Accounting/ Accounting Software Decisions term paper 17807

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Selecting Accounting Software is one of the most important and, potentially, one of the most costly decisions a business makes. The decision is important because if the right choice is made, internal control of most accounting functions will provide a lower risk of doing business. An accurate method of keeping track of the essential financial functions of the business also will result. However, the decision could be costly if it is made without a thorough evaluation of the current and future needs of the business as well as the establishment of an effective method of determining which software package best meets the requirements of the business.

Three of the most important steps to identifying the appropriate software for any company are:

1. Strategic planning for the future.

2. Identification of tested products and vendors.

3. A selection process that matches the product with the business' current needs and future desires.

Know your business

CTS, a nationally known expert, has been evaluating accounting software for more than 15 years. It believes that "the challenge today is not so much to pick software that works because the vast majority can do the basics well, but to choose the one whose strengths match your business priorities" (http://www.ctsguides.comcts.asp). The important message here is that unless a business understands its own overall operating environment, which includes organizational structure, culture, management philosophy, operating style, and commitment to excellence, choosing the right software will be impossible. Strategic planning is a critical element to determining the vision of an organization and, ultimately, the tools necessary to attain it.

Strategic planning is used to identify long-term goals and objectives that guide a business in the development and use of its core competencies. It is these core competencies that help establish operational plans, one that involves the accounting, financial and reporting mechanisms used by businesses. This initial planning phase gives guidance and direction to the task of identifying an accounting software system that will help a business meet its goals.

The Good Product, The Good Vendor

"Great Plains Earns Arthur Andersen Global Best Practices Award." Such was the headline of a recent news release by Great Plains Software. In fact, it is the third award Great Plains has received in as many years from Arthur Anderson, a global professional services organization. The awards were for Strategic Leadership, Exceeding Customer Expectations, and Motivating and Retaining Employees. According to the press release, "Great Plains received the Strategic

Leadership award in part because of the following Leadership development competencies:

 Communication

 Emotional Intelligence

 Relationship Building

 Coaching

 Strategic Vision and Innovation "

Awards like these are an important part of identifying good businesses with good products and good vendor /customer relationships. The awards presented by Arthur Andersen are significant because independent judges made up of respected leaders from business, civic, and academic sectors are used to judge the applications.

While making software choices on reputation along won't assure a successful choice, a business' reputation is something of which to pay attention. Recognition by one's peers and system users builds confidence in knowing that the product and business practices of the vendor are well respected.

Selection Process

Good front-end preparation is the key to successful implementation. Following the initial strategic planning effort, a business is well prepared to outline the steps it will take to ensure the appropriate software is selected. That selection process will include the following:

 Team development

A two-tiered approach, given the dynamics of decision-making, will often be required. The intent is to establish a process for identifying the needs of the organization by calling on knowledgeable employees and external experts. Oftentimes, the day-to-day user of the system does not ultimately make decisions about software purchases. Therefore, it is important to have an executive team participating at the beginning. The software users, however, also play a critical role in the needs assessment. A technical team of employees is established to help identify the requirements of the software system while the executive team establishes certain parameters, discussed more fully below, that will be used by the technical team. From time-to-time these two teams should meet and confer about any issues that are of concern to one team or the other.

Buy-in by management and staff is one important goal of selecting the right team members. Without buy-in at all levels, the chance of being successful is greatly diminished.

 Requirement/Constraint identification

As noted above, both teams participate in this step. The executive team will establish cost parameters while the technical team will identify the limitations of the current system and potential new hardware needs.

Frequently, a consultant will be called in to help with the identification of future needs because of the lack of expertise in-house regarding potentially new technology. While staff can focus on what might be desired and what is deficient about the current operation, what is available to correct the deficiencies may not be known. Using a consultant is the most cost-effective method of identifying alternatives.

 Consultant RFP

The purpose of the consultant is to gather market and product information based on the needs and desires outlined in the previous step. A consultant must be identified who is not tied to any specific product but will serve strictly as a research consultant. If a business is too small or believes it would be too costly for it to hire a consultant at this point, there are many good sources available to compare software products.

 Vendor list development

Because there are over 300 various accounting software packages available, a business must decide which packages best fit its requirements. The executive and technical teams need to consider and choose a "short-list" those vendors.

A significant step at this point is to create some real scenarios to be played out through the demonstration of the products you choose to review. These scenarios use data information specific to the business and come directly from its database.

 RFP to Vendors

Choosing the reply deadline is the remaining issue to be resolved before sending a request for proposals based on the criteria established in prior steps. The return date is important especially if a timeline for implementation has been identified to coincide with certain reporting periods for the business. Expectations for responses must be clearly articulated to the vendors so that there is no misunderstanding at the time the teams begin reviewing the proposals.

 Demos and interviews

Once the teams have received the RFPs, it is important to have already established the review criteria and rating system so that everyone is comparing the products based on a fair method of comparison. Interviews and demonstrations can occur simultaneously but it may not be appropriate to have the same staff and executives at demonstrations versus interviews. The technical team will want to be present for both, however, the executive team may defer to the technicians instead of attending the demonstrations.

