In 1974, when I graduated from the University of Texas with a degree in accounting, we were using ledger sheets for keeping books. My research paper was about small business posting machines. We were poised at the brink of a revolution in accounting.

Up to 1974, accounting was done the same way that the Egyptians did it 3,000 years before. Our technological advances since the Egyptians consisted of painting green and white alternating lines on our paper to make it easier to follow a line across a 36 inch ledger page. We also had ball point pens instead of those messy fluid ink pens. When I was out of balance, I could tell you if the problem was a transposed number and what those numbers were. Life was easier if you knew these tricks. That is a skill that I was happy to lose.

Posting machines were actually ledgers on steroids. We had an accounts receivable card for each customer. We would post invoices and receipts to the card while it was in the posting machine. Behind the card was a ledger sheet and entries to the customer A/R card were carbon copied on the ledger sheet. No more looking for transposed numbers because the ledger sheet always balanced with Accounts Receivable detail. I suppose that was the first integration for an accounting process. We did one thing, enter customer transactions, and it gave us a ledger sheet as a by product. What a time saver!

When computers finally became cheap, we bought our first for $80,000. What an exciting day that was. This thing even had a CRT. We call them monitors now. It had 20 lines on the screen, 80 characters wide. It was so much easier to see data on a CRT than it was fumbling around with data cards. We had our first full blown integrated accounting system!

When we did payroll, it created general ledger records. Billing created these records also. All we had to do was print financial statements at the end of the month. A 15 day process of consolidating ledgers was reduced to minutes and we had our reports on familiar, green and white lined, 14 inch wide paper. We had financial statements in a timely manner. History was not kind to our competitors that did not have timely information!

We commissioned a couple of engineers to write that first software package. Seeing the amazing potential, I wanted to learn programming in order to make this thing really save us time. All accounting packages were custom back then. There were no “Accounting Software Vendors”.

In the mid 80's personal computers came out and it was not long until there were several companies selling accounting software. Several became hundreds and then thousands. It was virtually impossible to evaluate a significant number of them so we basically threw a dart to pick a package. The one we picked was relatively inexpensive at $50,000. That was 3 years salary for an accountant at the time.

Prices fell because of healthy competition. I remember when DACEasy came out for $100. We all knew they would go out of business. However, they became very successful because of volume. As happens in a robust economy, the big guys bought the little guys until there were only a few players.

Gone were the days of customizable software for accounting. The low prices dictated that all software be standard so that help desks could help. All the wonderful vertical accounting applications were gone and we were forced to fit our square pegs in round holes. Still prices were cheaper, more people could automate, so it was an improvement.

In order to crack the market, small software producers would provide the source code to their software to help us get a package that felt vertical. That is when I found Datamar. It was a dBASE accounting package that was customizable. I had plenty of fun creating customized accounting software saving people time. On one application, the customer would create a sales order, and that would automatically print mailing confirmations. It printed a work order to make the product, and shipping labels. General ledger records were produced when the invoice was created. What an amazing integration! I was an official systems integrator.

Many of these source code providing vendors stopped allowing customizations once they became popular. Some software vendors did not survive competition from customizable software and the result was orphan software packages. People were still using them but had no support and no source code to make needed changes when operations changed or when computer systems changed. What a bad time that was.

Reluctant to choose an accounting package by a small producer even if they provided the source code, everyone flocked to Peach Tree and Quick Books. This made entry to the accounting software market next to impossible. Those of us that made our living customizing accounting software were also out of business. In my opinion, no one was providing adequate accounting software. It was just not possible without the ability to customize accounting systems to fit operations.

Around 1991, Linus Torvalds turned the software industry upside down by releasing to the public domain the operating system that he authored, Linux. This was unprecedented. Bill Gates was making billions from his operating system. The move was brilliant. It was the best way to beat Microsoft. Linux is now the most popular server software.  There are more Linux servers on the web than Microsoft, Novell, and all the competition combined. Linus created the open source software revolution and became rich. Probably historians will be more kind to Linus than Bill because Linus broke no laws, held no monopolies, and never pressured computer manufacturers to buy his system.

Open Source Software has spawned hundreds of horizontal and vertical accounting software packages, many made for a specific industry. The best part is they are free! Customizing is more popular than ever. With an open source software package there is no company to go out of business. Thousands of companies are supporting open source software. There can be no orphans here. We no longer have to fit square pegs in round holes or worry about the big guys buying the little guys.

Have you heard the term scalable? What could be more scalable than a web based accounting package. You can use it on a stand alone non-networked computer or deploy clusters of servers, each with their own specific duty. No change to the software required.

What about portable? You can run these accounting systems on Windows, Linux, Novell, Mac, and any future operating system because they are web based. Once again no change to the software required. Did you notice that proprietary software companies quit using the terms portable and scalable?

The big changes in accounting seemed to happen when we changed platforms. Major changes happened when we went from paper to computer. Another major change was from mainframe computers to PC's. Then the next big change was from text based user interfaces to graphic user interfaces. Everyone says that someday we will no longer have software to load on our computers. We will only have browsers and servers. This major platform change is underway now.

The motivating factor for changing platforms has been to take advantage of new ways to integrate software. The one concept that is responsible for 90% of the time saved with computers? - Integration.  If your accounting system can communicate on the web, the only limit to the possibilities of integrating software is our imagination.

I honestly believe that we are seeing the final revolution in accounting software. Now accounting packages can grow endlessly and never be obsolete. Object oriented software allows us to reuse software for other applications. Development takes less time. There will never again be a need to create new software because of a platform change. Web based software can be integrated with any process anywhere in the world. How can any new concept compete, especially since there are no license fees?

One key feature about open source software that gives it a clear advantage over proprietary software, is it is created by end users and supported by end users. All proprietary software has a limited number of programmers in ivory towers who cannot compete with an unlimited number that actually use the software. A limited number of support staff manning proprietary software help desks cannot compete with an unlimited number sharing their knowledge freely on the internet. Google and Yahoo make finding user support easier and less expensive than calling Microsoft for support. Has anyone out there actually done that? I was never able to get adequate support from Microsoft, Novell or any proprietary software. With open source, I find the exact solution to any problem in minutes and reprogram if necessary.  No more waiting on hold to speak to a foreigner that may know their software but with limited knowledge of my language they are less likely to be able to help.

What does this revolution mean to you? If your company is not ready to get rid of an old, obsolete, client-server, proprietary software package, you may experience similar problems to those in the 80's that claimed they did not need a computer in their business. That is what happens in a revolution.

Changing accounting systems is the most difficult thing a business can do.  It has never been prudent to change accounting packages unless there is a major platform change.  History is clear about what happens to businesses that do not switch platforms in a timely manner.  Start up businesses have a better chance of surviving when they take advantage of new platforms especially when old businesses are struggling to compete clinging to their the old ways.

Mo Kelly is a developer of webERP, a web based accounting system and also a developer of Joomla! Extensions integrated with webERP. webERP Cell Phone Quotes integration can reduce your quoting time from days to seconds, giving your sales personnel the ability to deliver quotes anywhere anytime.  CARTwebERP may be the only no maintenance shopping cart!  If you want to save time and money you need the Integration King!