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Review: Accounting in the Clouds

Clouds goldenAccounting software was first widely adopted by mid-market companies in the mid 1980s. The arrival of cheap personal computers made personalized accounting affordable for the first time. At first the newly affordable computer technology attracted users moving from manually prepared financial records.

The next wave of automated accounting converts were moving away from what had become considered restrictive and inflexible shared computer systems known as time sharing.

For twenty years companies used (and largely still use) accounting software loaded to their office computers. Gradually as technology improvements become commonplace  and companies opened branch offices across the country there was renewed interest in  shared remote computing where the server was not located in the company’s offices.

While at one time computing largely occurred in one office, the scattered workforce now created  more demand for mobile computing. The ability to access records easily in remote locations with little or no advanced setup.

The Internet offered a nearly zero cost method to connect remote locations. Where expensive T-1 communication lines used to be required (and prohibitively expensive) to connect remote offices, the Internet now provided a fast dependable way to connect remote offices and workers.

Suddenly, to some the concept of maintaining the hardware, workstations and backup systems required by standalone accounting software started to out weight the cost of allowing someone else to manage the infrastructure. Instead the concept of software as a service or SaaS became increasingly popular for some customers tired of maintaining the internal hardware and software systems required by their accounting software.

Software as a service is loosely defined in several categories. The broadest is perhaps any type of hosted software that might be similar to a remote computing environment. Users log in via a remote connection similar to Citrix or Terminal Services  to a dedicated company owned computer that's reserved and maintained by a third party for their exclusive use.

At the other end of the SaaS spectrum is multi-tenancy which is perhaps the most commonly accepted definition of SaaS. A multi-tenant application hosts many different companies who all share the same common software code base. Because this code is shared there usually is not as much opportunity for software customization. Upgrades are generally delivered automatically and with little or no effort on the part of the software user.

The popular term for this shared computing is either cloud or software as a service (SaaS). The terms refer to varying degrees of off-site computer use that range from a single computer maintained for a single company to one computer where many hundreds or thousands of companies can share the same computing power.

The Pros and Cons of SaaS

The concept of software as a service has as many detractors as true fans.

Chief among the perceived downsides to the SaaS market is the repeated belief that in the case of an Internet outage an entire company would be left idle waiting for their critically important accounting software to become available once again.

Right or wrong the perception that an interruption in the Internet communication stream could bring down a company operations has been a powerful motivator for some to move cautiously.

Security concerns are also voiced any time that data is stored off-site and away from the protection of a company's own storage facility. Also the ability of hackers to access data stored on remote services and even the fear that a service provider could lose a company's accounting data.

The benefits of SaaS are that it can eliminate significant headaches typically associated with connecting multiple remote offices and users. The hardware costs are typically very low because the SaaS applications are accessed through an Internet browser which does not require special hardware or memory.

The multi-tenant nature of some SaaS applications means that upgrades are carried out automatically and without any effort on the company's staff. This can significantly slash the recurring money spent on expensive consultant time and the service disruption associated with software upgrade processes.

SAP Business By Design
SAP Americas  
Newton Square, Pa.
(800) 872-1727     
Price: $149 per user per month.

SAP Business By Design
SAP, typically associated with large multinational businesses, is moving down to the mid-market with their SAP Business By Design SaaS offering which was first announced in 2007, but has taken a much discussed lengthy time to get to market in volume. That's happening this summer.

The SAP solution is aimed at what seems to be the sweet spot forSap Business By Design all  the SaaS applications - companies with from 50 to 500 employees. This employee range may grow up to the 1,000 but if it extends much bigger then SAP's benefits would become the ready availability of next step up ERP systems like the beefy SAP Business Suite.

The typical user for SAP Business By Design is a fast growing company looking to consolidate multiple applications onto one platform that offers a multi-tenant SaaS approach.

Key industries served include professional services, consulting, project based organizations, light and discreet manufacturing and FDA compliant process which as they grow could migrate to SAP Business All in One.

Cost on SAP is roughly $149 per month. There’s a typical minimum starting point of 10 users and most of the companies are 25 or higher user counts. Expect to pay about $20,000 each and every year.

All access to SAP is via either the Firefox or Internet Explorer web browser. There's no additional connection software to load beyond some security keys to authenticate your access to company data. Your first view when logging into the system is a dashboard of various key indicators. SAP allows you to build various roles which are then reflected on your home page as your log in.

There are between 400 and 500 pre-designed reports, each of which may be exported to Excel for further manipulation. Modified reports can be saved back onto the server where they're automatically shareable between your users.

There's no payroll included with SAP. Integration is however provided between HR and external payroll services like ADP and Paychex. One nice unique feature is a prominent segregation of duties alert screen. If anyone in the organization has been assigned conflicting duties the system flags and notifies you of the situation immediately.

San Jose, Calif
(877) 968-0600 
Price: $400 per user per month

The AICPA endorsed Intacct as their preferred provider of financial applications in April 2009. This opens the doors to over 45,000 AICPA members who can take advantage of the Intacct Accountant Edition ($90 per month per user) to keep both their own accounting and review the records of their clients.

The regular price for business use of Intacct is $400 per month per userIntacct logo. According to Intacct there is no minimum user count required and there are very low-cost ($10/month) licenses available for users who may only need limited access to the system.

Intacct is multi-tenant and offers monthly upgrades delivered automatically to users  of which they claim 95 percent renew annually.

