A buyers' guide: high-end accounting software.
The developers of high-end accounting software and the users of that software too often march to a different drummer. The users chief financial officers, controllers and other accountants of very large organizations want their computers to deliver useful financial and marketing information, not spew out reams of raw data. They want succinct forecasts, not voluminous spreadsheet tables; practical business advice, not dense financial statements. In short, users want--and need--flexible, functional and friendly systems. And they want these software applications on a variety of computer operating systems--not just large, expensive mainframe computers.
The developers, on the other hand, while not totally ignoring customers' needs, appear more focused on the wizardry of the computer: client/server and object-oriented technologies, for example. While these technologies ultimately enhance the power and flexibility of software, their utility usually is not immediately apparent to most users.
In the last few years, however, some major vendors have begun to hear and to act on their pleas for friendly, practical and powerful applications that run both on huge mainframes and midsize computers, whose popularity grows as mainframes' future dims.
This article reviews the major shifts in the high-end accounting software market and looks at the leading products in this arena.
In the early' 1990s, recognizing that mainframes' star was on the wane and that much of their business depended on it, developers of high-end accounting software decided they had to move quickly to survive. For years, all mainframe technology was "closed"--that is, it was inflexible and proprietary, unique to particular hardware. As a result, users were boxed in: In most cases, they could use only the application written for the operating system designed for that particular mainframe. But as powerful and cheaper midsize computers rushed into the market, software developers, in a move to grab a share of this fast-growing plum, hurriedly rewrote their products' programs so they' could run on multiple operating systems.
The swing to so-called open systems won immediate applause from customers who wanted to be free to shop for applications best suited to their needs rather than struggle to adapt themselves to the peculiarities of the hardware vendors' software. On top of that, the recent management pressure to downsize and reengineer added immediacy to the desire for flexible open systems-along with the recognition that many of the less-efficient procedures of large organizations stemmed from the inherent inefficiencies of their financial software.
Hardware manufacturers read the handwriting on the wall, too. They recognized that if they failed to heed the call for open systems, their future--already jeopardized by the growing popularity of midsize machines--would be bleak. For example, it is clear that the specialized software for computers such as IBM's mainframes and AS/400 and Digital Equipment's VAX are giving way to open systems such as Microsoft NT and Unix. Exhibit 1, below, compares the operating systems currently being used by large companies' finance departments and what they plan to move to in the near future. The AS/400, one of the most popular midrange computers that once operated only on IBM's proprietary software, now runs under applications from major software vendors such as SAP, PeopleSoft and J. D. Edwards.
The hottest entry in the open system market is Microsoft's NT. In just over one year it clearly has become the most popular choice for midrange applications. Unix, on the other hand, has been at the starting gate for some years, but its growth has been hobbled by its failure to come up with a single unified design; currently, there are several flavors of Unix, each proprietary to a different hardware manufacturer.
Exhibit 2, on page 45, shows in U.S. dollars the investment in operating systems by leading high-end accounting packages in North America and my projection for those sales into the year 2000.
Looking further out, the mainframe market probably will flatten and then decline; the AS/400 market will probably hold its own, primarily because of the open system upgrades; Unix will show continued growth; and NT will gradually become a dominant force in the market.
The overwhelming trend--especially exhibited by large organizations--is toward client/server technology, in which PCs running on Windows act as the common user interface (client) to a range of larger computers (servers), linked by a network. The combination is ideally suited to bring together modern desktop applications, such as word processing, spreadsheets, electronic mail and databases, and link them directly with the type of financial applications mentioned in this article. This means that not only can new applications have a modern Windows appearance (commonly called graphical user interface, or Gui) but also the PC can be configured to link to legacy (older) applications. Data can reside on different servers yet be accessed easily by the client workstation.
As a result, rather than one large centralized information system, we are now looking at decentralized systems with computer processors at individual operating departments or in divisions or subsidiaries, and all of these systems are linked through networks that replicate data as necessary for management information purposes.
However, this new technology, while powerful, is bringing with it significant problems. While the installation of a typical host-based proprietary system application is straightforward, installing a client/server system is complex. Client/server systems take as much as 300% longer to install, and specialists are needed to do the job--significantly increasing costs.
