Financial Software Part 1: accounting for SMEs


4 Jul 2003

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Accounts software was one of the first applications of computing to business, going back to the days of ‘business machines’ and mainframes and changing the world of smaller businesses with the arrival of the PC. The accounts function is the one universal essential in every business of any size or sector. So accounts software has to be the most widespread application in Irish business? Wrong. The consensus among vendors in Ireland is that as much as 20pc to perhaps even 40pc of Irish companies still do not have computerised accounts.

An independent survey last March commissioned by market leading vendor Sage Ireland showed that throughout the entire island of Ireland just 77pc of smaller companies with one to nine employees have invested in a PC. Of these computerised small businesses only 59pc have an accounts package. From companies with 10-49 employees, accounts software use rises to a healthier 87pc and in larger businesses from 50 employees upwards computerisation is 100pc but accounts software penetration is just 91pc. At this level the 9pc without financial systems is not really significant, trade sources say, because there are businesses such as bars and other retailers, contract cleaning, temporary worker agencies and others where payroll might be significant but ‘the books’ are done by external accountants.

But it’s still a far cry from e-commerce and the information society that we aspire to create. Yet Liam Mullaney, managing director of Sage Ireland, says that the signs among new small start-up businesses are positive. “The people tend to be IT-aware. They are being advised by local enterprise boards and others, so the first things they do are rent premises and invest in a PC with office and accounts software,” he explains.

Mullaney also says that existing users — and their accountants — tend to be loyal to their accounts packages. They will change product only for serious business reasons to do with new functionality required — e-commerce, mobile sales forces and relationships in a supply chain are among the kinds of reasons where the simpler, traditional packages may not offer the best solutions.

The market for PC-based accounts systems in Ireland has changed in recent years in that UK multinational Sage set out on an acquisition trail here. It achieved serious market dominance at the lower end when it bought TAS Books, the best-selling package at the entry level of the market. Later came Apex, an Irish package favoured by smaller accounting firms, and a formidable product set was completed with the purchase earlier this year of Take Five, the 20-year-old doyen of the Irish-developed packages. Sage Ireland now has a client base of 26,000 for its Sage brand from Instant Accounts up to Line 500 for larger companies, 20,000 for TAS Books and 4,400 Take Five customers.

Outside the Sage stable, the next along in the number of user businesses is probably The Big Red Book. This is another Irish solution, originally aimed at first-time PC users for whom it used (as it still does) screens that replicate the traditional accounts ledgers. It has 4,600 registered customers. Pegasus Opera, distributed by Quantum Business Solutions, has approximately 1,600 companies on its list. After that, the market is shared between packages such as Access Accounts, Exchequer, SunSystems, Sybiz and others, each with dozens to several hundred sites.

Microsoft’s two acquired products, Great Plains and Navision, have had a presence here for some years but no significant market share. New entrant Business One from SAP, aimed squarely at SMEs (small to medium-sized enterprises), is now a stable companion of The Big Red Book in this market and could introduce serious competition into what could be described as the SME mid-market where most of these packages need to gain their market share.

We have a very healthy crop of indigenous solutions in the accounts field. Take Five and The Big Red Book are joined by niche solutions such as Intact (a focus on accountants and retail), Artemis II from Aquila Technology in Galway at entry level, Sam Jr (Mac and Windows), Kernel and agribusiness specialists Kingswood.

Apparently there is a healthy level of churn in the market, with businesses moving on to new accounts systems in response to changing business needs. That is by no means all driven by e-commerce and leading-edge functionality. “Saving money is a great driver,” says Charles Alken, director of Quantum. “An invoice or a statement costs at least €1 to print and post, while cheques and remittance advices cost the same or more. So even a small business can be spending a couple of thousand euro a month, obscured in overheads. If your accounts system lets you do almost all of that electronically, by email and electronic banking, you save direct costs and labour immediately. In fact, the payback for a smarter system could be in months rather than years. That’s real return on investment. Changing systems is not technically difficult these days, although there will be training and familiarisation issues.”

By Leslie Faughnan