How CPAs count on computers.

What to buy now and what to expect in the future.

In the world of computers, the only constant is change.

Given how heavily the accounting profession has come to rely on computers, this ever-changing scene is a mixed blessing: While the advances in technology continue to make difficult and repetitive accounting tasks easier to accomplish, the rate of change often is forbidding-and expensive.

The following pages present an assessment of the current state of computer technology and a preview of how tomorrow's technology probably will reshape the work habits of the profession.

THE COMPUTER OF CHOICE

In the accounting profession, as in the rest of the business world, the microcomputer, or personal computer (PC) as it's now called, is king. While the larger minicomputer certainly isn't dead, it no longer is the purchase of choice. The only buyers who may take exception are those who operate huge databases. Today's PC does almost anything the minicomputer or the even larger mainframe can do--only it does it cheaper, usually faster and in less space. In the years to come, it's likely the PC will become so powerful it will handle any job its larger counterparts can do--and more.

Intel Corp.--the company that developed the so-called computer on a chip, which made the PC a rival of the mini and mainframe--has increased the PC's power significantly with its new chip, the Pentium. Pentium is the trade name for the microprocessor in the latest generation of PCs, generically labeled the 586. It replaces the 486 microprocessor.

What makes the 586 special? The major attributes over the 486 are speed; ability to handle multiple media (video, animation and sound) and to multitask (perform more than one task at a time); and memory capabilities. Poised for introduction (probably by next year) is the 686, which some wags speculate will be called the Sexium. Preproduction models have been completed, but little has been disclosed about its properties, except that it, too, likely will be a major technological leap forward.

Surely all this upgrading is good news for the computer industry, which profits handsomely when customers invest in new, more powerful machines. But what does it mean to most CPAs, who generally run tax preparation and accounting software, spreadsheets, databases and contact-management programs and probably share files with colleagues down the hall, across town and at the other end of the continent? Should they junk their 386 computers and buy either 486s, which are available now, or the even hotter 586s, which are just starting to be shipped? Or should they wait for the 686s before making a move?

For accountants who already have 386-c1ass computers and are satisfied with their performance, it's probably prudent not to invest in either a 486 or a 586 now. At most, accounting programs will work faster with the hot, new machines but not significantly better. Another reason to delay is prices for the 486s and 586s are at premium levels because they are new; in fact, 586s probably will be in short supply for a while. By year's end the prices of 486s probably will drift down to where the bargain levels of 386s are now. An indication of how swiftly changes occur in the computer industry is that some manufacturers already are closing out their 386 production and shifting to 486 and 586 models.

However, for some applications, waiting is not the best move. If an office wants its new computer to work as a server--the workhorse for a network system--or to handle high-tech projects, an immediate upgrade is warranted. In these applications, the faster and more powerful computers will add more than a little zip to a job. Here are some of the high-tech projects that benefit from more powerful hardware:

* Document image storage and retrieval. Stacks of documents--from tax returns to audit support statements and even photos--can be digitized and stored in the computer, eliminating the need for paper files. Also, once the documents are digitized, they can be accessed selectively and transmitted to remote computers.

* Presentation graphics. Computerized slide shows and animated presentations with sound can be produced easily. Presentation graphics expertise is becoming a key computer skill for marketing-oriented accountants.

* Desktop publishing. A report that looks typewritten can be transformed into a powerful typeset document with an arresting layout and explanatory graphics. To catch clients' attention these days, reports need interesting, catchy graphics--the kind desktop publishing software can produce easily.

THE OPERATING SYSTEM WAR

Until recently, few users gave a second thought to a computer's operating system--the software every computer needs to run application software. As a practical matter, most PC users accept the operating system that is already loaded in the computer when it's delivered. IBM-compatible computer users have had only one choice, MS-DOS, developed by Microsoft Corp. Recently a small but technically superior competitor has emerged--Digital Research's DR DOS. However, the software publisher is so small that, compared with giant Microsoft, it hardly rippies the market. Apple Computer has its own operating system, but since few business users opt for its Macintosh computers, MS-DOS has ruled the roost despite its many shortcomings.

In the past few years, however, the situation has changed dramatically. It's not just that there are choices; there's a major marketing and technology war over which operating system to use, and many CPAs, like it or not, will be faced with choosing their next operating system--a choice that will determine which application software they use and, in turn, how they run their businesses.