Examples of financial reports that are the result of the scenarios process may be reviewed by the executive team at some point during the interview process or afterward when they can be more thoroughly discussed with the technical team.

 Evaluation, references, selection

Reference checks will help you understand more fully whom the vendor is, how he or she works with other clients, the competence level of the vendor and how reliable he or she is when trouble occurs. A desirable product is determined primarily on how well the product meets the requirements of a particular business.

There are several issues a business needs to be concerned about when reviewing software features. Specifically, the software should be easily understood and easy to use. Timely support from the software company and vendor is essential. The system must be flexible in that reports can be customized to fit the needs of the business. Secured entry and transaction handling must be available with appropriate input, output and processing controls in place.

All team members should feel comfortable and confident with the selection. Once a determination is made that what the company sought to purchase (what it needs, not what might be called bells and whistles) matches as closely as possible what the vendor offers, enough time must be allowed for a thoughtful and successful implementation.

Great Plains Dynamics Assessment

Great Plains products are rated among the best in the middle-market software accounting market. Those who rank accounting software packages look for several attributes:

 Good clean, stable code

 Good underlying technology

 Good company behind the product, including good leadership

 Good financial reporting capabilities

 A sizable customer base

 Good customization capabilities

 A well-developed and knowledgeable VAR channel

 Good breadth of modules

 Well-developed offering of third part add-on products

 Minimal amount of missing features

 No significant problems

The Great Plains Company

Great Plains scores well in most of these categories. It was founded in 1981 and has become a global provider of accounting, financial and e-business applications served by over 1100 employees worldwide. With a sizable customer based of over 24,000 customer sites, it has been listed in Forbes Magazine as "one of Forbes 200 Best Small Companies" and "one of Business Week's 100 Hot Growth Companies."

Plains continues to exceed expectations for earnings increasing by 34% its revenues in the most recent quarter. Overall stockholder equity has gone from $133 million on May 31, 1999 to almost $203 million at the end of February 2000. Plains has earned several awards over as many years, including PC Magazine Editors' Choice when it reviewed multi-user Windows accounting systems.

System Comparisons

Excel Company presents a good comparison of Great Plains Dynamics with other upper-mid range accounting systems that shows, in most cases, the company scores extremely well in all functional areas by either providing the function themselves or through a third party server (http://www.excelco.com). Other areas reviewed by Excel include server operating systems,

database support and Microsoft compliance. Great Plains does not meet the needs of all server systems. In particular, Macintosh users cannot use the product.

Customization and Financial Reporting features are important to all businesses. The Journal of Accountancy Online provides a review of middle market software for both categories. Great Plains Dynamics 5.0 showed consistent strength in both areas, however, ratio reports are not provided without the purchase of Crystal Reports or another similar product. Great Plains allows customers to customize reports, forms, user fields, and input screens to name a few of its customization features (http://www.aicpa.org).

Customer Testimony

Morgan Crucible, an international engineering group is headquartered in Windsor, UK. In 1997 the company began the search to replace a legacy system that would not meet the demands of the fast-approaching new millennium. The goal was to implement a new system by mid 1998. After identifying the business' information needs, specifications were drawn up. Much research was done to identify an initial list of products and vendors that looked like they could match the requirements. After hiring a consultant to review the list, a short list of five suppliers was identified. From that list, Morgan Crucible selected Great Plains Dynamics.

Michele La Riviere, the lead person for Morgan Crucible indicated "there were two main considerations that finally swung the decision in favour of Dynamics. One was that it was a 32-bit, fully Windows-compliant product, and had been developed as such, rather than being written for DOS with Windows patched on top of it. The other consideration was the analysis capability." Having met the July 1998 deadline, Morgan Crucible has nothing but good to say about Great Dynamics product, employees, and the value-added reseller (VAR). Whenever glitches occurred, the VAR was available. End-user training was provided with the VAR explaining the Dynamics system while La Riviere spoke specifically to how it applied to the business' applications. La Riviere pointed out that, "like the implementers, the support staff have a good understanding of the accounting issues."

Support and Training

Dynamics provides a menu of training and support options to meet the specific desires of its customers. Many technical support service options are available through the local software consultant and Dynamics. A unique feature offered by the business is the "Great Plains University." In existence for more than 10 years, this program provides "traditional and online classroom training throughout the United States and internationally." Demos, evaluations, desktop movies, and white papers are also available for review.

SoftLetter and the Association of Support Professionals have given Great Plains Software high marks for its customer support site known as CustomerSource. Customers note that CustomerSource provides them ready access to support that is easy to use and very responsive to the customer's needs.

Personal Evaluation

Dynamics provides a good cross-section of input, processing, and output application controls. Because risk is inherently involved when it comes to handling financial transactions, businesses must take as much precaution as possible to reduce the temptation to use internal information inappropriately and to prevent poor decision-making as a result of bad information. The personal analysis will focus on three main areas: ease of use,

Word Count: 2170

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