ACCT341, Chapter 15
Accounting Software
Introduction
Accounting software
Early decades
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primarily processed bookkeeping transactions
Today
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it has become much more of a mgmt tool
customizes financial reports
provides sophisticated ratio analyses and dashboards
performs forecasting functions.
has evolved into a part of integrated enterprise software
accommodates specific industry information needs
AIS Software Market
Entry-level (Entry) software is designed for smaller businesses—those
with revenues of less than $5 million and with up to 20 employees.
Estimated 5 million U.S. companies fitting this profile.
Small to medium business (SMB) software is engineered for companies
with sales of up to $100 million and no more than 100 employees. About
516,000 companies meet that description.
Small to medium enterprise (SME) software is designed for
organizations with sales of up to $500 million and as many as 500
employees. Some 84,000 companies make up this category.
Enterprise resource planning (ERP) software is for the largest
organizations with sales exceeding $500 million and more than 500
employees. An estimated 17,000 companies fit that profile.
Integrated Accounting
Software Programs
Most companies purchase accounting and enterprise
software rather than developing internally

But usually only 80% of needs can be met with purchased
software
 20% of needs met
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
by supplemental software (e.g. Excel)
or by customizing purchased software (if vendor supplies
source code)
Installation/setup of mid-to-high end software is
complex

a value-added reseller (VAR) or qualified installer is
needed.
Integrated Accounting
Software Programs

process all types of accounting transactions
 include transactions affecting accounts in the general and
special journals
 organize transaction processing in modules and provide
links among the modules
 general ledger module includes the chart of accounts
 other modules usually include accounts receivable, accounts
payable, inventory and payroll
 journal entries recorded in modules update the ledger
module
Integrated Accounting Software
Programs - Features
Can handle multiple companies and users
Has audit trails
Has budgeting capability
Provides cash-based and accrual-based accounting
options
Can print checks and invoices
Can customize financial reporting
Integrated Accounting Software
Programs - Features
Cont.
Has E-commerce features
Has tools for financial analysis
Can generate graphic reports
Can manage the inventory
Can handle recurring journal entries
Accommodates business growth
Can provide variance analysis.
Buying Accounting Software
mid-range or high-end accounting software
packages are usually purchased from a valueadded reseller (VAR)
VARs provide buyers with services such as
installation, customization, and training (if
they know what they’re doing ! E.g. WWU
initially hired a bad VAR)
a VAR offers a broader array of services than a
qualified installer
Small Business Accounting
Software
Small business owners are usually concerned with
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cash flows and
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figuring out if they have been profitable.
The three top-rated small business accounting
software include
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QuickBooks products by Intuit
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Sage50 (formerly PeachTree) products by Sage
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DacEasy, Simply Accounting, etc.
Mid-Range Accounting
Software
A mid-range software package is useful
when transaction processing needs
grow in volume and
increase in complexity.
Some examples of accounting software
packages of this type are
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Microsoft’s Dynamics GP
SAP Business One
Sage’s MAS90
Intuit’s QuickBooks Enterprise Solutions
Mid-Range Accounting
Software
These software packages offer many
features. They can
convert transactions from one currency to another
write checks in foreign currencies
split commissions among multiple salespersons
handle more than just accounting functions
be deployed from an array of options including
desktop computers, a web browser, or a hosted
solution
Hosted Solutions
Another option is hosted solutions, also called “cloud
computing,” or “e-sourcing”. This is where the
software is rented and hosted online.
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E.g. QuickBooks online
Advantages:
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No upgrades (always have most current version)
Auto backup (Computer crashes? No problem.)
Universal access 24/7
Multiple user access around the world
Password access of parts restricted to certain users
Facilitates online business
Specialized Accounting
Information Systems
Accounting software
began with programs written to automate common,
repetitive transactions
has become increasingly sophisticated and customized
for specific industries
offer add-on modules that can process special
information.
are useful to manufacturers and construction
companies, and point-of-sale features for retailers
sell source code with their programs to customize the
software to fit specialized information needs
Enterprise-Wide Accounting
Software Solutions
Enterprise resource planning (ERP) systems
are integrated programs with a central data base
do much more than process financial data
expand with the price and complexity of software
have the ability to interface with customers and suppliers
(supply chain management).
ERP systems include
SAP (used by P&G, Kodak, etc.)
Oracle / PeopleSoft (used by Wal-Mart)
Microsoft Dynamics GP Enterprise
ERP Historical Development
Enterprise System Functionality:
ERP systems originated from manufacturing systems
 MRP I Systems:
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Marketing sales projections,
 Production schedules
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MRP II Systems:
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MRP I plus forecasting
 planning for all manufacturing resources including labor and overheads
ERP Systems combined MRP II systems with
accounting and finance functions
Traditional ERP Functions
Traditional functions are concerned with
back-office functions which primarily
deal with internal systems, such as
Order processing and fulfillment
Manufacturing
Purchasing
Human resources
Traditional ERP
Extended ERP Functions
Integrated external front-office functions
Traditional capabilities plus
E-business
Customer management
Supplier management
Business partner management
Strategic business relationship management
Extended Enterprise
Information System
The Talking Bears
The Architecture of
Enterprise Systems
ERP Configurations
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are client-server based
can typically run on many operating system
platforms
Centralized database
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stores information about each data
item just once
makes it immediately available to
all the various functions
The Architecture of
Enterprise Systems
Application interfaces

a best-of-breed approach (BOB)
 extended application interfaces
Internet portals

Are gateways to other web sites
 enhance communication and
productivity among employees,
customers, partners, and suppliers
ERP Systems and Business
Process Reengineering
Buying an ERP system

is akin to a new way of doing business
 entails reengineering an organization,
 encourages the separate units to conform to
standard practices
Implementing an Enterprise
System
Implementing an ERP involves:
systems planning,
forming the project team,
selection of the software and the consultant,
pre-implementation work,
follow-up after going live,
training of personnel, and
change in management methods, if warranted
Systems Development
Costs and Benefits
of Enterprise Systems
Costs
Hardware
Software
Training
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Technical
Business processes
Data conversion
Interfaces and
customization
Professional services
Reassigned employees
Software maintenance
Software upgrades
Benefits
Reduction in inventory
investment
Improvement in asset
management
Improved decision-making
Resolution of data redundancy
and integrity problems
Increase in flexibility and
responsiveness
Improved customer service
and satisfaction
Global and supply chain
integration
Buying Accounting
Software
--Large organizations with specialized needs
may require a customized AIS
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likely to be costly, but
will prove to be a good choice in the long run.
-- may manage with a packaged software for 80% of
their needs
-- Installation/setup of mid-to-high end software is
complex

a value-added reseller (VAR) or qualified installer is often
needed.