Difference between an Accounting Package and an Enterprise system.
This a question I asked a lot when trying to explain the differences between software packages. I wrote this guide to help people through the different options available.
The developement of accounting packages.
When P. C’s became the accessible to both large and small business’s the idea was simply to replace manual processes with automated computerised systems. This allowed the ability to store data in a form that could be easily retrieved and manipulated. For accounting purposes that meant financial transactions could recorded against field names, such as nominal codes and cost centres, for ease of calculation. Profit and Loss and balance sheet reports could now be produced in seconds rather than hours of manually adding up from paper based ledgers. The imperative was to complete financial accounting information to meet an organisations statutory requirements (such as Annual Accounts or VAT returns) so software was developed for meeting the needs of the finance team to generate these figures. Now, other departments would purchase other IT solutions to meet their distinctive needs. The warehouse would build a database, (usually customised in Access) to keep track of stock and deliveries, the sales team would have a spreadsheet to track potential income and the website would take orders on-line but any financial information or stock updates would have to be done manually.
Evolution to ERP
As database technology improved and business needs became more sophisticated, software was developed that would capture all the information into one central pool called an ERP system. (Enterprise Resource Planning). As the name suggests it allows management to oversee all the information to assist them in making strategic decisions while each section can see the data that is relevant to them. That means that a sales team would be able to access what items were sold to develop a customer’s profile (called CRM, Customer Resource management) but they would not be able to access the financial. A finance team would could track who owes them money while at the same time a manager could run a report to calculate sales commissions. The same is true of the warehouse as they respond to orders being delivered the stock changes update the asset account values so the finance department don’t need to perform complex manual journals at the end of the month. With an ERP system, each team can see their relevant areas instantly, while sensitive management information is still restricted. The advantage is that the whole organisation is singing from the same hymn sheet making the workflow more efficient. It also increases the integrity of data input as information does not need to be re-entered minimising mistakes. For more information visit our Services page.
Next in the series we look at different ERP software packages available.
About the Author.
Malcolm Ford has been working with companies across the UK advising and implementing different accounting and ERP software platforms. The sectors involved include manufacturing, construction, International law, medical equipment and retail operations.