An Overview of the Accounting Software Market
Levels of the software market
The choice of software for your business is very important. Get it right and you can increase your profitability and improve the ability for business growth. Get it wrong and it can be disastrous.
Changing software is expensive and disruptive, making it important to select software that can grow with your business and is provided by a supplier who will be supporting it for many years to come. To ensure software longevity there are two main requirements; that they are a mainstream supplier and that your software is able to grow with your business. Many small software companies are vulnerable to market changes and are often reliant on one or two key technical people. Fortunately, there are a number of mainstream players such as Microsoft, Sage, MYOB and SAP, which can provide products that are able to grow as and when needed. However, the problem here can be that most of the larger organisations buy up smaller software companies and their products, enhance them but often don’t have a growth path or even an easy transition from one product to their next level product.
An even bigger problem though is the way products are superseded and customers are forced to change products when their existing product becomes unsupported.
There are many different software packages available to small and medium sized businesses and they fall into two categories:
Starter packages:
- low cost
- easy to set up solutions with limited functionality
- These include Xero, MYOB, Quickbooks. Reckon and Saasu, SAP B1 Cloud
These enable a new business to be up and running quickly and inexpensively. Some of these products are excellent and may be all you need. However as your business grows, your requirements will grow and you may need a more comprehensive solution.
Mid-range products:
These products have the extra functionality not available in starter products such as:
- Better stock management
- Cost centre accounting
- Better security to provide control over who can access what data.
- Quotations
- Special Pricing
- Multiple warehouses
- Fixed Assets
- Customer Relationship Management (CRM)
- Project Management
- Sales Opportunities and Pipeline Management
- Customisable Dashboards
- Mobile Apps
- Service Management
- Batch and Serial Numbers
- Production Planning
- Materials Requirements Planning (MRP)
- Custom Report Writers
- Query Management Functionality
- Messages and Alerts
- Foreign Currency
- Bin Locations
- Application Program Interface (API) Integration to other software
- User Defined Field Capability
- Attached documents to create a paperless office
- Integration Tools – for Webstores, Electronic Data Interchange (EDI) and more
- These include SAP Business One, Access Attaché, Sybiz, Jiwa, Triumph, MYOB Advanced, Sage, J-Curve, Microsoft Dynamics 365, Arrow, MYOB EXO, Pastel Business Manager, Netsuite, Harmony and many, many more.
Looking at this list begs the question “what extra functionality will I need as my business grows?”
If you are planning to keep the business to a modest size with the reduced stress levels associated with less change, then a starter package is the way to go.
If you are planning to grow to a point where mid-range software is needed, it is usually better to start with the end in mind and select a midrange software product that can start small and grow with the business. This will save the significant overhead associated with changing systems midway through your growth, dismissing the need to spend time selecting a new system, planning and preparing for a system changeover, training staff and losing easy access to your historical data.
Products for Larger Organisations:
These are significantly more expensive, starting from around $100,000 to hundreds of millions of dollars, which for some very large organisations is not an exorbitant cost, especially when it enables them to dominate their industries and make a lot more profit.
These include Pronto, Technology One, Navision, Peoplesoft, Sage, SAP S4, SAP BYD, Oracle
Summary:
As businesses grow and their systems complexity increases, the cost per user tends to increase significantly. For small business the software cost may be in the tens of dollars per user per month. Mid-range software starts around $100 per user per month, while larger systems may approach or even exceed $1000 per user per month. The purpose of systems is to make people more productive so the costs of technology need to be compared to the return they will provide. Even at $1000 per user per month, the return on investment of the right system can be huge.
