Cover story - Where accountants fear to tread

Try walking through a quagmire and you’d have a pretty good idea how most accountants feel about managing the financial management systems they have at their disposal. The market is moving so fast, new products are coming on stream and technology is stealing a march on their skills levels-finance professionals have never had it so tough.

And as if all this wasn’t enough, they have the added worries of the new Millennium and European monetary convergence to address. Both of these are potential show-stoppers, and, despite all the considerable hype emanating from the information technology industry, many senior-level managers haven’t got to grips with them.

If they are expecting their software supplier to sort out the problem, they’re in for a rude shock. Most legal experts agree that it is the end-user, not the system vendor or the outsourcing partner, whose responsibility it is to ensure their software works on 1 January 2000. Richard Kemp, partner at Andersen Worldwide’s legal arm Garrett & Co, comments: “Now would not be too soon to start poring over the small print to see exactly where the liability lies. My belief is that it is unlikely to lie with outsourcing suppliers, software vendors or any other third party.”

Unfortunately, the Year 2000 issue has become a bandwagon, and there has been an unseemly scramble in the IT industry as vendor after vendor struggled to leap aboard. There will barely be a week between now and 2000 which does not see someone, somewhere, staging a conference on the impact and consequences of Millennium-dating. Yet none of this intensive marketing should make systems users sleep more easily at night.

The raft of proposals, suggestions and barefaced hype one can hear loudly and clearly coming from the IT consultancy market all fail to conceal one fact: there is no short cut, no silver bullet and no magic wand that will sweep systems managers’ nightmare scenario away at a stroke. The only real solution to the problem is a wide-ranging systems revamp or upgrade, a line-by-line code rewrite or costly tinkering at the margins to ensure that whatever else the year-change does, it doesn’t cause organisations’ mission-critical systems to go belly up.

Paul Williams, a computer assurance partner at Arthur Andersen and chairman of the technology faculty at the Institute of Chartered Accountants in England & Wales (ICAEW), warns: “It just never ceases to amaze me how unprepared businesses are for the problem. If they haven’t started planning already, it is too late. And even for those who have begun work there is not enough time to sort all systems out before the end of the Millennium.”

In December, Ernst & Young became the first Big Six firm to warn that it would start qualifying the accounts of audit clients whose mission-critical systems are unlikely to work in the next millennium. Senior partner Nick Land said it was essential that business woke up to the problem, and went on to admit that E&Y’s own Year 2000 problem would cost the firm “well into six figures”. But not all accountants have taken this rather draconian approach.

Coopers & Lybrand’s Year 2000 project director, partner Mike Barkham, explains: “We deliberately haven’t made a major issue out of it. Warning that we could qualify accounts is not the right emphasis. If people out there are waiting for the auditor to ring the alarm bell, it will be too late. We’ve been trying to help clients avoid the problem in the first place.”

Barkham said many Coopers’ clients are already, or will shortly, be Millennium-compliant. He added: “Not everybody has been unaware of this issue.

There is a tremendous competitive advantage for anyone who can reliably demonstrate they are compliant when the time comes.”

Price Waterhouse project manager Paul Jarvis agrees: “We have been looking at both the impact of the Millennium and monetary union. The trap many businesses could fall into is of trying to tackle both at the same time.

There could be an opportunity to combine the two but I’d suggest separating them. There is no point fixing the Year 2000 problem only to find that you have to throw your systems out because they won’t support a single currency.”

The accounting software industry shrieked with alarm when the Bank of England published its initial proposals for dealing with the single currency and found that not one developer had been asked for their views. The Bank has since entered into negotiations with the Business & Accounting Software Developers’ Association, BASDA, to rectify that.

Anyone assuming that these are the only two problems facing the accounting software industry, though, would be sadly mistaken.

Technology continues to march swiftly on. Electronic data interchange, Internet-enabled financial and business applications, Intranet software-new products are hitting the market all the time. Confusion is rife in the financial community, not just because of beancounters’ bewilderment at all these new opportunities, but because they are only gradually coming round to some technology that has been around for several years. It seems that conservatism will always be an accountant’s strongest trait.

Amazingly, there is still debate over the wisdom of using Windows in the accounts department when everyone working there remains a keen advocate of character-based software running on good old, reliable, plain, green screens. Much of this enthusiasm seems to date from the days when computers took up whole rooms, rather than just a corner of the desk.

