Business accounting software sure has come a long way. When you look back at the history of enterprise software you see a gigantic downward curve when it comes to the prices. Accounting (or financial) software specifically is a great case study. I had friends during the '70s and '80s working for some of the early big financial software companies including McCormack & Dodge, MSA, and Dun & Bradstreet. Back then, companies would gladly hand over hundreds of thousands, even millions, just for some automation assistance to help with all of the journal entries, account updates, discount allowances and aging reports. It was an expensive market.
Jump forward ten years to the big buying spree in the '90s and then the Y2K scare. Fewer companies were spending millions on point solutions for financial applications and software was getting more accessible. There were several more application software providers offering integrated solutions, which were more affordable to companies below the giants in the Fortune 1000. They were also more functional. Accounts payable was actually feeding directly into the general ledger. Transactions posted in accounts receivable showed up in trial balance later that day. Integrated financial applications had become the norm.
Jump forward another ten years and we have business accounting software running on PCs. Real accounting solutions can be purchased for thousands, or as low as hundreds of dollars. Companies no longer have to take out a loan to buy business software. QuickBooks and a few other applications have made financial accounting software accessible all companies. Words like accounts payable and accounts receivable are no longer secret code words spoken only by trained accountants. Today, small business owners running operations out of their garages are using real accounting applications every day.
Now jump ahead to where we are today in 2012: Business Accounting Software is now a commodity. There are no great changes coming next month to the way someone is going to apply cash to an outstanding receivable. There is very little magic happening these days in the way a business owner cuts a check in accounts payable to pay for a purchase order of received materials. When products in any market get to commodity status, companies across the market are forced to change the way they sell their product and look for new ways to attract customers. Buying business with a low price is a dangerous game to play in a commodity market. The logical path that many technology companies choose is to offer services on top of the commodity product.
This is the perfect time for open source software to disrupt a market. We saw it in the server operating systems when Linux servers started replacing Unix servers everywhere. We are seeing it now in the mobile space as Android (based on Linux) knocks out most every other mobile operating system contender besides Apple and IOS.
This must be why at xTuple we are seeing the tremendous uptick in users of our financial applications. PostBooks, our Free and Open Source version of the xTuple ERP solution, includes complete financials (accounts payable, accounts receivable, general ledger, financial reporting, etc.) The market is reacting to the commodity nature of financial applications. With greater frequency, the market is looking for alternative solutions without the big price tags. We hear every day that users can't see a justification in paying great sums for software when there are free, widely used alternatives that are better than many for-pay options. At the same time, these customers are gladly paying for help in getting those financial applications set up optimally for their business.
One of the services we provide to the community is a Monthly Webinar Series. If the attendance at the monthly accounting webinars we conduct is any indication, this trend is expanding. You might say its expanding xPonentially.
Wally Tonra
Wally has been with xTuple since 2004 and in ERP sales since the mid-1990s. After all that time selling vendor-centric, proprietary enterprise software, moving to an open source, Mac-friendly ERP package was a natural evolution. Prior to xTuple, Wally spent 10 years at JD Edwards, which was eventually acquired by Peoplesoft, in various sales and sales management positions. He made the move to xTuple before Oracle took over both Peoplesoft and the former JDE. Prior to JD Edwards, Wally held sales positions at ERP software company Daly.commerce (formerly Daly and Wolcott), hardware supplier XL/Datacomp and storage vendor EMC. Wally holds a B.S. from Boston College, where the Mac fanaticism all began.