THE NEW MARKET
The market for international accounting systems has grown tremendously over the last three years. Large organizations, most of which do business worldwide, are ready customers, because the new software lets them standardize on one package rather than use different packages for each country, which creates major headaches when financial data are consolidated. Meeting international requirements goes beyond language and currency: The software must meet the stringent fiscal, legal and tax requirements of each country, in which an organization operates.
The biggest change to modern systems, compared with systems purchased in the late 1980s, has been the move from functionality to flexibility. For example, just a few years ago, most of the high-end packages on the market tried to be all things to all customers: The software was loaded with applications. What was missing, however, was an easy way to tailor the packages to the special needs of a customer. As a result, many customers shopped for third-party modules to perform functions more in harmony with their special needs. Thus, a user would determine which third-party module was best suited to the organization's needs and that best-of-breed module was then linked either to another third-party module or the user's accounting software.
One of the prime candidates for third-party modules was executive information systems (EIS). As managers sought more strategic and timely information about their operations, they recognized that while convention:d accounting software was good at providing history, it did not excel at telling managers the condition of business today or forecasting what it would be like tomorrow. Although many organizations in the early 1990s turned to third-party ElS packages to meet their need for strategic analyses, such arrangements usually were not satisfactory. Vendors quickly recognized that, and today most of the systems have EIS functions built in.
Included with this review is a table (exhibit 3, pages 48-51) showing, among other things, the range of applications that each of the packages can perform and the platforms and databases on which they operate.
Another trend got reversed in the 1990s-- customization. In the 1980s, while the high-end packages could be customized to meet each buyer's special needs, such changes usually required rewriting the packages' source codes--the underlying, hidden programming of the software. Thus, customization was both difficult and fraught with dangers because subsequent updates of the package often did not adequately accommodate the older custom changes. The upshot was serious bugs in the software. And if a customer still wanted the custom features, source code modifications had to be undertaken from scratch--a frustrating and costly operation.
With today's financial software, rarely do screens need to be modified other than to have fields redefined or additional fields included--a relatively simple operation often undertaken by the customer, without special training. And if specialist screens are needed, they generally are developed outside the standard system; therefore, upgrades are not affected. Also, some vendors have developed ways to keep track of any customer modifications and then provide easy ways to integrate them into subsequent upgrades.
So the trend now is to fully integrated packages. An organization is less likely to buy a general ledger from one supplier and bolt it onto an accounts payable module from another supplier. Today, with the advanced features of drill-down--where a user can determine a profit-and-loss variance and then, with the click of a mouse, dig down for the source of that variance--it's vitally important that at least the financial modules be from the same supplier.
Yet, despite the trend and as a way to expand their products' functionality, most of the leading applications have tools that allow end users, specialist departments or third-party implementers to modify their systems or develop special applications that easily bolt onto them. PeopleSoft and the new J. D. Edwards' OneWorld have possibly the most advanced client/server application development tools available today. CODA, which offers only a financial package, stresses its ability to link to other applications, such as manufacturing and logistic systems.
And therein lies a problem for customers: One of the realities of marketing is that vendors are inclined to stretch the truth about what their products can do and how easy it is to modify and customize them. When vendors say their packages contain the tools that allow a customer to customize the products, what is left unclear--until after the purchase-is that such customization often is more difficult than the customer imagined, and special programming skills still may be required.
Two key software developments improve the productivity of current systems: workflow and electronic commerce.
* Workflow is a software technique that allows users to program how a process automatically flows through an organization; for example, when department X approves a purchase, the order--a file on the computer--automatically moves to the purchasing department for action. If purchasing is tardy in moving on the purchase, involved persons or departments are automatically alerted to the problem. Computron and Dun & Bradstreet Software's SmartStream were two of the first packages to design workflow into their core systems. All of the leading packages, if they have not already installed the workflow function, are implementing it in their next releases.
* Electronic commerce, which includes electronic data interchange (EDI), is having a huge impact on business. Using EDI software, companies are able to automate the process of moving documents electronically between vendors and customers. When company A buys supplies from company B, the entire process is handled electronically-- no paperwork is involved. When one considers that 90% of documents used for data entry are computer generated, it's pretty obvious that EDI is the wave of the future. With the rise of the Internet and the ability to transfer information cheaply and effectively over the whole world, electronic commerce is becoming a major focus for most organizations.
