Featured Article Read these excerpts from the article, The observer does not even know whether Luca changing landscape of computerized accounting Pacioli's double-entry concept is still being used. systems," and answer these questions: (1) Define Accounting seems to be the perfect application each of the "in-technologies and systems." for making the most of computing power. (2) What is their relationship to the success As we face the 21st century and the third of ERP? millennium, questioning what technology has in MORE POWER AND GREATER store for accounting systems is quite appropriate. With prices for consumer PC systems hovering STANDARDIZATION around $600-1,000, and low-end accounting soft- The world of accounting systems software ware priced at about $100, businesses can afford used to be divided into two parts: the low end to have computerized accounting. But, are the and the high end. This worked quite well before old programs enough to run a business in the e-commerce, e-business, and enterprise resource 21st century? planning came along. These, coupled with The New Marketplace. Today the com- cheaper and more powerful computers, have puter accounting industry has three major levels, given rise to a new breed of accounting systems with the mid and lower levels each split into two beyond the high end. The good news, however, is groups. that while the pricing of the new breed is not ERP vendors dominate the highest tier of cheap, it is far less than the mainframe and mini- accounting systems, where software solutions can computer-based systems that previously were start at $150,000. The mid level (where previously needed to perform the same functions. Also, for high-end functions are found), with software costs the first time, database management within at $8,000-$50,000, is divided into SQL-based sys- accounting systems is becoming standardized tems and non-SQL-based systems. Lastly, the low- under the SOL-based client-server system. This end systems, which still provide some bang for the means ease of movement for databases from one buck, carry prices in the $100-5,000 range. This application to another. group is also broken down into two strata: the The computer has revolutionized the way very low-end systems, and a class of larger" sys- enterprises keep their accounting records. After tems that are more functional and robust but fall transactions are recorded they can be manip- far short of the mid-level systems. ulated sorted, analyzed, summarized, and Another force at work is the introduction of turned into financial statements with ease. The e-commerce and e-business into the accounting systems mix. Most, if not all, mid- and high-end products provide some sort of communications interface with the Internet. Many of these inter- faces are based on ODBC and the ability to have multiple software and hardware products com- municate directly with the accounting system and its databases Even low-end vendors such as Peachtree offer an e-commerce module. Peachtree's Peach Link provides small businesses with the wherewithal to do business on the Internet. PeachLink allows the user to list products and services on the Web, take orders, and even receive payments. THE 21ST CENTURY MARKETPLACE Most of the major accounting systems manufac- turers agree with the following view of the future accounting marketplace: "In" technologies and systems E-commerce and e-business Best practices SOL GUI front ends Web-enabled applications Extended enterprise solutions Value chain e-business primarily conducted at the commer- cial or wholesale level. E-commerce is the use of the Internet to conduct business. Amazon.com and online securities trading are examples of e-commerce at the retail level. The use of SQL as the back-end database, and its ability to use ODBC as a methodology for transmitting information to and from other applications, makes using the Internet for business transactions easier than ever. Dell Computer Corporation currently handles $10 million in retail transactions per day over the Internet, according to Lettie Ledbetter of Dell Computer's public relations department. Enterprise Resource Planning. Lynne Stockstad, director of global marketing at Great Plains software, sees the back office application of ERP as follows: "This application category is the backbone of a strategic business management solu- tion.... It typically includes fully integrated applications across financials, distribution, human resources/payroll, service manage- ment, and manufacturing. ERP solutions have predominantly been implemented by the Fortune 500 businesses. However, major midmarket vendors... are now offering this full scope of ERP solution[s]." ERP leaders SAP, PeopleSoft, and Baan have, as stated, moved into the middle tier of businesses, breaking into the Fortune 500 and beyond. They have done this by repositioning and restructuring their current selection of ERP products to run on the mid-tier platform of choice, Windows NT. Nevertheless, the former high-end accounting products, which have been reclassified by these ERP vendors, should not be discounted. As Stockstad stated, ERP and the creation of pro- grams that support this system of management are on the wish lists of the now mid-level accounting systems Solutions which in the past cost in the mil- lions of dollars can now be achieved for less than $500,000. This new accessibility to ERP allows information power that was not previously available to be used by smaller corporations Solutions geared toward specific industry sets or implementation of management theories (such as best practices) foster tighter integration of the Internet-based Commerce. Commerce con- ducted over, through, by, or with Internet-related technologies will be the single hottest technology in the next decade. Vendors that responded to an e-mail survey all stressed a vision of e-commerce or e-business solutions. Each and every non- respondent's website also stressed e-commerce or e-business. A new feature in Quicken 99 exemplifies the attention that accounting vendors are paying the Internet. Quicken, the highly popular and simple to use home accounting system, now pro- vides remote entry of transactions through the Web. This capability allows users of Quicken 99 to enter transactions through Intuit's (Quicken's publisher) site and store them for later retrieval. E-business has been defined as the exchange of goods and services using electronic means. Electronic data interchange (EDI) and electronic funds transfer (EFT) are examples of accounting, managerial, and operational func- tions of the business The addition of the Internet to ERP and e-commerce has morphed even this newfound jargon with a new glossary of terms, most notably the extended enterprise solution (EES). Best Practices. Arthur Andersen defines best practices as simply the best way to perform a process." The boom in ERP and e-commerce gives rise to the need to institute best practices, to both improve the bottom line and create an air of control over what is to be a new explosion in information. From accounting to marketing data, inventory control to depreciation sched- ules, it is the art of data warehousing that is enabling the small and large business to manage growth in changing economic times. By imple- menting best practices, from planning to imple- mentation, companies are able to reengineer their business and maximize productivity. A best practice forces a reexamination of the business from all points of view, essentially requiring the corporate entity to redefine itsell. The largest mistake made during the imple- mentation of a new accounting system, espe- cially a manufacturing requirement processing (MRP) or ERP system, is to redesign the new system to work in the old environment. This is often done without a thorough examination of the effectiveness of existing procedures and an evaluation of where best practices can optimally be employed. Structured Query Language. As mentioned previously, SQL is quickly becoming the data- base of choice. Vendors from Peachtree to Accountmate are rolling out SQL-based accounting systems, offering improved manage- ment of increasing amounts of data. The use of SQL standardizes the database aspect of these upper-end accounting systems. Before the accep- tance of SQL, every vendor either used disparate database systems or created or modified their own database system. This made it difficult to share information with other systems located on shared resources THE RULER OF THE ROOST Today, and most certainly tomorrow, ERP rules the roost, requiring CPAs' and businesses' accounting staffs to retool and reeducate them- selves in this new management philosophy. ERP, best practices and ad hoc SOL queries will exist not only in large enterprises but also in mid-sized companies. SOURCE: Honig, Susan, "The changing landscape of computerized accounting systems. "CPA Journal, V. 69, n. 5, May, 1999, pp. 14-20. Copyright: Copyright New York State Society of Certified Public Accountants 1999.