{"id":7172,"date":"2020-09-16T16:14:43","date_gmt":"2020-09-16T20:14:43","guid":{"rendered":"https:\/\/www.sage.com\/en-ca\/blog\/?p=7172"},"modified":"2026-01-16T05:14:55","modified_gmt":"2026-01-16T10:14:55","slug":"make-room-for-change-and-growth-with-modern-cloud-based-accounting-solutions","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-ca\/blog\/make-room-for-change-and-growth-with-modern-cloud-based-accounting-solutions\/","title":{"rendered":"Make Room for Change and Growth with Modern Cloud-based Accounting Solutions"},"content":{"rendered":"
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\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
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\n\t\t\t\t\t\tMake Room for Change and Growth with Modern Cloud-based Accounting Solutions\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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\n\t\t\t\n\t\t\t\t\"Susan\t\t\t\tSusan Pearlston<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n\n\n

Evolution of Technology and the Impact on Accounting Software of Today<\/h2>\n\n\n\n

We\u2019ve seen several generations of financial accounting systems emerge over the last 4-5 decades. Initially, there were mainframe applications that only completed the most computationally intensive aspects of a financial process. High cost computing hardware drove a lot of the early specialization in application development (and the limited options for same). As computing power became more affordable, minicomputers drove a new phase of application development. Many accounting software providers emerged as did the accounting suite: a collection of related applications.<\/p>\n\n\n\n

Since then, computing power has grown exponentially, and computing costs have plummeted. Today\u2019s smartphones routinely possess more computing power and storage than mainframe computers had in the late 1980\u2019s. Programming languages became more powerful too and this allowed smaller development teams to create new financial accounting applications quicker and cheaper.<\/p>\n\n\n\n

As a result, accounting technology has been able to improve at an accelerating rate. Unfortunately, many firms\u2019 usage of an accounting software package seems to have lengthened during the same timeframe. In my early career, we used to track the \u201cde-install\u201d<\/em> rate of leading back office solutions. In the 1990s, customers often hung onto their software for approximately 10 years. In fact, we\u2019d often saw software being replaced as early as 8 years after the initial installation with 80% of customers using a replacement product by year 12.<\/p>\n\n\n\n

Today, it\u2019s not uncommon to find companies still using the same product almost 20+ years later. Why did this happen? Many companies perceived the risk of removing a packaged solution as high, while the upside of doing so was low. This was certainly the case for much of the last decade. However, newer solutions now offer a vastly different value proposition and smart accounting organizations would be wise to take note of this.<\/p>\n\n\n\n

What\u2019s Different Today<\/h2>\n\n\n\n

Prior generations of accounting software<\/a> focused on transactional processing and financial statement generation. The sales pitch for those solutions was often centered around how fast journal entries, checks or reports could be produced. These conversations could have been confused with those of the makers of manufacturing equipment: it was all about speeds and feeds.<\/p>\n\n\n\n

Once the domain of transaction processing was conquered, software vendors had to look elsewhere to add value. Where they once had the competitive advantage in transactional processing, it was now a commodity. Worse, the presence of lower-cost computing resources was acting as a dampening force on new software sales. Software vendors had to find new ways to add value or else their markets and products would eventually become stagnate.<\/p>\n\n\n\n

As it turns out, ever cheaper technology enabled capabilities like machine learning to become practical. Likewise, the plummeting price of data storage and the availability of sensors (e.g., IoT devices), big data (e.g., social sentiment information), etc. meant that executives could look at more than accounting data to understand what was occurring in and around their firm.<\/p>\n\n\n\n

Finance today must:<\/strong><\/h3>\n\n\n\n