Following are the reviews of the leading high-end accounting software products:
Product: CODA Financials
Vendor: CODA, 1155 Elm Street, Manchester, New
CODA, which was founded in 1979, offers financial software designed to operate on a wide range of platforms, including Unix and Microsoft NT. In addition, the package is relatively database-independent: Versions can run on Oracle, Informix, Microsoft SQL Server, Sybase, CA Ingres and any ODBC-compliant database.
For organizations with international operations, CODA offers one of the best solutions. Its single unified ledger design is ideal for handling multiple currencies. Unlike many of its competitors, CODA sells only financial software. However, the product can link to a wide range of other specialist applications.
One of the program's strong points is its analytical and statistical tools. Its Windows screens are user friendly. The software is scalable from 10 to 500 concurrent users.
Product: Computron Financials
Vendor:. Computron Software, 301
Route 17 North, Rutherford, New Jersey 07070
Computron, founded in 1978, is one of the leading international accounting software vendors. It recently expanded into Europe, with acquisitions in France and Germany. In the early 1990s, when Computron saw the emerging client/server Windows market, it redesigned its product to run on multiple platforms. It was one of the first financial products to implement modern workflow technology.
So that its users could store old reports in a way that makes them quickly retrievable, it developed Computer Output On-Line (COOL), which uses CD-ROM technology to provide fast access to years-old information. Computron incorporates a third-party product, Neuron Data, for its graphical user front end; however, it plans to upgrade its software with Visual Basic. The program can handle from 10 to 200 concurrent users.
Product: CA Masterpiece
Vendor: Computer Associates International, 1 Computer Associates
Plaza, Islandia, New York 11788
CA Masterpiece was originally developed in COBOL for the mainframe. It has been ported to a wide range of platforms, including IBM's MVS and AS/400, Digital's VMS, Unix and more recently NT. The client/server product uses an intelligent screen-scraper (a program that converts DOS screens into Windows screens) as its graphical user front end, based on CA Cricket, but has performance problems outside its mainframe environment.
CA Masterpiece provides a complete suite of integrated ledgers and distribution systems that link to CA manufacturing modules. The program can drill down to examine underlying numbers and can handle multicurrency transactions.
The program is available on a wide range of relational databases, including CA Ingres, CA DB, Informix, Sybase, Oracle and IBM DB2. It also is available on indexed file systems for the mainframe and Unix platforms. CA Masterpiece is scalable from 10 to 5,000 concurrent users.
Vendor: Dun & Bradstreet Software,
3445 Peachtree Road, NE, Atlanta, Georgia 30326
[Dun & Bradstreet Software is being acquired by Bain Capital, 2 Copley Place,
Boston, Massachusetts 02116; tele - phone: 617-572-3000.]
SmartStream was developed in the early 1990s to provide a modern client/server suite of integrated financial, distribution and manufacturing systems. Although SmartStream was sold to some large organizations, it is not a direct replacement for the centralized DBS mainframe systems--Millennium and Expert Series.
The product's strongest attribute is its workflow technology, which was designed into the package. Workflow is easily configured and uses well-designed alerts and triggers. It is directly linked to Lotus Notes and e-mail and can, among other things, handle remote authorization in electronic commerce. SmartStream was developed in PowerSoft's PowerBuilder. It comes with its own SmartTools to allow customization. The program runs under Sybase and Microsoft SQL Server. It also is available on Unix and NT platforms. It can handle from 10 to 200 concurrent users, but there is reason to believe the new owners will expand that range.
Product: System 21
Vendor: JBA International, 3701 Algonquin Road, Suite 100, Crossroads Center, Rolling Meadows, Chicago, Illinois 60008
JBA International has developed a truly international version of its AS/400 and Unix accounting system. It has a wide range of modules, distributed by over 60 agents worldwide. JBA built its reputation on the AS/400 platform. Many of its functions, which in other packages are separate modules, are built in. They are very customizable by the vendor, not the user.
