Here it Comes EDI or Not

Steve Gold looks at the accountancy software market and explains whyEDI applications have come of age

Accounting software hasn't exactly been setting the dealer channel alight over the past few years, despite the healthy migration of business users from Dos to Windows applications. Nevertheless, the market is making progress.

In September, Pegasus announced it had acquired Accredit, PCG's electronic data interchange (EDI) applications software, for an undisclosed sum.

The deal means Pegasus can include the EDI package within its Senior accounts suite.

According to Pegasus CEO Jonathon Hubbard-Ford the EDI version, known as Pegasus Edition for Senior, will soon be available to the company's 20,000-plus Senior users.

The acquisition came just three months after the release of Edition for Opera, the EDI-compliant version of Pegasus' large company accounting software, currently in use at more than 3,500 locations.

Hubbard-Ford says the company is delighted it has been able to reach an agreement with PCG over the transfer of the rights to the EDI package.

'PCG has experience in this field. Together, we are committed to providing sophisticated, but affordable solutions.'

According to Hubbard-Ford, the release of the package will meet a rising need among accounting software users. 'The next decade will lead to a great demand from all industry sectors for EDI capability to be integrated directly into leading accounting packages,' he says.

The idea of providing electronic additions to accounting software is starting to gather pace, especially since Sage, the biggest seller in the accounting software stakes, unveiled Sage Online in February.

Sage Online is a suite of online services for businesses, including banking and credit management. Phase one, which went live in the UK in spring, offers online banking from the Midland Bank, credit management services from Dun & Bradstreet, and Bacs facilities from Active Business Services.

Sage representative David Pinches says the aim is to have all the online business services accessible as a simple icon under Windows, making Sage Online as seamless as possible.

'Currently, each application is separate under the user's Windows front-end, but it's still early days regarding this type of service,' he says, adding that charges are also being worked out. 'Sage Online has no hard and fast type of business that we're aiming for. We see the service as appealing to businesses with a turnover of #500,000 to #10 million.'

Pinches agrees Sage appears to have stolen the march on Intuit, which has yet to launch an online banking and business service in the UK, after launching in the US last year. 'We understand that the Intuit service is geared to personal customers in the US, rather than businesses. We don't see them as competition,' he says.

Managing director Graham Wylie says Sage is the first supplier of PC accounting software to offer its customers a range of online business facilities that, until now, have been mainly used by larger businesses.

'Sage Online is an essential component of our strategy to ensure that Sage accounting systems are placed at the heart of electronic commerce,' he says.

Wylie says the company has identified a number of key services for its customers. 'These services will provide tangible business benefits such as better and more timely information, improved productivity and reduced costs.'

The Midland Bank hookup offers businesses with secure online access to account balances, transaction details, salary and supplier payments, as well as financial market information via Hexagon, a Midlands PC banking service.

Pinches says that although the Midland is pleased to take part in the Sage Online project, 'from the discussions we have had with the bank, it's clear it views this as a step forward that other UK banks will take in due course. The bank is not looking at hordes of businesses switching banks to the Midland because of this service.'

The main aim of the Sage Online service, says Pinches, is to allow businesses to integrate their PC accountancy software with their other services in an online environment. It is possible that the system will allow users to update Sage business software electronically, which is one reason why the company is starting a Web site (www.sagesoft.co.uk). 'The Web site is an exploratory move by Sage. Like many firms on the Internet, we're still exploring with our Web pages,' says Pinches.

He says the Web site is different from the Sage Online service - for that, users must dial specific phone numbers for the services they wish to access. As the Sage Online software develops, all dialling routines and login pages will be hidden from the user.

Not that everything is a bed of roses in the accounting software arena.

Only last month the Business and Accounting Software Developer's Association (Basda) formed a working party to lobby the UK government over guidelines for changes in accounting software when European monetary union (EMU) occurs.

If everything goes according to plan, the run-up to EMU will start on 1 January 1999. At that time, the exchange rates of participating European countries will be irrevocably locked to the euro and, although banknotes or coins will not be issued, the euro will start to be used for transactions.

Euro notes and coins are due to be issued in January 2002, when they will become legal tender alongside national currencies. On 1 July 2002, national currency notes and coins for individual countries will cease to be legal tender.

