Packaged accounting software vs SaaS software

A growing number of businesses are forsaking packaged accounting software in favour of accessing it as a service over the world wide web. We investigate the benefits and improvements worth taking advantage of.

When looking for a new accounting software package for his small business, Con Zeritris chose a relative newcomer to the accounting software market in Sydney-based SaaSu, So-called software-as-a-service (SaaS) companies have been one of the most interesting trends in software in the past five years, with the trail blazed by the US-based customer relationship management system, developer Salesforce.com. Accounting systems are now receiving the same treatment.

Under the service model, clients don’t purchase any packaged software. Instead, they pay to access a system that is hosted on the internet, in a similar way to which they might access online banking or Facebook.

The idea is catching on. In addition to SaaSu, New Zealand-based accounting software maker Cognito is also offering its MoneyWorks accounting software as a service through partners, while Reckon will consider doing the same if it sees sufficient demand.

MYOB also recently released an entry level, online invoicing and cashbook system in New Zealand called BusinessBasics Online. Both this application and the SaaSu service automate the process of creating and coding transactions and daily bank feeds, making bank reconciliation a thing of the past and freeing up valuable administration time. MYOB is continuing to add features to BusinessBasics Online and anticipates launching it in Australia late this year.

MORE INTUITIVE

Zeritris came across SaaSu while using Google to search for an alternative to MYOB for his IT contracting management business, InduistrieIT.com. He says the software provides most of the functions of MYOB, but he believes it is more intuitive.

“There is probably some more complex functionality missing that MYOB supports, but certainly for my business, which is not overly complex, it has everything I need,” Zeritris says. “Where there is some functionality missing there are simple ways to get around it.”

He was also impressed that he had completed the migration from MYOB to SaaSu in a matter of days, and is happy that he doesn’t need to do anything to support the service himself. He believes the service will also support him as he seeks to grow the number of contractors he is managing, in line with his goal of growing from less than 20 today to more than 500 over the next three years.

The chief executive officer of SaaSu, Peter Cooper, says interest in his company’s web-based accounting system is growing, especially as the software can be integrated with other applications, such as internet banking, LinkedIn and Google, to assist in running the business. The latest release includes activity management features.

“Your accounting package is usually recommended by accountants, whereas business owners are really looking for things that will help their business run more efficiently or grow,” Cooper says.

COST EFFECTIVE

Because the software is paid for on a rental basis and hosted by SaaSu, Cooper says there is no capital requirement upfront for clients, and the cost per year is half the price of comparable accounting packages.

While SaaSu represents an emerging trend amongst software generally, it is unlikely that the packaged software we have become accustomed to will disappear any time soon.

Other packages continue to evolve and develop at a steady pace. In April, Reckon released the latest version of its QuickBooks product, dubbed QBi. Around US$1 billion has been spent redeveloping the software, which now includes a structured software database embedded within the software to ensure that it can service the needs of growing businesses.

According to the chief executive officer of Reckon’s business division, Gavin Dixon, the advantage is that a new company can purchase a $29.95 software package that can scale up to 30 concurrent users running a business with turnover in the hundreds of millions dollars.

“The previous versions of QuickBooks haven’t been able to go above ten concurrent users and, if you had significant volumes, the performance degraded and you needed to condense or archive data in order to maintain a reasonable performance,” Dixon says. “The new version has no real limit.

“In the past, once customers grew out of QuickBooks or MYOB Premier they needed to go to an enterprise resource planning solution like Exapta, but those kinds of products have a different order or magnitude in terms of cost and complexity.”

Dixon says in one instance a client was investigating switching to an ERP application, but was put off by the purchase price of $136,000 and $27,000 in maintenance costs. By comparison, QuickBooks cost only $5,250 and $3,000 in annual maintenance.

MORE FUNCTIONALITY EQUALS MORE VALUE

“As you go up the range you get more function and at the enterprise level you get things like manufacturing and dynamic inventory allocation, a user-driven report writer and user security. You get all sorts of things that you would never dream of in the lower end products. But in fact the software is exactly the same from the smallest to the largest; it is just that we turn features off as you go down the range.