Its new System 21 is a transition from the typical green-on-black, character-based AS/400 screen to a modern multiplatform client/server with a graphical user front end. However, not all of its modules have yet been rewritten for the graphics mode; in the meantime, the modules use an intelligent screen-scraper as the front end.
JBA is known for its financial, distribution, supply chain (purchasing, inventory and sales order management) and manufacturing software. Its package is one of the few that meet the language, legal, fiscal and tax requirements of the international market. Its AS/400 applications can be run by from 10 to 400 concurrent users.
Vendor:J. D. Edwards, 8055 East Tufts Avenue, Suite 1331, Denver, Colorado 80237
J. D. Edwards recently introduced its multiplatform OneWorld, which gradually will replace its World Series Classic, which was designed for the AS/400. OneWorld was designed as a distributed client/server system, using the latest technology for configurable network computing. J. D. Edwards is one of the largest international software developers and has been the market leader on the AS/400 application for many years. OneWorld is available on Unix, NT, AS/400 and mainframes.
The software can coexist with the AS/400 Classic product, which uses the same DB2 file structure. Thus, customers can mix and match OneWorld with Classic. More important, users are now able to distribute their applications and data over a wide range of operating systems and databases. The product was written in 32-bit technology for NT and Windows 95. The company developed its own application development tool to enable screens and applications to be generated by end users or third parties.
J. D. Edwards historically has provided a high level of training and support directly to its end users. The package includes a wide range of modules, including financial, distribution, supply chain management and manufacturing. It's scalable from 5 to 500 concurrent users.
Product: Open Enterprise Financial System
Vendor:. Lawson Software, 1300 Godward Street, Minneapolis, Minnesota 55413
Lawson was founded in 1975 and has 2,100 customers worldwide. Its applications, originally developed for mainframes, were later rewritten for the IBM 36/38 and the AS/400. A Unix version was added later. Lawson has a comprehensive suite of financial and supply chain modules. It has its own application development tool--Insight AD Workbench--which was used to develop the current application and can be used by end users and third parties to enhance and develop additional applications.
The program is available in three formats: (1) for a "thin" client, which is a version of client/server where the presentation software is on the client workstation and the application and database reside on the server, (2) for computers running in a client/server architecture and (3) for host-based terminals for the AS/400 and Unix. Under Unix, it's available on the Oracle, Informix, MS SQL Server, CA Ingres and Sybase databases. The most useful feature is its advanced drill-down, which can operate from the general ledger through accounts receivable and payable to invoicing and purchase order processing.
The program is highly functional and flexible. Fields can be easily defined by users applying its tool kit. Although it has limited international functionality, versions are available for most European countries. It is scalable from 10 to 500 concurrent users.
Product: Oracle Financials
Vendor: Oracle Corp., 500 Oracle Parkway, Redwood Shores, California 94065
Oracle is a leading supplier of enterprisewide client/server business software. The program is designed to be flexible and to support continual reengineering of a customer's business.
Oracle's applications were developed for the U.S. market in 1989; the international version became available in 1993. Its program is now looking dated compared with some of its newer competitors--especially its general ledger account structure. While Oracle Financials has sold well in the United States and the United Kingdom, it has been slow to become established internationally.
The latest version of Oracle Financials, launched in 1995, comprises over 30 integrated modules, covering accounting, human resources, manufacturing, distribution, sales and marketing, Internet commerce and mobile computing. This is an interim release to provide a bridge between release 10, its character-based version, and release 11, which will be its full client/server GUI version, due in 1997.
The program is scalable and can support both individual departments and the entire enterprise. SmartClient can be deployed in both two- and three-tier configurations and supports both GUI and character-based formats. Thus, economy-minded organizations do not have to upgrade terminals to run the program. Although Oracle Financials is a horizontal application, it can be customized for specific vertical market requirements. Oracle says it can handle as many as 1,000 concurrent users; however, that figure has not been verified.
Product: PeopleSoft Financials
Vendor: PeopleSoft, 4440 Rosewood Drive, Pleasanton, California 94588
PeopleSoft has had outstanding success with its range of client/server financial and human resource applications. Founded in 1987, it went public in 1992. In 1993, it launched its financial applications, which have been extended to cover asset management and purchasing. The company shortly will launch order processing and inventory packages. [t plans to develop its own suite of manufacturing packages to provide completely integrated applications.
