ACCT341, Chapter 15 Accounting Software

1. ACCT341, Chapter 15Accounting Software

2. 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

3. 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.

4. Integrated Accounting Software Programs • Most companies purchase accounting and enterprise software rather than developing internally • But 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.

5. 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 ledgermodule 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

6. 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

7. Integrated Accounting Software Programs - Features • 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.

8. 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 they’re doing ! E.g. WWU initially hired a bad VAR) • a VAR offers a broader array of services than a qualified installer

9. 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.

10. 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 • Microsoft’s Dynamics GP • SAP Business One • Sage’s MAS90 • Intuit’s QuickBooks Enterprise Solutions

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. Extended ERP Functions Integrated external front-office functions • Traditional capabilities plus • E-business • Customer management • Supplier management • Business partner management • Strategic business relationship management

18. Traditional ERP

19. Extended EnterpriseInformation System

20. The Talking Bears

21. 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

22. 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

23. 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

24. 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

25. Systems Development

26. 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 Costs and Benefitsof Enterprise Systems Benefits Costs

27. 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.