It's critical role in the majority of small operations is hard to over-estimate. There are countless support and training resources, as well as consultants and implementation specialists. There are whole armies of temp agencies that are on call to support it. You can buy it, install it, and begin entering your transactions, downloading them from your bank, write checks and pay employees.
It's so easy to get, set-up, and use.
And more often than not, it doesn't work.
It's not that the software doesn't work. It's not that it isn't a great tool (for financial reporting). Although many CPA types will argue about this in some of the finer points of accounting, Quickbooks has been a huge success for Intuit.
The real issue lies in what it's designed to do, what users want it to do, and where the limits are.
The classic issue with Quickbooks
BusinessMaster was one of the first manufacturing software applications to integrate with Quickbooks in 2001, when Intuit first opened up their ubiquitous program to data exchange. Data exchange opened up vertical markets to a horizontal application. Quickbooks is a financial accounting program, one most small businesses had (already), and it was positioned horizontally in the market. Horizontally means it did many common things every business needed to do, without specializing in any one "vertical" segment (like a specialty or business focus).
To be horizontal in a software paradigm, is to be broad, wide, covering a large, generic portion of the market.
To be vertical is to specialize in a narrow, unique focus, such as woodworking (or even more focused, custom cabinetry), or custom musical instrument repair (or even more focused, guitars).
For instance, all businesses SHOULD maintain correct Profit and Loss reporting, Balance Sheet reporting, and similar disciplines. And for the most part, it's an almost identical process. But HOW these business drive accounting transactions can be so different. A totally custom cabinet shop buys, sells, inventories, and manages capital equipment totally differently than a local retail store. Even within similar areas like manufacturing, some operations what is WIP (Work In Process Inventory) to one company doesn't even exists in another.
Quickbooks has constantly tried to add features to their application to accommodate many different processes, and stuff them inside their horizontal program. Some are successful, like Payroll. Some are not, like Inventory. And some changes, like incorporating Sales Orders and Invoicing, attempt to push multiple users into Quickbooks, which Quickbooks was clearly not designed to handle. If you have a multi user install of Quickbooks, you know the performance hitwhen more than a few users get in the program.
Here is a small list of problems we see regularly (Keep in mind of course there are users who do pull this off)
- CRM: Customer Retention Management, or Contact Management. Quickbooks DOES maintain customers, but NOT every contact every employee works with. This requires every user that interacts with customers in any fashion to have Quickbooks installed, and enter data that isn't relevant to any account practice.
- Item management: The fundamental piece of Inventory Management can be far more complex and sophisticated than what is needed for accounting. Many of the activities in managing raw materials and assemblies are far outside the design of what accounting requires. In fact, I feel confident in saying real accounting doesn't CARE about the part numbers or the discreet parts in general.
- Inventory: The needs of manufacturing to manage inventory can be so different than just a simple "How much of x product is on hand?" it would take too long to write. Suffice to say, I believe I've "paid the rent" more fixing and solving problems about this one element than any other. When potential clients tell me they are running their inventory in Quickbooks, and they are a manufacturer, I can tell right away there is a fundamental lack of understanding about both Inventory AND Quickbooks. See our Evaluation War Story Part 1.
- Partial Shipments and Purchase Order Receiving: Most accounting programs treat a Sales Order and a Purchase Order as an accounting transaction, rather than the RESULT of these as an accounting transaction. In doing that, they require back orders and partial shipments to be closed rather than left open. There are work-arounds, but they don't work in most real world scenarios.
- Billing for Deposits: I've seen more bizarre practices trying to cope with this idea in Quickbooks than I care to remember. If you are taking deposits from customers, or progressively billing customers, ad are using QuickBooks, chances are high you have problems auditing your books up to standard GAAP.
Because Quickbooks works so well for some things, it doesn't work for everything
Quickbooks does work very well as a small business solution for financial transactions. When it comes to Accounts Receivable, Accounts Payable, Reporting, Checkbooks, Chart of Accounts etc... I believe it is basically unbeatable. But I also believe it is limited in it's ability to truly solve the other pieces.
Large scale ERP systems do this in larger companies, but if you saw the budgets for these types of software applications (and I mean annual, not just occasional upgrades) you would understand why there really isn't one totally integrated program for the small business.
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