PeopleSoft was one of the first developers to provide Windows-based client/server solutions. It was programmed with its own People Tools, which is more advanced than most of its competitors' tools.
The company started to expand into the international markets last year and has already established itself in Canada, Great Britain, Singapore, Australia, Southeast Asia and Latin America.
The client/server design can provide access across a wide range of operating systems, including MVS on the mainframe, MVS Unix and NT. The program is available on a wide range of relational databases, including Oracle, Informix, Gupta SQL base, Sybase, IBM DB2 and now Microsoft SQL Server.
It uses a modern Windows look and feel, moving away from the traditional accounting software design structure.
PeopleSoft Financials represents a significant advance, not only in client/server functionality in small, midrange and mainframe applications but also in consolidation of reporting functionality, which is seen only in expensive third-party packages. It is scalable from 10 to 500 concurrent users.
Vendor: SAP, Headquarters International, Court 3, 300
Stevens Drive, Lester, Pennsylvania 19113
Over the last four years, SAP has grown from a medium-size central European mainframe developer to the largest application developer in the world, with $1.9 billion turnover last year based on one product--R/3. SAP R/3 was one of the first truly integrated client/server business systems to be launched in the early 1990s. Unlike some of its competitors, it was designed to be best-of-class in four specific areas: human resources, financial, supply chain management and manufacturing.
While originally intended as a centralized solution for downsizing from the mainframe, SAP extended its functions and is now scalable, serving both medium-size and large organizations. The early problems of implementing such a complex system have been mostly solved. Designed as a fully integrated product, SAP is now working closely with partners to link to a wide range of specialist applications. The product was developed for the vertical market as an international product, meeting the local fiscal, language and tax requirements of most countries.
SAP R/3 was originally created for Unix, using the Oracle, Informix and ADABAS databases. It was recently extended to NT, using SQL Server, and to IBM's AS/400, using DB2/400. SAP is currently working with IBM to provide a distributed MVS mainframe solution to allow access to legacy data files on the mainframe from open system server platforms. The company is now scaling the product down for smaller organizations of 25-plus users, and it can handle more than 1,000 concurrent users.
Product: Financial Management 2000
Vendor: Software 2000, 25 Communications Way, Drawer 6000, Hyannis, Massachusetts 02601
Software 2000 was founded in 1991 and otters a range of financial, human resource, purchasing and process manufacturing systems for international corporations. The product was designed for the AS/400 platform, using IBM's I)B2/400 database. It has since been reengineered to take into account the move toward client/server distributed processing. Software 2000 now delivers a full object-oriented interface called Infinium FM, which provides a substantially enhanced GUI that can be fully customized at the desktop level.
Its functionality is quite exceptional for a product of this type, linking to the more open desktop of the PC with a Windows client. The product is scalable from 10 to 500 concurrent users.
Vendor: Walker Interactive Systems, Marathon Plaza Three North, 303 Second Street, San Francisco, California 94107
Walker Interactive Systems was founded in 1969, and in the 1980s its products pioneered in the use of database technology for mainframe systems. It was one of the first systems to use IBM's DB2 database. Despite the shrinkage of the mainframe market in the early 1990s, Walker decided to stick with the mainframe, but with significant enhancements. It recently announced Tamaris, an advanced client/server mainframe package using a Visual Basic Windows front end. The initial release, Application Development Kit, enables its mainframe users to design their own client/server front ends to link their legacy applications with Tamaris. Such an architecture provides an ideal solution for customers that anticipate not only major corporate changes but also system changes. The program is scalable from 10 to 5,000 concurrent users.
DENNIS KEELING is the senior partner of Dennis Keeling Partnership, a consulting firm based in Great Britain that specializes in analyzing international business software. Keeling is an engineer and the author of Ovum Evaluates: Corporate Accounting Packages, a 370-page report evaluating the leading international accounting systems. His e-mail address is 101757,firstname.lastname@example.org.
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|Publication:||Journal of Accountancy|
|Article Type:||Product/Service Evaluation|
|Date:||Dec 1, 1996|
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