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What Does Indian SMBs want from Accounting Automation Software Products?

Saturday, June 26th, 2010


>With a growing economy and deeper penetration of technology in business, even small and medium businesses (SMBs) are becoming more and more tech-savvy. Whatever would be their business-area and/or their level of comfort with technology, they are looking to leverage the advancement in technologies for their business benefit. However, key thing to note here is that every such decision for a SMB is a business decision, and need to make business sense to the small-time business owner in his/her own settings. Besides the core technical and product features of any automation software solution, there are several other business parameters on which the product needs to score for it to make the required business sense for a SMB to adopt it.


Beyond the product features offered by the accounting automation software solutions, the pain-points which SMBs face in this domain are:

Upfront Investment in the required IT Infrastructure:

Information Technology is an enabler for SMBs to their business, and not be their core business function.

The most key business insight which all automation software solution producers need to understand is that software or information technology is an enabler for SMBs to their business, and it cannot be their core function. Applying technology for their businesses is an investment case and SMB will be concerned about the Return-On-Investment (ROI) needed on setting up the required IT infrastructure.

In such context, it is important for all automation software solutions to be lighter on the minimum upfront investment required in IT from SMB for their product to function to its potential. There are 3 key costs involved in this upfront IT investment:

  1. Hardware Cost: Getting the required machines, servers, network, internet connectivity, etc.
  2. Software Licensing Cost: Software solutions come with sizable licensing cost which needs to be renewed at regular intervals or is on a per-user/per-login basis
  3. Initial Training Cost: Because technology is not their core business, SMB owner or someone from the organization has to be training on the technical and feature-specific aspects of the software solution

While implementing a full-grown ERP or its accounting modules like iBaan or Navision requires a large IT investment across the organization, the off-the-shelf available software solutions like Tally require investment per machine. Besides, the initial licensing and training cost for all these software products often cripples the motivation of SMB to automate their accounting process

Cost of Maintaining the IT infrastructure and Software Solutions:

SMBs for which IT is not the core business function, managing this IT infrastructure and software solutions become a sizable cost. Company has to recruit a computer technician/operator or hire an agency for the regular maintenance. The most common heads under the maintenance cost are:

  1. Data Management: Every business is critical about its business financial and accounting data. While an automation software solution provides for archiving and managing this data, it needs manual operation of regular data-uploading, data-cleaning, and data-backup. This often requires hiring a data managing personnel/agency and is a cost for SMB
  2. System Crashes & Virus Protection: Virus attack is one of the most common and severe problem faced by SMB. To protect their systems from this, SMB has to invest in anti-virus software solutions, which add to the overall cost of the automation exercise. Besides, in an eventuality of system crash due to virus or any other reason (which is again very common occurrence), restoring the system or IT infrastructure becomes an additional cost
  3. Product Maintenance: All software solutions/products need to have regular maintenance cost, like security patches, product upgrades, etc. Costs involved for this activity include sourcing these upgrades and applying them which again require skilled technical manpower

Usage Authorization:

Because SMB owners are busy with their core business functions, operating the accounting automation products is left to the hired employees/agencies. This being sensitive business data, SMB would want to have a proper authorization check on usage of different features of product and different kinds of data. For example, they would like to have differentiated authorizations wherein operator’s access is restricted to feeding of raw data, while manager has authority to edit/download it, and senior manager has separate executive access through which they can have dashboard kind of quick comprehensive overview of the business process. Having a regular downloaded update about the health of business process through easy channels like mail or mobile update will be huge boost for a SMB owner

Product Evolution as per Changing Regulatory Norms:

Accounting practices in the country generally keep changing as per the prevalent policies of concerned governing bodies. We have seen a continuous change in the taxation rules, surcharges to be levied, statutory auditing and reporting rules, etc. Variables like prevailing currency exchange rate often become a significant business input for an accounting automation product. An office automation software product needs these inputs regularly and this adds to the additional effort in terms of evolving the product as per the prevailing regulatory norms

Business-On-The-Move, Distributed Office Locations:

A SMB operating in a particular region often has distributed office locations. Business may have a central office in the business city, a warehouse at the city outskirts and also branches in nearby towns and cities from where it manages the regional business. Managing business processes across such distributed locations becomes a challenge which office automation software products need to be aware of. Businessman managing the show in such distributed environment often is on move, and requires quick and global access to its business data and processes. None of the existing accounting automation software solutions provide this at the ease of using it over internet or mobile

Major Accounting Automation Players in Indian SMB Market

Wednesday, June 16th, 2010

Major Players in Indian SMB Market

As suggested in the earlier section, accounting automation software product is often a part of the larger ERP packages and has different set of criteria driving their demand in the market. Stand-alone accounting software products which are comparable as alternative for the current accounting processes being followed by the Indian SMB and businesses generally fall under the category of specialized mid-level ERP, desktop applications or SaaS solutions. This section provides a brief comparison of the major players in the Indian market of accounting automation products:

  1. 1. Tally:

Tally is a desktop application and is available in form of a licensed software product. It is the most popular application right now in market and enjoys the largest market share (~60%)

  1. 2. E.X. from TCS:

E.X. is another desktop accounting application from Tata Consulting Services (TCS). Coming from Tatas, it holds a sizable market share (~25%)

  1. 3. Quicken from Intuit:

Quicken is a product from American financial software products major called Intuit Inc. Having developed for the world audience, it is a fairly evolved product, but this same reason makes it a difficult to adopt Quicken for Indian scenarios

  1. 4. iBaaN, Navision:

These are mid-level ERP packages of which at times only the financial accounting module is implemented. These prima-facie do not compare with a stand-alone accounting automation software products, however a lot of mid-sized businesses are using it for their financial automation needs

  1. 5. OfficeBOX:

OfficeBOX is the latest and most evolved entrant in this market. It differentiates itself by offering the accounting on a Software-as-a-Service platform and offering its basic version for free use.

Besides these, there are several other local accounting automation software systems built-on-order for local needs by local players. A simple search for accounting software in India on any search engine throws a list of these players.

Types of Accounting Automation Software Solutions – Based on Delivery Mechanism

Thursday, June 10th, 2010


Accounting automation software products can also be categorized based on their delivery mechanism. The three prominent delivery mechanisms are:

1. Across Organization, available on internal servers/LAN:

These products are essentially part of the larger ERP packages and hence require an elaborate internal IT system spread across the multiple business divisions, geographies and ranks of organization. Both large scale and mid-level ERP packages need such investment in IT infrastructure and are being delivered over this internal server systems/LAN.

Examples: Accounting modules of ERP packages like SAP, Oracle Peoplesoft, BAAN, Navision, etc.

2. On Premise, desktop products:

These products reside on the computer system of the business and can be operated without any internal/external network required. All data resides on the system/desktop and products. These products are sold off-the-shelf in form of licensed software diskettes.

Examples: Tally, E.X., Quicken, etc.

3. Software-as-a-Service Delivery:

This is the latest delivery method in the accounting automation software products. The intelligence of the product resides on the robust servers of the service provider. Businesses upload their financial accounting related data to the highly secure data-centers of service providers and use the accounting software over internet. This eliminates the requirement of IT system (and its maintenance) for accounting automation purposes

Example: OfficeBOX