Horizontal vs. Vertical Accounting Software Solutions – Which Do You Need?
Businesses of any size most likely have an automated accounting software system of some type. Smaller organizations may likely use Quickbooks or Peachtree, which largely are designed around a “one-size fits all” approach. Larger organizations may have custom-designed applications written for the complex and unique needs of their particular operations, such as airport management or international distribution. The general terms for these applications are “horizontal” for the one-size fits all application, and “vertical” for the industry specific solution.
As organizations grow and become more complex, their perceived need for more specific functionality, able to efficiently handle their “unique” needs, drive their move toward a more vertical accounting software solution. Developers who have written an application for a client in a particular industry may package that program as a vertical solution for other prospects in that industry. Colleagues in that industry may recommend a package they use which is more industry specific.
But vertical applications also come at an increased cost. Typically industry-specific accounting applications are in the mid-range market, or higher. They often are packaged by modules, with the user selecting which modules they wish to purchase (further “customizing” the solution for the user).
The trend toward vertical accounting software solutions is increasing based on several factors. First, savvy users are not satisfied with the efficiencies gained simply by automating transaction and account level reporting. They want greater functionality related to their industry, such as depreciation and amortization calculations in real-estate firms, inventory for manufacturing, and job costing for construction. Recognizing this, entry level, previously-horizontal software packages are now offering “industry specific” versions of their software. So there is now Quickbooks for Retail, Quickbooks for Manufacturing, etc. Also, mature horizontal products with broad customer bases have continued to enhance their product development to the point where they now include many functions previously only available in the vertical solutions. Incorporating functions such as payroll, inventory, human resource management, and others make the previously horizontal application better able to handle a user’s specific needs.
Another trend making these horizontal applications more flexible is the growth of cloud computing. Users may now share both the application cost and the infrastructure cost that used to prevent smaller organizations from fully capturing and sharing information across the organization. Through the use of software as a service or hosted applications, the smaller organization may now demand, and be able to afford, greater functionality than ever before.
So it seems that the gap between vertical and horizontal packages is lessening, making the decision of choosing one over the other more difficult. That is why it is critical to identify what functionality you require from your system before beginning your review. You may be able to save tens of thousands of dollars by using a package that wouldn’t have worked for your company three years ago. On the other hand, you don’t want to buy a system that won’t perform for you now, or grow with you in the future. Consider carefully, and allow www.AccountingSoftwareSuccess.com to help.
About the Author
John S. Francis graduated with his MBA from Southern Illinois University- Carbondale in 1985. Since that time he has worked in various accounting professions. From 1996 to 2009, he was founder and President of one of the country’s leading accounting software implementation firms. Acknowledged as a “Top 100 Technology Pacesetter” and a “Killer VAR” by Accounting Today
magazine, and a “Top 100 Value Added Reseller” by Accounting Technology
magazine, his firm successfully managed accounting system implementation and training engagements for thousands of clients worldwide. In 2009 he began working on accountingsoftwaresuccess.com
, a site dedicated to assisting accounting professionals with their search, selection, implementation and use of accounting systems. The site contains several tools to assist accounting professionals with their accounting software research including an Accounting Software Selection Tool
and an Accounting Software Articles Library
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