Before the choices are explained, it's necessary to understand one other development. Some years ago Microsoft introduced Windows, a software program that looks like an operating system but actually runs under DOS. While it solves many of DOS's shortcomings, it also introduces many of its own. In many ways Windows emulates Apple's graphical user interface (GUI--pronounced "gooey") design, which makes running a computer a picture game. For example, instead of typing a command to launch an application program as one would on a DOS machine, a Windows or Macintosh user positions the cursor over an icon (a small graphical image on the screen that represents an application program) and clicks on it. Microsoft's validation of Apple's GUI created a marketing revolution, and most software publishers hurried to develop Windows versions of their DOS programs.

Aside from GUI, Windows' biggest advantage is its ability to load several application programs and to switch from one to the other without entirely closing out of any of them. In addition, it's easy to copy and transfer data or even graphics from a file in one application program to another. In certain circumstances, a user can link files in different applications--such as a word processor and a spreadsheet; a change in the data in one file changes the numbers in the other automatically.

But Windows has drawbacks: Compared with DOS programs, it's slow. Worse, a Windows program works only under Windows, and most accountants still do not work with Windows, sticking instead to DOS applications. While DOS programs work under Windows, the multitasking and linking advantages are unavailable. In short, while Windows is better than DOS in some respects, many feel there aren't enough advantages to justify switching to it.

Several rivals are poised to challenge Windows, and in the years to come one of them may become the business computer standard; or, at least, collectively they may provide accountants and other business users with options that will make it easier to use computers. The emerging competitors to watch:

* OS/2. IBM's OS/2 is a very powerful operating system with a ragged history. IBM released the first version before many of its serious bugs were worked out. As a result, software publishers saw a bleak future for the system and few developed application programs for it. However, IBM says by year's end many application programs will be available. Programs designed for it run extremely well. In most applications OS/2 is faster than Windows. It, too, can multitask--not only its own programs but also those originally designed for Windows and DOS.

That means a lot to an accountant. If a typical workday includes the use of a word processor, a spreadsheet, a database, an accounting package and a personal information manager (PIM) or contact manager, all these programs can be loaded and ready to use with the touch of a button. In addition, as is the case with Windows, files can be linked.

To many users, the biggest advantage OS/2 has over Windows is that it's crash-proof: If a program running under OS/2 freezes, only that program--and not the entire computer--is frozen, and data can be saved.

The current release of OS/2 has drawbacks, too. It needs a lot of hardware: at least 6 megabytes (megs) of random access memory (most computers have no more than 2 megs) and 32 megs of space on the hard disk (few computers have that much space to spare). Also, by many accounts, OS/2 often is hard to install and it's "buggy"--that is, the system still has small but significant programming flaws. Over time, IBM is sure to solve the bugs and maybe even get OS/2 to run on less memory. But whether it can solve these problems in sufficient time to meet the growing competition is unknown.

* Unix. Variations of this operating system have been around for years. It originally was designed to run complex engineering and scientific applications on large computers, but now several products--including Sun Microsystems' Solaris and Univel's UnixWare--have been redesigned for PCs. While Windows and OS/2 multitask, neither handle the chore as well as Unix. In fact, it even can run a network with different operating systems (including DOS, OS/2 and Apple).

Unix has been the sleeper in the operating system sweepstakes. Last year, Novell, publisher of the top-selling network programs, acquired Unix from AT&T. It also acquired Digital Research, the MS-DOS competitor, making it a serious contender. (The Journal soon will publish an article on how adaptable Unix is to accountant's needs.)

* DESQview/X. Although not very well known, DESQview/X, produced by Quarterdeck Office Systems, does what Windows can do and then some. Under its "hood" is a modified Unix "engine," so it can multitask DOS or Windows (and even some Unix) applications. While it runs DOS programs swiftly, Windows programs run sluggishly.

* NT. In the meantime, Microsoft is not waiting patiently for the competition to pounce. Sometime this year or early next it will introduce NT (for "new technology")--a Windowslike operating system that will go head to head against OS/2. The developers say it will be able to run DOS, Windows, OS/2 and Unix programs with limitations; it's not clear what those limitations will be. It, too, will need loads of memory and will take up some 66 megs of hard disk space.

* Taligent. A more remote contender is Taligent, from a new IBM-Apple team. It will be several years before Taligent is introduced, and little is known about it except that it is being designed to run DOS, OS/2, NT and Apple programs; its developers say it will be able to translate data instantly from one program into usable data for another. And since many Apple programs are noted for their user-friendliness, that may be a big boost for people who feel overwhelmed by the complexity of today's DOS-based software.

