Like one of my fellow classmates, I too had wondered if there was any differences between traditional accounting software and the accounting capabilities of ERP systems. Are they the same thing? If I was a new company picking out my software and system needs, how am I to distinguish between the two? Are we comparing apples to apples or apples to pears?
As it turns out, while the two types do cover some accounting functions, they are still technically different. As explained by this article at ERPSoftwareblog.com, accounting software handles typical accounting transactions such as receivables, payables, payroll, and balances. ERP systems handles the financial resources of a company plus the ability to manage intangible assets like work hours, product lifecycles, performance, and customer relationships. Accounting software is only for tasks related to accounting, but ERP systems actually interface to other aspects of business operations/processes.
So accounting software is more like an apple with ERP being the branches of an apple tree. Great.
But since ERP systems can easily take over much of the accounting capabilities, and many ERP packages have full accounting functions already built in (like the Microsoft Dynamics series), what’s the trend for independent accounting software these days? Well, according to the article, that industry is contracting. And this makes sense too. Comprehensive software packages are becoming more in demand and many accounting software companies either get absorbed into larger ones or fade away. Sooner or later, we’d only hear about ERP softwares in place of accounting.