John Tate

Accountants are not over the moon about their finance systems. This is despite packaged software being around for nearly 30 years.

Charity Finance surveyed 300 organisations in the not-for-profit sector on the use of IT. Just 11% rated their accounting systems as very good, while 45% viewed their systems as average or poor. Nearly one-third were considering replacing their systems in the next year. Not impressive reading. While this research only looked at one ‘vertical’ market, I believe this picture is repeated in the commercial world.

Compare this to other packaged software, such as spreadsheets or word processors. User satisfaction levels are much higher and the market has concentrated into a few applications. By contrast, there are thousands of accounting software packages on sale or in use worldwide.

So what of the future? Will the existing vendors deliver a knock-out product that will rule the world? At the entry level, Microsoft has launched a package that is getting some interest. But the product is focused on the UK and US markets and there appear to be no short-term plans to roll it out globally, which will limit penetration.

Sage continues to focus its growth strategy on acquisition. For example, at the end of last month, it acquired UK construction software specialist Tekton for £21m. One interesting aspect of this purchase is that Tekton’s software, EVision, is based on one of Microsoft’s accounting products ­ Dynamics NAV. Sage has made its money by acquiring dozens of products and generating good profits from the user bases. Sage is not at its heart a software developer.

Another recent story was the acquisition of Armstrong Consulting by Access Technology Group (owners of Access Accounting). Armstrong Consulting has a focus on the professional services and service management markets and is a reseller of Access Accounts.

So, if companies like Sage and Access are going to focus their growth via acquisition, will we ever get the killer application? One wonders whether the only chance of this happening is with a new player. Google? Salesforce? Who knows?

John Tate is the IT adviser to the Charity Finance Directors Group. He blogs for Accountancy Age on IT issues at technologymatters.accountancyage.com