* Cairo. A likely direct competitor of Taligent is Cairo, an operating system under development by Microsoft. It also is some years away from launch. Little is know about it; however, considering Microsoft's reputation, it should be a significant advance in operating system design.

WINDOWS DILEMMA

In the meantime, most users must make the choice between Windows and DOS--except users of SBT Corp. accounting systems. SBT has taken an innovative step with its two new accounting software products--ProSeries 2.5 Multi User and Unlimited. Both run under Microsoft's FoxPro, a database that comes in two versions--for Windows and for DOS; both versions share a common database. As a result, two accountants, one working on an SBT program under Windows and another working on the same program under DOS, can share a client's database without having to convert, import or export the data.

Assuming the operating systems on the drawing board deliver the promised flexibility, accountants will be in luck. They will be able to run any application program, no matter which operating system it was designed for. They will not have to upgrade application programs continually just to match operating system advances, as is now the case with Windows. Also, the new operating systems finally will allow users to tap the full potential of the new PCs.

PRODUCTIVITY ENHANCEMENT

Following is a collection of computer products--software, hardware and accessories--that can improve accountants' productivity immediately:

* Simple network. For accountants in small offices who want to install a network, there's Windows for Workgroups by Microsoft. Windows for Workgroups integrates peer-to-peer networking, which allows colleagues to share each other's files without going through one central computer. It's a very efficient network setup for 10 or so users. Windows for Workgroups also lets users share E-mail, group schedules and printers. One of its biggest advantages: It doesn't require a network expert for installation; during installation, the program analyzes the user's system and configures itself accordingly. Also, it handles passwords for security. While it can access DOS workstations, it can share only Windows files. For five users, the program costs $400.

* Database. Borland International's Paradox (for DOS and Windows) is fast becoming business users' database of choice. While dBASE is still widely used, many users are switching to Paradox because of its speed, flexibility and ease of use.

* Spreadsheet: Three products are toss-up choices-Borland's Quattro Pro (for Windows and for DOS) and Microsoft's Excel for Windows. All are vast improvements over the old standard, Lotus 1-2-3.

However, Lotus's publisher, Lotus Development Corp., recently introduced Improv, a unique Windows spreadsheet that may revolutionize the market. Early reviews of Improv rave about its flexibility and, in particular, its ability to use plain English commands instead of complex formulas. Also, rather than intersecting rows and columns of cells that are identified by numbers and letters, Improv uses labels such as "sales" and "expenses." The early reviews also commend its ability to create new models with the click of a mouse.

* Audio. A picture may be worth a thousand words, but a few well-chosen comments may be worth a lot more. Microsoft has introduced a system that allows users to add spoken comments to any computer file running under Windows. When the file is accessed and the cursor passes over the comment spot, the recorded message is played back. Microsoft's Windows Sound System, which includes a plug-in audio circuit board and software, lists for $289. The system also can be programmed to read out the numbers in a spreadsheet.

* Small computer. Notebook computers and the even smaller "subnotebooks" have become popular because of their portability. But until recently the trade-off was weight vs. an ergonomic keyboard: The lighter the computer, the harder the keyboard was to use. Gateway 2000 recently introduced the HandBook, a subnotebook with a full-sized keyboard. Including the battery, it weighs only 2.75 pounds, half as much as comparable machines. It's only a 286-class computer, but it can handle memos, spreadsheets and databases. It lacks a floppy drive and connects to another computer for uploading and downloading by cable. Battery life is 4.5 hours. Its biggest plus: It can accommodate a fax-modem, which means a traveler toting this light-weight machine can do office work on the road and keep in touch with E-mail, transmit files by phone and even fax a file to the office or a client. The list price is $1,295.

Another notebook worthy of mention is IBM's new ThinkPad, a 486-class machine. Since it has an active-matrix color screen, users can view the screen even from oblique angles. For a list price of $4,350, the computer comes loaded: 8 megs of memory and a 120-meg hard disk. It weighs 7.8 pounds. The computer also has a keyboard feature that mouse users will find especially handy. Wedged between the G and H keys is a tiny rubber-tipped joystick about the size of a pencil eraser. When the tip is wriggled, the cursor moves. Two click buttons are situated behind the spacebar. The advantage of this design is that a user does not have to lift his or her hands from the keyboard to maneuver the cursor.