“Also, it retains that same user interface all the way through. That will help our users in terms of their learning curve and their return-on-investment. The more functionality that you can actually use, the more value you can get out of it. Most times accounting software is designed by accountants for accountants and QuickBooks has philosophically said most people that run businesses are not accountants so it is better to create a solution that works for ordinary people.”

For many business owners, telling the difference between one software package and another is an almost impossible task, and one often left to the accountant or finance manager who defaults to whichever package they have used previously. And while MYOB and Reckon dominate the Australian market, there is a plethora of other solutions out there, including Peachtree, Coda, and even Microsoft’s Money.

According to the managing director of MYOB Australia, Tim Reed, it is important that the business owner ask themselves some basic questions, such as what the business needs will be two years out. It is also worth ensuring that the package is one that the company’s accountant or bookkeeper is familiar with, while also thinking about the number of people in the business that will need to access the software.

When it comes to making the buying decision, reputation also helps.

“MYOB is a trusted and recognised brand globally,” Reed says. “Small businesses trust us to deliver tools and services that will empower and enable them to work smarter, not harder.”

WHAT WORKS FOR YOU?

While different packages essentially do many of the same things, they will at times tend to do them in different ways. The new version of QuickBooks also sports a new user interface, which is designed so that almost all of the functionality is not more than two clicks away from the first screen the user sees.

According to Dr Grant Cowie, chief executive of Cognito, when it comes to selecting software, feature checklists are often irrelevant, because so much of the functionality is the same across packages. He says it is better for clients to investigate how a package performs a function, and whether that suits the business. He also recommends investigating those things that are unique to their business that they find hard.

“Every software package is going to do bank reconciliation and stuff like that
, so you forget about all of the mundane stuff and list out the things that are going to be difficult,” he says. “Then you use that as the filter to determine which packages to look at. Even a very small business might not realise quite how unique some of their requirements are, that they just take for granted because they have been doing it on a spreadsheet.”

Reed says MYOB also has an established program of working with software developers that can assist clients who need more than the core applications can provide them.

“We have an established developer program that can tailor solutions to meet the needs of particular industries or niche markets, with MYOB as the accounting engine.

“We also recognise that small businesses are becoming more mobile with the proliferation of laptops, mobile phones, cameras and GPS devices in small business workforces. “Information is more accessible, richer and delivered faster than ever before. MYOB will continue to develop and utilise technology platforms that will empower and enable small businesses to reach their goals.”

Cowie says Cognito is also differentiating its software through the inclusion of advanced reporting tools, including a report writer.

“Reports are an important part of any business, and no accounting system can provide every report that everyone wants,” Cowie says. “MoneyWorks has always come with a report writer in it, and we have substantially enhanced that in the last version. And that’s pretty well unique in the SME business market.”

Another important factor is interactivity. With the rise of real-time retailing and inventory systems, particularly driven by e-commerce activity, it is important that companies are able to input and access information from their accounting systems for use in other parts of the business as it is needed.

Cowie says Cognito has also worked to ensure that MoneyWorks will interact with other software.

“We’re very much of the belief that MoneyWorks is not going to do everything for everybody, and so our job is to provide a very good core accounting engine, but with hooks into other systems. So you can chose your CRM system and the chances are it will hook up to MoneyWorks.

“As businesses get more and more sophisticated, they want more and more functionality, and there are always going to be better solutions from specialist providers of those solutions than by general purpose suppliers who try and do everything.”

INTEGRATING THE WEB

Dixon says the new version of QuickBooks is ‘web-enabled’, meaning it can interact with other applications across the company network or over the internet. This means that information can be more easily accessed and entered through different applications, and maintained in real-time.

“You can integrate web applications and have them called from within the user interface and it can be, if it is done well by the third party, more or less seamless,” Dixon says. “We see already some examples of sophisticated applications are able to be added onto QuickBooks without having them embedded within the product itself, and I think that will help us in maintaining a reasonable level of sophistication for most of our customers.”

MYOB even went so far as to acquire a web hosting company, ilisys, to help its clients get set up and trading online.

“Small businesses are becoming more aware of the advantages that technology offers and are starting to look to technology to assist them with their business,” Reed says. “For example, more and more small businesses are realising the benefits of establishing a website to advertise themselves as well as a platform for delivering goods and services.”

Related Stories