As with most of the other SaaS products Intacct excels at the core financial marketplace. One of their niches is in professional services and especially with software or similar companies where there is a strong need to manage advanced revenue recognition over multiple periods.

Another key feature is the workflow process built into the system. Approvals for expenses and purchase requisitions are automatically maintained without any need for third party software as is common with the on-premise software brands.

Whenever there's a function that Intacct is not able to supply they offer various hooks for third parties to create interfaces or connections to the software. User defined fields and screen customizations could be used by most fairly literate users to make minor changes to the look and feel of the system.

One point of that all the multi-tenant applications make is how easy the common code makes integration and collaboration. Since there is no third-party software that sits bolted on top of the core system, all the links flow smoother and with almost no maintenance.

Intacct relies on some third-party solutions to fill holes that other solutions natively integration. One example is the reliance on Salesforce.com for CRM. There are also hooks but no native e-commerce solution.

Real time dashboards are displayed on users home screens. This data will update as various transactions are posted and keeping the screens open doesn't interfere with any of the posting processes. A welcome change from the traditional software world where stringent rules sometimes govern what operations can simultaneously be in use while printing reports or viewing data.

More complex customizations are available through Intacct's professional services grope. While they don't change the source code they do make advanced use of the exposed programming links and are available as a resource for customers who wish to make changes.

Unique to Intacct is the dashboard which is available in the CPA version. Here an accountant can at a glance see all their clients as well as view dashboard notifications for key indicators such as cash shortages or receivables that suddenly may have crept up over a pre-defined aging category. Tax data can be exported for yearend preparation and different staff in the CPA's office can have different levels of security.

San Mateo, Calif.
(650) 627-1000
Price: $99 per user per month

If breadth of functionality is what you're seeking then NetSuite has it. There's hardly a stone left unturned in the functionality that they support or feature they offer. It's all multi-tenant SaaS for ease of upgrading. The company is also one of the old timers at offering SaaS. They've been in the marketplace since 1998 and claim 6,600 customers.

Pricing is a reasonable $99 per user per month. That includes E-Commerce which is a unique offering between all the solutions reviewed. Also included are NetNetSuite logoSuite CRM and Financials. While there's no stated minimum number of users as a practical matter most customers of NetSuite are going to be 10 or higher users. The company says most customer pay more than $10,000 annually.

As with most of the SaaS offerings reviewed, additional advanced configuration options  may cost extra, so double check your configuration to make the functionality is all included at the price you've read here.

Upgrades are issued twice yearly. The use of a common multi-tenant code base allows for these released to be updated with no customer disruption. Typically there will be a short beta cycle for invited customers. There may be an early peek provided and then a customer can choose when to turn on new features, either immediately or at a future date.

Multi-currency and multi-language is all available in NetSuite. Slipping between the myriad of currencies and languages seems almost too easy and will be a desirable feature for anyone doing business in multiple countries each with differing currency and language.

Project management is offered through NetSuite and the company says that wholesale distribution (traditionally a weak spot for most SaaS offerings) is a key part of their offering with over 2,200 users making use of advanced features such as pick, pack and ship.

Over 90 percent of the NetSuite users customize their solution. Often this is with the addition of user defined fields, graphical customization to the screen or adding scripts or Java code to slightly change the screen behavior.

Bethesda, Md.
Price: $15,000 annually.

Companies with a high user count and a need for accounting coupled with project management should take a look at Acumatica. Versions of the software are available for hosting either off-site or on the customer's premise.

What's unique is that licenses are all flat rates per year with no extra charge for additional users, making it quite economical for large numbers of subsidiaries.

Acumatica refers to ts solution as a hybrid model. It's the only one reviewed wAcumatica logohere an on-premise solution is offered in addition to a hosted model that relies on the Microsoft Azure cloud platform which allows for off-premise hosted applications to be run at the Microsoft data centers.

Pricing on Acumatica is a flat $15,000 per year. Add in $7,500 for certain specific modules like wholesale distribution. As with each solution reviewed be sure to check your specific configuration for any pricing that might be additional.

Acumatica is sold through a pure VAR channel. Newly added board member John Howell joined in May and formerly ran the international operations for Solomon and Acumatica is the only pure channel SaaS solution in this review. The strongest target market for Acumatica is users with multiple global offices. The unlimited user pricing tends to attract companies with large user counts and/or numbers of subsidiaries.

Core financials is the primary target market for Acumatica. There is some distribution capability and the company is working at enhancing that. Posting processes can be real or batch oriented - though in practice nearly everyone runs the system in a real time mode so that posting is automatically applied by those with the proper user rights.

Inventory processing allows for some matrix-like processing. This means a retailer of shirts could simultaneously stock the clotting in multiple colors without having to create additional skis.

Deferred revenue management is a new modules which allows for allocating revenues from any source whether its invoicing or general ledger. The Analytic Report Manager is a dead ringer for the commonly used (but now extinct) FRX Report Writer.

An employee portal has a login area where employees can track time against projects. Time can also be set as relating to multiple projects so both revenue and expense can be properly matched.

Wayne Schulz is the founder of Schulz Consulting. He began his career working for two professional service organizations and managing their consulting divisions. He has been active not only with the implementation of Sage MAS 90 and MAS 200 accounting software but often is engaged to help clients design or evaluate their current accounting procedures.

The philosophy of Schulz Consulting has been built around one of being a consulting firm first and a sales company last. This is evidenced by Wayne’s unwavering claim that he is the world’s worst salesman but perhaps one of the top at providing client service to his loyal base of clients (many of who have been with him since 1986).
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