved. These are, for the most part, also necessary with other mid-range accounting offerings from other vendors. If your client needs it, Dynamics NAV can be hosted by an independent software vendor or Microsoft itself.
Also realize that while Microsoft's sales material refers to Dynamics NAV's suitability for small businesses, the software giant's conception of what constitutes a small business may not be the same as what you have in mind.
Just as Intuit and Sage are the two major vendors in the entry-level segment of accounting software, there are two major vendors in the mid-range cloud-based accounting strata of the market. One is Intacct, which is primarily an accounting software supplier, and the other is NetSuite.
In many ways the two are similar. Both offer the benefits of offloading hardware and software maintenance, support, and backup and recovery from your clients. And, being cloud-based, access is performed remotely -- either through the Web browser on a laptop or desktop, or through a mobile device like a smartphone or tablet.
There are some differences between the two vendors' offerings, however. Intacct is positioned primary as a financial system. It can be extended with add-ons, but its primary focus is on the accounting/finance processes of an organization.
NetSuite positions itself a bit differently. It offers a complete set of accounting modules and features, but that's only part of the overall Suite, which extends into CRM, e-commerce, and supply chain and other ERP areas. NetSuite also offers other options including true project management.
Both Intacct and NetSuite offer your clients an excellent cloud-based solution. You might, however, find NetSuite a better choice for your clients with complex needs that would normally need a top-of-the segment or a true ERP solution.
Of all the companies mentioned in this roundup, Open Systems has probably been around the longest, having been founded in 1976. At that time, personal computers were just starting to get off the ground, with the Altair 8800 being featured on the January 1975 cover of Popular Electronics. In 1976, Open Systems was selling accounting software for minicomputers. That original software OSAS (Open Systems Accounting Software) is still being sold, though the version sold today hardly resembles the three-and-a-half-decade-old version.
Traverse is Open System's Windows accounting system, and with optional software that include CRM and manufacturing capabilities, it straddles the line between mid-level and enterprise ERP. As with many scalable accounting systems, Traverse is built on Microsoft SQL Server, and uses Microsoft's .Net technology. This gives the applications the capability of supporting hundreds of users and thousands of accounts, customers and vendors, assuming that your client has hardware heavy-duty enough to handle this kind of a load.
As with most of the software included in this roundup, Traverse is a modular system, with a System Manager providing the centerpiece and user entry point. Application modules include GL, AP, AR, Payroll, Enhanced Payroll Tax Reporting, Direct Deposit, Banking, Bank Reconciliation, and multicurrency capability. Your client gets to pick and choose what they need, and there are vertical versions of the software for industries like manufacturing.
QuickBooks Enterprise Solutions
If you count all of the users currently using different editions, QuickBooks is arguably one the most popular accounting software applications in the world. In fact, the intense loyalty and acceptance of the software is a mixed blessing for Intuit. A good percentage of QuickBooks users are still using versions that are years behind the current 2013 edition. That's good news as far as brand loyalty, but not so good news when it comes to the upgrade revenue Intuit needs from its users.
But QuickBooks itself wasn't designed to support a large number of users or transactions. And that's a major problem for an increasing portion of its user base. With the time, money and effort invested in configuring their accounting system and training users, QuickBooks customers have been leery about having to go to another vendor when their currently installed version of the software begins to bulge at the seams.
Several years ago, in an effort to both keep and please its user base, Intuit introduced what it called an "Enterprise" edition of its popular software. The software, called QuickBooks Enterprise Solutions, is built on a different database, but maintains most of the structure and user interface from other editions of QuickBooks. The largest difference between QES and other editions is the number of users it supports -- starting at five users, and increasing up to 30. Given a moderately powerful host server, the application can support this number of users simultaneously, and with a very large number of transactions.
With this latest edition, Intuit has beefed up security, and added enhanced reporting and report customization. Users can also upgrade to an enhanced inventory capability for a yearly subscription. This Advanced Inventory adds FIFO costing, barcode scanning, multiple inventory locations, and bin locating. Intuit now offers QES on a hosted basis priced per user, and on a yearly per-user subscription fee, rather than outright purchase.
Sage 50 Quantum - U.S.
Just as Intuit found itself with a large user base that needed more user capability than it offered, Sage Peachtree (now Sage 50) customers found themselves in the same boat. Peachtree was one of the very first true accounting programs available for personal computers, and over the years collected a tremendous following. And, as with the QuickBooks user base, there was a lot of hesitation to move upwards into a mid-range application that would require significant change and upheaval.
So Sage did pretty much the same thing that Intuit did - brought out an enhanced version of its popular editions with the capability of supporting more simultaneous users. Sage shows the prices for five- and 10-user licenses on its Web site, but Quantum can support up to 40 concurrent named users. That's already a fairly large client. And, as with QuickBooks Enterprise Solutions, the upgrade is pretty much painless, other than the hit that your client will take on their checking account. The interface is close enough to the other Sage 50 products that retraining won't be necessary, and any custom reports that you or your client have developed will transfer over to the new edition.
As always, Sage 50 Quantum provides exceptional inventory capabilities for a product at this price level. Sage 50 has always provided excellent capabilities in costing, including FIFO, LIFO and specific costing. Additionally, your client gets just-in-time purchasing capability, drop ship, serialized item, assembly history tracking, and more.
One capability that Quantum Accounting doesn't include out of the box is payroll. Fear not, though - there's a Quantum Accounting with Payroll edition. This adds just under $400 to the price with a 50-employee limit, and about $550 to the base price of Quantum to pay over 50 employees.
Sage is serious about its customer retention and service plans. For example, your client can't get payroll without also purchasing a Gold or Platinum Care plan. And while Sage used to offer an Accountant's Edition at no charge, it only does so now if you join its Sage Accountant's Network. That's not particularly onerous, but it never used to be a necessity.
Ted Needleman writes frequently on software, hardware, and technology-related subjects, and was previously the editor-in-chief of Accounting Technology.
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