Many software vendors have managed to straddle both old and new camps by offering both a DOS product that many accountants grew up with and an updated product with a basic graphical user interface. Many of the so-called Windows products available today are little more than character-based software with screen-scrapers-graphical screen images without the benefits of true Windows software.

Developers of true 32-bit Windows software howl loud and long about the column inches given to rivals’ “Windows” products that are old technology, dressed up to look new. But many people believe they protest too much.

One vendor with an old product that uses a so-called screen-scraper, Systems Union, sells one of the most popular systems on the market. And SunSystems consistently achieves user satisfaction ratings of nearly 100 per cent in all available polls.

According to research analysts Tate Bramald Consultancy, which has interviewed senior managers from over 13,000 separate organisations, both large and small, over the last 12 months, this reflects an ongoing suspicion of new technology in the financial community. Tate Bramald’s research asked executives questions about the type of software they use and their experiences of it.

Systems Union, a mid-range supplier, and Megatech, a low-end supplier stand out as exceptional suppliers in a market many end-users perceive as, at best, mediocre. Alarmingly, as many as three-quarters of all finance executives are so unhappy with the business and accounting software they use that when they come to replace it they will dump their current supplier and go for someone else.

Only in medium-sized companies are accountants and financial directors slightly happier, but even they do not rate their accounting software as highly as some other desktop applications, particularly in terms of its ease of use and features.

Software vendors, asked to comment on the findings, rejected them out of hand. And there was angry criticism of the research – a strange reaction given that, with a total of just over 13,000 respondents, it is more representative than any other survey of the market to date.

Tate Bramald’s managing director, Jyoti Banerjee, counters: “These are not my personal views. These are the opinions of end-users. The reason people put up with bad service and inadequate software is that they think they are the exception. If they knew how poorly all their peers rated the software they use I think they’d all start demanding a better deal from the industry.”

Although finance managers have long claimed that technology is not a reason on its own for changing software suppliers, there is evidence that demand for better desktop integration is a major factor in their selection criteria. Software users increasingly want the same look and feel from all their applications and, as a result, the move to Windows is accelerating.

Why put up with DOS accounting applications when word processing or spreadsheets can run easily on Windows 95, they argue.

Tate Bramald research manager Wendy Kane comments: “Windows is definitely the key driver in the small business sector. About half of all companies still use character-based software, but 32 per cent already use Windows and a further 40 per cent say it’s the way they are going. For mid-range systems, users have a clear choice – do they go for tried and tested Systems Union or for software based on the latest technology, such as Dynamics or Navision. These are good products, clearly technology-led, but neither yet has a substantial UK user base history.”

There remains a me-too philosophy behind most software purchasing decisions.

Just as IT managers were apparently never sacked for selecting IBM in the ’70s and ’80s, so now Sage is seldom left off accountants’ short-lists.

And in the corporate sector, SAP and Oracle can usually be assumed to be in the running for any major deal. But is this healthy?

Predictably, Navision’s managing director Yash Nagpal thinks not: “The choice comes down to whether you want the look or the performance of true Windows technology. Navision, for instance, is object-oriented, 32-bit technology. It can do many things that these other imitations cannot.

The argument is also about our UK user base. We must have the fastest growing user base here – we’ve sold 60 company licences since we launched in April. We have gained over 1,000 users since we unveiled our product in Denmark in January 1995. If the technology doesn’t deliver business benefit, I might accept some of these arguments. But it clearly does, so the claims just don’t hold water.”

Access to data remains one of the biggest problems faced by corporate systems end-users. Over half of all UK businesses surveyed claim that the inadequate reporting capability of their accounting system is the single biggest problem they face. Eighty per cent of large organisations say that reporting is an area that needs a lot of attention by software developers. Not only that, but just over 15 per cent of large organisations believe they are restricted in their use of IT because of the inflexibility of their financial systems-many large organisations are running applications on different platforms, making access to information at best difficult and at worst impossible.

Many accountants continue to spend days before every month-end rekeying data from one system into a spreadsheet. What this means is that the system is dictating to the user how they can and can’t run their business, rather than the other way around.

The message which end-users give out does not always seem that consistent, however. Despite claiming that the software they use falls down in certain key areas, 67 per cent of all respondents to Tate Bramald’s surveys believe their expectations have been met. So how can this be? The answer is simple-they just don’t have very high expectations. Guy Dresser is a freelance journalist

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