ACCT341, Chapter 15 Accounting Software

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ACCT341, Chapter 15Accounting Software
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Introduction

• Accounting software
• Early decades
• primarily processed bookkeeping transactions
• Today
• 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

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AIS Software Market

• Entry-level (Entry) software is designed for
  smaller businessesthose 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.

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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
• 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.

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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

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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

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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.

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Buying Accounting Software

• mid-range or high-end accounting software
  packages are usually purchased from a value-added
  reseller (VAR)
• VARs provide buyers with services such as
  installation, customization, and training (if
  they know what theyre doing ! E.g. WWU initially
  hired a bad VAR)
• a VAR offers a broader array of services than a
  qualified installer

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Small Business Accounting Software

• Small business owners are usually concerned with
• cash flows and
• figuring out if they have been profitable.
• The three top-rated small business accounting
  software include
• QuickBooks products by Intuit
• Sage50 (formerly PeachTree) products by Sage
• DacEasy, Simply Accounting, etc.

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Mid-Range Accounting Software

• A mid-range software package is usefulwhen
  transaction processing needs
• grow in volume and
• increase in complexity.
• Some examples of accounting softwarepackages of
  this type are
• Microsofts Dynamics GP
• SAP Business One
• Sages MAS90
• Intuits QuickBooks Enterprise Solutions

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Mid-Range Accounting Software

• These software packages offer manyfeatures. 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

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Hosted Solutions

• Another option is hosted solutions, also called
  cloud computing, or e-sourcing. This is
  where the software is rented and hosted online.
• E.g. QuickBooks online
• Advantages
• 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

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Specialized AccountingInformation 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

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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 PG, Kodak, etc.)
• Oracle / PeopleSoft (used by Wal-Mart)
• Microsoft Dynamics GP Enterprise

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ERP Historical Development

• Enterprise System Functionality
• ERP systems originated from manufacturing systems
• MRP I Systems
• Marketing sales projections,
• Production schedules
• MRP II Systems
• MRP I plus forecasting
• planning for all manufacturing resources
  including labor and overheads
• ERP Systems combined MRP II systems with
  accounting and finance functions

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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

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Traditional ERP
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Extended ERP Functions

• Integrated external front-office functions
• Traditional capabilities plus
• E-business
• Customer management
• Supplier management
• Business partner management
• Strategic business relationship management

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Extended EnterpriseInformation System
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The Talking Bears
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The Architecture of Enterprise Systems

• ERP Configurations
• are client-server based
• can typically run on many operating system
  platforms
• Centralized database
• stores information about each dataitem just once
  
• makes it immediately available toall the various
  functions

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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 andproductivity among
  employees,customers, partners, and suppliers

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ERP Systems and BusinessProcess 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

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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

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Systems Development
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Costs and Benefitsof Enterprise Systems
Benefits
Costs

• Hardware
• Software
• Training
• Technical
• Business processes
• Data conversion
• Interfaces and customization
• Professional services
• Reassigned employees
• Software maintenance
• Software upgrades

• Reduction in inventory investment
• Improvement in asset management
• Improved decision-making
• Resolution of data redundancyand integrity
  problems
• Increase in flexibility and responsiveness
• Improved customer serviceand satisfaction
• Global and supply chain integration

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Buying Accounting Software

• --Large organizations with specialized needs
• may require a customized AIS
• 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.