Comments on: Is “Horizontal” Accounting Software Dead?

By: Tom Coyes

Tom Coyes — Wed, 10 Nov 2010 17:01:13 +0000

An accounting software is a one size fits all general purpose tool that is suitable for a small number of businesses: businesses that have a simple business process such as retail store, wholesale business, restaurant, small repair shop, etc… An accounting software, be it QB, PT, SA, ACCPAC, etc…, is unsuitable for a large number of businesses: businesses that don’t have a simple business process.
SMBs don’t realize this because their current system is so patched up and clunky that the problem has been blurred and buried ten feet underground.
The simple and undeniable fact is that if spreadsheets did not exist, the usefulness of your accounting software (regardless of the brand) would drop by at least 50% and in very many cases the accounting software itself would be unusable, I really mean unusable.
Why is it so? The answer is simple: An accounting software is an accountant’s tool not a business tool and as such its function is very limited. The best proof that its function is limited is this: In the majority of businesses, users spend a significant amount of time and effort extending its functionalities in order to bridge the gap between accounting and the company’s business processes by using multiple spreadsheets, databases, 3rd party add-ons, electronic files, etc…. QuickBooks payroll is no longer adequate? No problem, new spreadsheets are created and maintained by the payroll person or an add-on is purchased. The sales process is getting more complex and your MS Dynamics or Sage can’t handle it or is too complicated or heavy to reconfigure? No problem, another series of spreadsheets is created by the sales department. The result is a system that is patched up and stitched from nearly every side. That’s the type of result you get when you use a screw driver to drill a hole. Messy and painful isn’t? The astonishing part is that people do it naturally without questioning this nonsense. The not so surprising part is when a business commits the sin (they all do) of asking their CPA or a system reseller to suggest a solution, he/she almost invariably recommends another brand of screw driver…. and life goes on.

By: David Hobbs

David Hobbs — Wed, 08 Sep 2010 00:48:15 +0000

Why reinvent the double entry accounting and GL wheel? I think great financials like QB and Dynamics will always be used, either on premise on in the cloud. Hanging cloud apps off these tried and true accounting modules is the way to go. DH.

By: Gina Marie Mangiamele

Gina Marie Mangiamele — Sun, 18 Jul 2010 14:38:20 +0000

From these posting experts, I have one very important question. If you were to direct an individual to get ahead of the accounting software curve, how would you tell them to proceed? What strategy of software training would you recommend for a re-entering accounting professional, who is being told I need to know quickbooks inside and out. If the trend is to move to the cloud, and I agree that this is the trend, what applications should I learn and become an expert at to be valuable to an employer? I’ve been refreshing my accounting skills and am targeting the small business advisory groups within a firm for employment. Your advice and comment is most appreciated.

By: Jennifer Doctor

Jennifer Doctor — Sat, 10 Jul 2010 02:02:12 +0000

While we offer flexible solutions, for both horizontal and vertical markets, what matters the most to us at Sage is that we offer the right solutions for the problems that are shared with us.

Most top-of-the-line “horizontal” small business accounting software packages, like our Sage Peachtree, are flexible enough to meet the needs of the majority of the smaller businesses. And, for those businesses with other needs, we continue to listen and respond through action supported by our strategy. To help with this, we currently partner with companies to help those small businesses who require market-specific software and serve a range of specialties. This partner relationship includes our own Sage family, with products including ACT! by Sage and Sage FAS (Fixed assets). And, we are committed to continue to work on specialized vertical solutions – including construction, distribution, manufacturing and nonprofits – to create niche solutions that solve market problems.

By: Scott Miller

Scott Miller — Thu, 08 Jul 2010 20:57:34 +0000

Good observation, Austin. I saw this trend with my previous venture, which was focused on ERP for the mid-market.

With my new venture, B2Bee, we are already seeing success offering a vertical for the “smallest of the small” service businesses, solopreneurs and freelancers. We are seeing a rejection of Quickbooks as a “one size fits all”. Offering a dead simple, web-app, for invoicing and light bookkeeping, and staying away from a traditional double-entry accounting system, makes all the sense in the world for our market.

The only question that remains is…..will the CPA community be open to solutions that fit their small clients better than Quickbooks. This is an industry that doesn’t change quickly and gets comfortable recommending one solution.

Thoughts?

By: Jason M Blumer, CPA

Jason M Blumer, CPA — Mon, 05 Jul 2010 20:45:24 +0000

Great article, and I do agree with most of it.

One of your points on the emergence of SaaS is huge. In fact, I don’t think its “emerging” anymore. Many are catching on that there is a better way to do business, and it is in the clouds.

I believe CPAs can assist with this “death of the horizontal accounting market” by researching and building new cloud-based solutions for their clients.

I don’t mean we have to “build” them, we just have to know what integrates and which tools are best for which client… and then sell it!

Great post!

By: John Coates

John Coates — Thu, 01 Jul 2010 19:40:17 +0000

Hi Austin,

At FreshBooks, we’re actually living this right now with a lot of success. We’ve built a vertical based billing and time tracking application for serviced based professionals (lawyers, dog walkers, marketing agencies). These business owners are using products more tailored to their business to save time by using simple tailored applications like ours, mostly in the cloud. It also makes it easy for us to develop as we can focus on the key features and use cases for this vertical – it’s a win all around.

These small businesses are also taking advantage of a lot of integrations between web based applications to cover their horizontal needs while focusing on their verticals to build a perfect online solution for their business (project management, CRMS, and form builders).

By: Ben Sady, CISA, CIA

Ben Sady, CISA, CIA — Tue, 29 Jun 2010 20:09:31 +0000

Great observation and post – I think you’ve described it well. I still see Quickbooks often enough in small and med sized businesses. With that being said, I think it is a goal for many companies to find a more industry specific package as they grow to the appropriate size.

A problem I’ve encountered is that some vertical apps are produced by small companies that don’t always consider the appropriate IT controls during the design of the application.
That is something to look out for when choosing a new accounting software package.

By: Gary Turner

Gary Turner — Tue, 29 Jun 2010 15:13:48 +0000

My view is that it’s the age of the large, monolithic app that’s gone.

I’d even suggest that vertical focussed apps (which can also be monolithic) are a transitionary phase and componentized apps will probably prevail where best of breed for accounting & bookkeeping will work in conjunction and collaboratively with peer app components in other spheres.

Vertical apps have long since had a variable reputation for getting the basic financials elements right – it’s hard to build great vertical app functionality AND great financials.

The one-stop-shop app is certainly dead.

By: Wayne Schulz

Wayne Schulz — Fri, 25 Jun 2010 11:27:01 +0000

Microsoft in particular has been singing the vertical/specialization song for the last several years to their ERP consulting firms.

In the early days of ERP the selections tended to be very thin and some were awful. So the mantra was to buy generic.

Then packages matured and became better. Companies that really needed features like manufacturing and distribution struggled with generic (aka horizontal).

The next logical move was for these companies to look vertical – which most of them are doing now.

We’ve also seen a huge decrease in replacement cycles for ERP software. Most companies are tending to stick with what they have for fear that moving to another system will be fraught with hidden missing features or difficult conversion.