In 10 years time, we’ll only be doing accounting through a browser, writes Steven Cohen, MD of Softline Pastel. But for the moment, in this country, running your company’s accounting software using Web 2.0 isn’t enormously attractive, simply because not everyone sees the immediate benefits and it’s just so much easier to do things the way we’ve always done them. There’s also an issue of trust.

Accounting software is always mission critical – and integrity of data within that software is vital. So, for many SMEs, the thought of trusting an external service provider to host their data and the possibility of experiencing problems if the provider is down, is too great a leap. For them, the risk of running their accounting software on Web 2.0 is still a little too high.
From the vendor’s point of view, though, whether we supply accounting software over the Web rather than on disk makes very little difference. The only real plus is that it takes us out of the distribution and logistics business.
For the rest of our operations, it’s business as usual. We still have to design and refine our products – and we still have to provide user support through our contact centre.
From the user’s perspective, all they are saved by Web 2.0 is the installation part of getting and upgrading accounting software. They still have to configure the software to suit their business and financial reporting needs. So they still have to bring in a value added reseller, who probably also sold them our product.
In other words, the basic development and sales infrastructure stays the same for vendors, customers, and the channel.
We’re also not expecting costs to change significantly because whether accounting products are supplied online or offline, the major part of the cost is intellectual property. And dismantling a physical distribution operation doesn’t save the software developer or vendor a great deal because very similar costs are involved in setting up, maintaining, and administering Web 2.0 facilities even if you as the vendor outsource the network and server farms.
In theory, therefore, the change from PC-driven to Web 2.0 accounting, when it happens, won’t be very disruptive for anyone in the value chain.
What we do expect, however, is that the change will be gradual. That’s because there are differences between the digital immigrants and digital natives (those who grew up with computers rather than coming to them late in adulthood) using accounting software.
We saw the generation gap in 2000 when, at the cost of some R4 million in development and deployment, we brought our first web-based application to market. It failed.
Why? Because the majority of owners and managers of SMEs at the time were (and remain) digital immigrants. They’d done business just fine without the Internet and so had no reason to change. Indeed, they found it quite difficult enough computerising the most essential part of their business – their finances.
Having bedded down their accounting systems, however, they were then prepared to consider using the Web for marketing purposes and even, with a fair bit of persuasion, allowing some limited transactions to take place via the Web.
The Web hasn’t changed that much since then, except for more attractive interfaces – and a gradual realisation by digital immigrants that the Web is more than a shopfront; it’s a highly sophisticated till.
So, for most established SMEs, the idea of using a Web 2.0 accounting solution is not automatic. By contrast, for those who were 20 and instinctively surfing the Web in 2000 and are now starting their own businesses, Web 2.0 accounting solutions will be the instinctive way to go.
The two streams will eventually run into a single flow towards Web 2.0, but not as soon as predicted. In the meantime, we’re developing a personal, home-based financial management application for Web 2.0 – by way of helping the digital immigrants move towards adopting accounting on the Web.