According to Basda director Dennis Keeling, the prospect of the UK joining the EMU raises more than political issues. 'Our members develop software which is used throughout Europe. Even if the UK does not join, any organisation in this country which is trading with countries in the EMU will have to have accounting systems which can cope,' he says.

According to Basda representative Wendy Haylock, the problem will be handling the dual running system when both currencies are convertible currency. 'Most experts agree that the best way to handle the dual running period is to have accounting software running in both currencies,' she says.

Basda's official line is that, while most experts agree that software will have to handle a minimum of two base currencies down to transaction level once the dual currency period begins, there has still not been any guidance to software developers from the Department of Trade and Industry or the Bank of England.

Keeling says the other major concern is the rounding rules which will apply when national currencies are converted to euros and back again.

'There are a number options on rounding and we need a decision. Although French and German banks are providing more information than UK banks, they have not yet announced a decision on rounding,' he says.

He claims these changes have the potential to cause more problems and cost more than the year 2000 revisions. 'Yet, when last week the Bank of England issued a list of all the organisations it has consulted about EMU, not one computer or software body was mentioned,' he says.

Several industry organisations are getting behind the expanding electronic aspect to accounting software. In August, the Centre for the Study of Financial Innovation (CSFI), launched its own Web site (www.pobox.com/\~csfi).

It is being provided by Hyperion Systems, an IT management consultancy which specialises in electronic commerce.

Hyperion is a member of CSFI, which is why it offered its Web site hosting facility to the centre. The CSFI bills itself as offering a forum within which trends in the world of international finance can be explored, to test new ideas and to challenge the established consensus.

The CSFI publishes research papers about once a month and organises a regular flow of roundtables where practitioners, regulators and others interested in finance can discuss topical themes on neutral ground. Plans call for the Web site to feature a calendar of CSFI events, details on working groups, publications catalogue and a list of CSFI sponsors.

'The CSFI aims to provide a forum for leading edge financial debate for the widest possible audience, so it is natural that we have set up a presence on the Web,' says CSFI director Andrew Hilton.

Hyperion director David Birch hopes the service will 'further increase participation in the vital debates that affect international finance'.

According to the CSFI, the centre has no ideology of its own, other than a belief in free and open markets. The centre aims to educate and inform the financial services sector by exploring key issues through research and discussion, promoting fresh ideas to a wider audience and by bringing together practitioners, academics and regulators to address a common agenda.

In its first three years, the CSFI's research papers have covered topics as diverse as EMU, UK financial regulation, social security in Russia and the use of foreign exchange options by central banks. Its roundtables have included discussion of psychometric testing and financial services, small business lending, deposit insurance and virtual banking. The CSFI has also sponsored conferences on derivatives, financial engineering and the fight against fraud.

As well as hosting CSFI's Web site, Hyperion sponsors the e$ mailing list at http:// thumper.vmeng.com/rah. Hyperion's own Web site is at www.hyperion.co.uk.

Several weeks ago, Microgen, one of the main movers in the EDI and electronic accounting industry, announced it was joining the revolution by offering EDI facilities as an integral part of its Chronos sales debtor management service.

This enables Chronos customers to send invoices electronically and in paper-based form. Microgen is offering the service through a business partnership with Sterling Software, an EDI software provider.

'Increasing numbers of companies are using EDI to trade with suppliers, and many large companies will now only deal with suppliers that can trade electronically,' says Microgen MD David Herridge.

'But as EDI systems are expensive to install, many smaller companies are being held back and are missing out on potential business opportunities.

By partnering with Sterling we can now offer customers a complete service with Chronos handling both paper-based and electronic invoicing.'

Chronos is a sales debtor management service that reduces the potential cashflow problems of unpaid debts by speeding up invoice issuing and chasing.

The package takes customer data and then produces and dispatches invoices, statements and personalised reminder letters in the name, style and livery of the client.

Chronos users send data to Microgen as normal, having marked those invoices that are to be sent by EDI. During processing this data will be split from other invoice data, which will be printed and dispatched as normal.

EDI invoices will be sent to computers running Sterling's Gentran software.

This converts data into an EDI readable form and dispatches it electronically to Sterling's Commerce Network EDI system. This distributes invoices to mail boxes and customers can then dial in and download their mailbox contents.

'We are delighted to partner such a forward-looking company as Microgen,' says Ashley McClinton, managing director of Sterling Commerce. 'This deal further confirms that EDI and electronic trading have come of age and are available cost-effectively to companies of all sizes.'