The Importance of Industry Specific Accounting Software

Introduction

The last couple of decades have seen a considerable increase in the demand for computer software packages that are designed to meet a specific industry need. Not unlike the subdivision of the labor market, we are entering an era of hyperspecialization. The division of work into smaller tasks performed by more specialized workers has resulted in productivity gains that have contributed greatly to the present day prosperity.

While this comparison may not be a directly proportional example, it does reflect a mirroring of businesses and the tools they need and demand. In the case of computer technologies, companies that used new tools wisely gained a competitive edge.

When examining accounting software, this trend is displayed in the move, among software vendors, toward industry-specific accounting solutions.

A strong argument in favor of accounting software, incorporating industry specific features, can be made. First of all, accounting software has been around for some time; it was one of the first applications to appear, en masse, in offices. Money, and the control of money, is a high priority concern for business. Consequently, using a customized software that responds directly to a business’s commercial requirements is a highly attractive and beneficial option. A generic option might be able to get the job done, but the advantages offered by customized software solutions are significant enough to almost always tip the scale in favor of an industry specific solution.  

One of the best ways to demonstrate this assertion is by comparing the specific needs and requirements of a number of different niche industries and how they employ this software. The following three industries will be examined:

  • Project-oriented Industries – e.g., Construction
  • Not for profit industries
  • Small and medium-sized businesses

Project Oriented Industries – for example Construction

The construction industry, with its complex divisions and sub-contractors, its tight profit margins, its numerous costs and expenses and large budgets, is the  optimal example of an industry that benefits exponentially from an accounting software solution that is highly attuned to the industry’s specific requirements.

Clearly, the more complex and extensive the company, the greater the need for an accounting software that understands the business intimately and is able to cover all pertinent areas of the project, especially areas such as security reports and information, compliance system alerts and all information and reporting aimed at monitoring all financial activity.

Not For Profit Organizations

Nonprofit organizations have an extremely complex accounting structure by virtue of the fact that they deal with the disposition of funds that are in their trust and not for the use of the organization. Consequently, these organizations will use a minimum of two categories for their financial dispositions – restricted and unrestricted funds.

This level of accounting responsibility definitely benefits from a system that closely mirrors the needs of this highly regulated financial environment.

The role and responsibilities of the management and auditors of financial reporting would make the use of industry-specific software almost mandatory in the case of this industry.

Small and Medium-Sized Businesses

A well-designed accounting software that integrates functionality, security, and monitoring for industries that are large, complex and have individualized requirements is a foregone conclusion. In the case of a small or even medium-sized businesses, however, the choice of accounting software is not as straightforward. Why? It would seem reasonable to opt for the software that is ready to address the needs and preferences of the industry in question. But apart from cost, there are other reasons why small and medium-sized businesses might opt for a generic accounting software solution.

In fact, there are many excellent software products, within the generic field, that would function extremely well in many business contexts, especially for smaller-sized companies that are in the growing phase and have yet to lock in their financial structure. Many industry specific add ons (and activity specific modules) are available and would successfully customize generic software for individual needs.

Additionally, industry-specific accounting software has a narrower range of integrating capabilities making it more difficult to convert and export data to the more popular office tools. In some cases, vendors may require the use of a another set of tools to complete this process. Generic software, on the other hand, with its wider reach of users may be far easier (and less expensive) to adapt to the more commonly used software.

All of these reasons, added to the higher cost factor, might convince many smaller enterprises to work with a generic software until their needs expand enough to warrant using industry-specific software.

Conclusion

Accounting software has achieved a high level of popularity among a wide spectrum of businesses, from large to small and across industries. The specialization towards industry-specific functionality that caters to the accounting needs of particular industries is gaining credibility and popularity because of the unquestionable advantages it offers to the specific industries:

  • Increased productivity for the business generally
  • Lowered risk for security and compliance monitoring
  • Enhanced reporting and integration across the organization

Contributed by Gabriel Gheorghiu – Experienced consultant and analyst focusing on business software and customer interactions

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