4 May 2016
Cloud accounting has taken the UK by storm in recent years, and for very good reasons. Businesses and accountants can now work remotely and data is accessible by a wider number of users, and at a much lower cost than traditional ‘on premise’ or local server based systems.
The major online bookkeeping software providers have also opened up their systems to third party app developers who have attempted to fill the gaps in functionality.
But has the industry got carried away with itself? Does business software really lend itself to an ‘add-on’ based approach? Do third party bolt-ons really offer value for money?
A horror story.
One of our clients, a manufacturing firm based in the Midlands, came to us with a horror story.
Just like thousands of businesses in the UK, the client moved over from an ‘on premise’ installation, to an online bookkeeping system because of the benefits of working in the cloud.
For the first 6 months, everything ran smoothly and the company supplemented its software with a series of spreadsheets and manual processes. However, as the business continued to grow it decided to employ more staff, and as orders increased it became clear that it needed more control over its material planning process.
The company eventually decided on a small number of bolt-on applications to work alongside their online accounting software, which pushed the monthly software costs to over £250 a month. After using the system for two months, our client’s accountant discovered that there were huge discrepancies between the actual value of stock and the values recorded on their books.
The difference was over £45k.
The first step, of course, was to contact their online bookkeeping software provider, and after a 24 hour response time, their advice was to contact the developer of the third party app. After another 24 hour delay, due in part to a different time zone, the advice came back from the third party app developer….yes, you guessed it….”you need to contact the bookkeeping software provider”.
This went on for over a week until the client decided to cancel his subscription. He was eventually contacted by a representative from the third party app provider and was informed that the issue was caused “because their software had syncing issues with the bookkeeping software”.
An isolated incident?
Well, for obvious reasons, software providers do not publish statistics on their disgruntled customers; but anecdotal evidence from the support forums of major online bookkeeping systems shows that these kinds of issues are more common than you may think.
So what are the risks of using bolt-on applications?
Additional points of failure
By adding bolt-ons, rather than centralising your information, you are adding in more potential problems. What happens when something goes wrong? Who is to blame? Who do you call? Who takes ownership of your problem?
Separate systems mean that, apart from logging in and out of different platforms, you also need to report data separately. Let’s imagine you have two ‘bolt-ons’ onto an accounting system, one for payroll and one for manufacturing/production control. Now, let’s say you want to find out whether employee absence is having an impact on your workflow; you may want to run a report which looks at late deliveries alongside sickness and annual leave. With separate bolt-ons the data is held only within the bolt-on applications, so it would need to be exported, formatted, compiled and organised into a report, which can take some time.
In a centralised system, the data is in one place. You just run the relevant report and the information you need is displayed instantly.
Online bookkeeping systems are undoubtedly affordable for small and micro businesses. But there comes a time where additional bolt-ons become unaffordable and inefficient for the needs of a growing business. A bookkeeping system which may look affordable at £30/month can very quickly become unaffordable when you factor in additional payroll costs and bolt-ons which can range from a few pounds a month to over £300 a month.
There are also hidden costs with using the main online bookkeeping providers – either through additional support fees or due to inefficient and disjointed software systems. Third-party providers are also free to increase pricing whenever they feel the need.
Square pegs, round holes
Bolt-on systems offer a ‘one-size-fits-all’ solution, but as we all know, every business is different. Businesses end up changing the way they operate and trying to fit around their software, and not the other way around. Growing businesses have achieved their success by operating in a successful manner, and changing the way that businesses work can be a risk. Business software should aim to compliment the successful elements of a business, and improve the unsuccessful elements, and a ‘one-size-fits-all’ solutions cannot achieve this aim.
We’re proud to offer affordable cloud software that pulls together all areas of your business into one, efficient and highly effective reporting and management system. For businesses who have outgrown their bookkeeping software, Hudman offers a range of powerful and highly customisable software systems. We also work closely with you and your existing infrastructure to provide a system which meets the ever-changing needs of modern business.
With pricing from £199 per month, a full business management and accounting system costs a lot less than you think.
Central ERP® provides complete control over your customers, suppliers, resources, scheduling and business performance with one award winning, cloud based accounting and ERP solution. Unlimited payroll, multi-currency accounting and full time support is included for one single monthly fee, with prices from £299/month.
Central Accounting® offers powerful multi-currency accounting and unlimited payroll. Much more than a bookkeeping system, Central Accounting® provides a full financial management and reporting system with inventory control and CRM. Full time support is included in one simple monthly fee. Prices from £199/month.
For more information please visit www.hudmansolutions.com
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