There is no Accounting for Bad Software

Accounting is not a subject I have written about in many years but, in the slurry of new business and marketing paradigms, we tend to forget that a business is still a business, and its success depends on a good administrative and financial control system.

In principle, a "system" doesn't have to be a computer-based at all. For accounting purposes, a shoebox full of expense receipts, bank statements and cancelled cheques handed off to your accountant once a year is a "system", albeit not a very useful one. A computerised system makes a whole lot more sense. It's hard to make good business decisions without timely income, expense and cash-position reports. A good system will both reduce the drudgery of doing accounting and provide better, more timely reports.

Accounting functions, like general ledger, payroll, payables and receivables are pretty much the same for any business, regardless of the industry. They come with standard reports like income/expenses, balance sheet and cash-flow analysis. Beyond that, it can get more tricky, depending on the kind of business you are in. For instance, it would seem like a restaurant could use the same inventory/bill-of-materials systems as any other kind of manufacturing but, actually, their work flow and even terminology are different. I used to run a company that consulted to the hospitality industries. We started to develop software to fill in the gaps and overcome the weaknesses of generic, "turn-key" accounting systems, but moved toward developing a full-blown control system for restaurants. It allowed for tighter integration with industry-specific workflows. The whole point of getting into software development was that existing software vendors just weren't "getting it".

A lot of years have passed since my hospitality industry days, so I expect that software in the industry has pretty much matured by now, but I can say that for sure because my focus is other industries now. To a large extent, what I do these days is directly related to the internet and, in many cases, only possible because of the existence of the internet. It goes beyond just on how we communicate or even think, and it's no longer "business as usual" in the broader, historical context. We are in exciting times.

What hasn't changed over the years is my high exceptions on what an accounting system should do and how it should do it. The business analyst in me is always vigilant, always finding flaws. In the past decade I have made two earnest but failed attempts at automating my accounting and administrative functions using web-based accounting and management systems. "Failure", in this context, is realising either that a product that promised much didn't deliver on those promises or it had such a convoluted way of doing things that it just isn't worth the effort. Why spend as much time on an "automated" system as you do on a manual one?

Since those failures I've still been doing my accounting largely through a combination of web-forms and Excel-style spreadsheets. This works a lot better than the shoebox but it doesn't scale very well. As my businesses grow I am faced with a linear increase in manual labour. I need to streamline all administrative processes, removing manual steps wherever possible. The secret to scalability is automation, but it has to be done right. It has to remove the human administrative element as much as possible.

Since my last two disappointments, a lot has changed. The web itself is evolving into a platform, supporting a wide variety of business tools. It is still relatively immature but it pleases me that the nature of the medium will force software vendors to "think multi". I mean, of course, multi-user, multi-currency and multi-lingual.

So now, again, I am surveying the accounting software landscape and see if there is a product that will automate my businesses. My preference is for a web-based, single-vendor, modular, turn-key system. Already I have seen some promising products and some serious disappointments and I am optimistic that at least a few vendors are worthy of competing for my attention.

My thought is to share my experiences here. In doing so it might help you develop your own selection criteria and avoid pitfalls but, more than that, I hope it will snap the vendors to attention and get them to think more about their own shortcomings. Stay tuned. Expect to see some rants. Hopefully there will be some raves.

Read Part 2 here.