Over the past decade the perceived gap between the need for an accounts package or an ERP software system has narrowed considerably, and now small to medium size businesses no longer have to restrict themselves to a purely financial based solution.
As the lines begin to blur between these different types of software package, in this blog post I will try to explain how they share a similar element but are not the same.
There was a time when accounts packages were deemed as the must have solution for small to medium businesses which they used to manage their payroll, accounts receivable, accounts payable and, well, not very much else.
Enterprise Resource Planning or ERP software was deemed to be reserved for large enterprises to manage huge sprawling manufacturing plants or by top tier companies scattered across multiple locations.
They use ERP systems because they needed a 360 degree view of all the operations across all of their sites whilst managing finance, planning, budgeting, supply chain, IT and Inventory to name but a few. The system facilitates the flow of real time information across departments from a centralised database enabling strategic, data based decision making.
While both accounting software and ERP systems have some common functionality between them, such as the accounts module, ERP systems have modules to track tangible assets like fixed assets and stock levels or intangible assets like product lifecycles, work hours, performance metrics and customer relations.
In a nutshell, accounting accounts for only one part of any modern ERP system. That’s why in recent years’ companies investing in business management software are choosing ERP systems over stand alone accounts packages.
They now see the value in having access to business intelligence and how it can be fed into their own business processes to operate more efficiently. They seek a software package that offers the same accounting functionality as the big name accounts packages but also offers scalable growth potential through the extra functionality provided by choosing an ERP system.
The increasing demand for ERP software is due in part to the critical need for all companies to make intelligent business decisions and it is for that reason traditional accounting software packages are no longer as popular as they once were. Larger more robust software is seen as the smarter business decision.
Why would any forward thinking business want to choose a limited accounts package when they can futureproof the need for further unnecessary investment in business management software by investing in an ERP system from the outset? It just wouldn’t make sense.
Most ERP products can now be offered as an accounting package for entry level users and then scaled by adding other modules over time as your business grows.
Remember, ERP systems are sometimes wrongly referred to as accounts packages but that is only a tiny part of what they have to offer. Accounts packages on the other hand should never be referred to as an ERP system as they just don’t have the vast functionality available to manage a business across all departments, providing businesses with one version of the truth.
The term accounting software will never disappear, but what is clear is that it is now taking its rightful place as part of a tiered bundle of functional modules that can be integrated and sold as an actual business management software solution, rather than as an unintegrated stand-alone business solution.