* Fax. For people who send many faxes, nothing is more convenient than a fax-modem--a plugin circuit board that allows the computer to send and receive faxes. With a fax-modem, documents to be faxed never have to be printed first; the computer file is sent directly to the modem, which then transmits it in the background--that is, the user can be running another program at the same time. Having the fax built into the computer provides other conveniences: It's easy to program a system to fax at any time of the day or night (saving toll charges), and names and phone numbers can be stored for multiple transmissions. Incoming faxes can be printed on any printer. As an added feature, an incoming fax's image can be scanned by any optical character-reading software, which can convert the stored picture into a computer file for editing. The leading fax board is Intel's Satis FAXtion modern/400, which lists for $549.

Another option is to convert a Hewlett-Packard Laser Jet printer into a dual printer and fax machine. The $1,395 fax converter, called a LaserJet Fax, plugs directly into the printer. Its advantages: It provides clear plain-paper copies, a fax can be sent fight from a computer file (without first converting it to paper and then feeding it into the fax) and the computer can program faxes for unattended transmittal at any hour. Also, received faxes can be optically read by converting the fax image into a computer file.

* Personal information management. Lotus Organizer, a Windows product, has one of the handiest PIMs on the market. While it may not have as many extras as some other PIMs, what makes this one especially attractive is that it's designed to function like the popular Day-Timer. It lists for $149.

* Printers. By far the most popular printer on the market, and for good reason, is the Hewlett-Packard LaserJet. The newest model, the LaserJet IV, is fast (it prints eight pages a minute) and has 600 dot-per-inch resolution. It contains many fonts that can be scaled to numerable sizes, providing more than enough type flexibility for most accounting, word processing and desktop publishing needs. The list price is $2,199.

And for those who want to print on the fly, there's the Hewlett-Packard Deskjet Portable. While it is slower than the LaserJet (it prints from 2 to 3 pages per minute, depending on whether it's in draft or letter mode), its quality is excellent. This inkjet printer weighs just under eight pounds and can produce about 100 pages on one battery charge. The list price is $599.

Another inkjet printer, the Canon Bubble Jet 200, weighs seven pounds and is transportable, which means it does not run on batteries, but requires an AC outlet instead. It comes with a 100-page and 10-envelope feeder. Printing is whisper quiet and quality is excellent. The list price' is $549.

THE FIDDLE FACTOR

This abundant array of computer hardware and software and the speed at which it's being introduced present some problems. Some people find the cornucopia so overwhelming they become numb and refuse to look at new developments. Others are so thrilled by everything new they must try it all. For the former, the danger is they will lose the opportunity to discover ways to enrich their professional work and ease their burden. For the latter, the danger is they will waste time playing with new products, a form of procrastination akin to sharpening pencils.

In reality, some intelligent playing is necessary to evaluate the worthiness of a product. It may be necessary for that task to be delegated to at least one person in every accounting office.

But the bottom line message for accountants is clear: Computer technology changes fast. It takes time and effort to keep up with it, and those who fail to keep abreast will be severely handicapped.

STANLEY ZAROWIN is a senior editor on the Journal.

Mr. Zarowin is an employee of the American Institute of CPAs and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation.

EXECTIVE SUMMARY

* EXCEPT FOR SOME specialized applications, the minicomputer is no longer the computer purchase of choice among accountants. The microcomputer, or as it's more commonly called, the personal computer (PC), can do almost everything minis can do. The new 586 PCs are even more powerful.

* SHOULD ACCOUNTANTS rush out to buy the new 586? In most cases, the answer is no. There are exceptions: For example, when an office needs the computer to function as a server--the workhorse for a network system--or for such high-tech projects as document image storage and retrieval, presentation graphics or desktop publishing.

* UNTIL RECENTLY, FEW accountants gave a second thought to a computer's operating system. Now they must begin to think about their choices, which include OS/2, which can run multiple applications simultaneously whether they are programs designed for Windows, OS/2 or DOS; and Unix, which can run application programs designed for different operating systems and even a network with different operating systems.

* MICROSOFT SOON WILL introduce NT--a Windowslike operating system that will go head to head against OS/2. And in a year or two an Apple-IBM team will offer Taligent, which is being designed to run DOS, OS/2, NT and Apple programs. The developers claim that Taligent will be able to translate data instantly from one program into usable data for the other. And within the next few years Microsoft will introduce Cairo, an operating system more advanced than NT.