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How to match computers and accounting software.

The key is to uncover the needs of the enterprise.

A common but unwise approach to selecting a computer system to handle an organization's accounting and management information is to buy a powerful, expensive computer first and then select an accounting software package to fit the hardware. Another unwise approach is to purchase accounting software and then shop for the supporting hardware. While both approaches may work eventually, they're likely to be very time-consuming and costly.

Instead, a management accountant should begin by figuring out exactly what management wants the accounting-information system to accomplish by analyzing the organization's accounting and business reporting needs and determining the possible ways to meet those needs.

GATHERING THE INFORMATION

Getting the information requires overcoming at least two major obstacles.

* The traditional limits of accounting. Historically, accounting systems focused almost entirely on money transactions. Other information was collected, but it was gained independently by various departments of a business--such as marketing and manufacturing--that needed it, and the data were kept separate from the accounting system. Today's businesses generally recognize the importance of integrated information systems that encompass all internal data. Some even plug in data obtained from outside sources, such as government and industry trade associations. Thus, accountants today must dramatically expand their vision of the boundaries of accounting information systems.

* Figuring out what management needs. Obtaining information requires meetings with three levels of management: strategic planners and staff and line managers. The tactics for eliciting information from each group differ. Here are some advisories for gathering the information:

* Discussions with staff managers should elicit from them what data they need. Requests could include anything from the company's backlog of orders to industrywide production rates. And since the content or format of future reports can rarely be anticipated, the software should be sufficiently flexible to produce ad hoc reports, meeting ever-changing needs.

* When meeting with line managers, accountants should focus on how they will use the accounting information. The questions should delve deeply into company operations, going beyond direct financial transactions, to uncover ways to integrate current computerized operations into the accounting system. For example, it might be suggested that the system can provide real-time information on inventory or customers' paying patterns. When such synergy is discovered, it provides a double benefit: Not only can the business's operation be improved but the accounting department's visibility may be significantly enhanced.

* The accountant also should consider whether the business will be growing in the foreseeable future. If it will be, the software selected should be able to accommodate growth, to avoid the expense of replacing that software in the future. It's important to understand that the cost of a software replacement is not just the purchase price; the largest cost is the time and money spent to learn a new program. Ways of learning which software has that capability are provided below.

THE SOFTWARE SEARCH

Armed with these insights, an accountant can now begin the search for software. A first step is to check with the company's trade association. Many associations have identified, tested and sometimes endorsed vertical (industry-specific) accounting software for their industry. Some even commissioned and guided its development.

If that approach is unproductive, the accountant can turn to a wide assortment of information sources for advice on locating accounting software. For details on these sources, see the sidebar, "Searching for Accounting Software? Let the Computer Do the Shopping," on page 57).

THE PERFECT FIT

As a practical matter, accountants shouldn't expect any off-the-shelf software to be a perfect fit; there will probably be some areas of compromise. If a perfect fit is wanted, the only route is a customized program. However, customization is expensive, takes a long time and sometimes is never ending--a change in one part of the program nearly always requires a modification in another. Another alternative is modifying an existing commercial program. While obviously more expensive than buying an off-the-shelf package, a modified program is almost always significantly less expensive than one that is fully customized.

The supplier's reputation should figure in the final decision on a software choice. For example: How good is its support? Is its technical staff qualified? How quickly can a customer get an answer from the support staff? The only way to answer these questions is to check with current customers. If possible, the accountant should visit sites where the software is in use. Also, expect to pay for support services.

HARDWARE SELECTION

In many ways, selecting the right hardware for the accounting system is much simpler than selecting the software. While scores of computers are on the market, they generally fit into just three categories: Two types of PCs (the IBM compatible and the Macintosh), and some type of minicomputer. The choice of software determines what kind of computer is needed and how powerful it must be. Today's PCs are powerful enough for all but the largest applications, and even large operations find PCs meet most of their needs.

A related decision is the computer's disk operating system (DOS)--the software through which applications programs run. The most popular is Microsoft's DOS; others include IBM's OS/2 and Santa Cruz Organization's UNIX. While a majority of software is designed to run with DOS, OS/2 will also run DOS-designed programs, and many accounting software producers have both DOS and UNIX versions.

In general, it's a good idea for an office to connect its computers via a network. However, much depends on the office's size and the type of workload. For example, if an office workload is heavily involved in word processing, spreadsheets and graphics, as well as accounting, the best solution is probably multiple computers with a local area network (LAN). But if the office workload is light and accounting needs are dominant, the choice could be UNIX or some other multiuser operating system designed to run with one central computer (it could be a PC) and several inexpensive video display terminals.

How does a management accountant select among the hundreds of computer brands on the market? There is no safe and easy answer. Quality and compatibility are no longer restricted to leading national brands, and cost differences may be significant. Two criteria are

* Has the computer been approved for the selected operating system? Some operating systems vendors have programs to certify that particular computers will run their software.

* Is the computer manufacturer viable and does it have a support organization with the necessary response time? This is important because if the computerized accounting system is down, the entire organization is affected, possibly with dire consequences for the business.

Many accountants turn for advice to computer periodicals that run hardware benchmark tests and publish their results. While many of the assessments are accurate and helpful in making a selection, sometimes these ratings are likely to be influenced by other factors, such as a publication's advertisers or an editor's bias. To offset such bias, it's prudent to check the reviews of several publications. Five of the leading publications for such reviews are Byte, Computers in Accounting, InfoWorld, PC Magazine and PC World.

As prices for hardware decline, it becomes economical to purchase extra computers as backups. In that way, if one computer crashes, and backups have been done regularly, a fully programmed duplicate is available to pick up any job.

The task of installing computers, and getting software and hardware to work compatibly, is often tricky. Even experts run into frustrating problems, so nonexperts shouldn't be surprised if snags develop. However, following these advisories will increase the chances that the project will go smoothly. There will be other benefits, too: Since equipment purchases will not exceed actual needs, costs will be held down. Further, performance reporting will be comprehensive and timely, providing better information for strategic planning.
COPYRIGHT 1992 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:includes related article on databases containing software evaluations
Author:Courtney, Harley M.
Publication:Journal of Accountancy
Article Type:Cover Story
Date:Jun 1, 1992
Words:1291
Previous Article:Planning for a computerized accounting system.
Next Article:How one firm limited the risk of being small.
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