Today's Technology for Tomorrow's Firm.
Issue link: https://cpapracticeadvisor.epubxp.com/i/696186
12 June 2016 • www.CPAPracticeAdvisor.com FROM THE TRENCHES By Randy Johnston SMB Accounting - What's Up With This Market? In the 1980's, I conceptualized the pyramid chart representing the accounting sofware market, backed it up with Census Bureau and Small Business Administration (SBA) statistics, and have maintained a version of the pyramid ever since. I wanted to have real numbers from a public source. Further, I granted permission to many organizations to use this model to present their products conceptually to the market. Consider the following chart: Note in the slightly lighter color in the pyramid is the Small to Medium Business (SM B) space. A lthough difcult to get the logos exactly positioned next to the py ramid, as well as to represent the range of coverage, the placement loosely rep- resents the capability of a product. Tere has been a frenzy of vendors creating new, browser-based SaaS products since 1998, which are pic- tured below. A signifcant number of these are for entry level businesses, ser vices only business, or micro- businesses. W hile these products are interesting and important, they are not the focus of this article (a chart of public adoption rates is at the end of this article). Virtually 100% of all traditional premise based products are ofered in a hosted environment for a monthly fee today if you want to minimize your upfront capital expenditures. Frequently a more robust hosted product, Epicor for example, is less expensive than a SaaS product with all of the add- ons required. A side beneft may be greater speed, too. Why should a business choose a more sophisti- cated SMB product? Tere are a number of reasons to choose a more sophisticated, com- prehensive, complex and expensive product. A lthough not intended to be comprehensive, consider the following: • T he bu si ness ha s g reater need s, w it hout t he need (or budget) for the highest level ER P or Enterprise system. SMB businesses frequently need: • More fex ibilit y w ithout hav ing to desig n, prog ra m, a nd i mplement new processes • Multi-location/company, possibly with consolidation • Multi-lingual and multiple localiza- tions, in some cases • More transactions, so need some - thing w ith a "real " SQL database, for 6+ users. SQL will almost always be sold and implemented separately, unless you are using a SaaS product • More complex transactions – heav y manufacturing, complex inventory, kiting, bill of materials, job costing, NFP, grants, revenue recognition, intercompany transactions, multiple tiers of consolidation and minority interests 1 2 J u n e 2 0 1 6 • w w w . C P A P r a c t i c e A Randy Johnston is executive vice president and partner of K2 Enter- prises and CEO of Network Management Group, Inc. He is a nationally recognized educator, consultant and writer with over 30 years' experience. He can be contacted at randy.johnston@cpapracticeadvisor.com . M ost of you who know me understand that I've had the privilege of having a long career in technology. Te opportunities to help vendors build hardware products, as well as network- ing, productivity, accounting and document management sofware have been some of the most enjoyable, enlightening and enabling engagements of my career. CONTINUED ON PAGE 23