A Journal Survey: The Software CPAs Use

A Journal Survey

About a generation ago, the only tools an accountant used were a hand-cranked calculator, a columnar pad and a sharp pencil. In those days, an electric pencil sharpener was considered a high-tech accessory. Today, you probably wont find any of those tools in an accountants office—except maybe the pencil and the sharpener. Replacing them are computers—mostly personal computers (PCs)—and their high-tech accessories are software products that do the work, and then some, of those old, clunky four-function calculators.

To find out what software tools CPAs use today, the Journal surveyed more than 4,000 members of the American Institute of CPAs, asking them, among other things, which products they used, how they liked those products, how they used them and, if they had plans to switch, what products they were likely to move to. This article describes the results of that extensive survey.

The participants represented a broad cross-section of the CPA profession: those working for CPA firms—large (Big 6 and national), medium-size (regional and those with multiple offices) and small (local and one-person offices)—and those working for a wide spectrum of for-profit and not-for-profit organizations, for schools and for federal, state and local governments.

UP ON TECHNOLOGY

Its no secret that for years the CPA profession was slow to adapt computer technology. This survey provides evidence of a reversal of that situation. Computers are being used extensively to perform accounting tasks—from posting transactions to writing reports, from developing what-if business scenarios with spreadsheets to preparing tax returns, from tracking receivables to keeping track of fixed assets. Extrapolating from the data collected in this survey, we surmise that many CPAs not only use technology to do their jobs but they also stay on top of the new technology by upgrading software in a relatively timely way.

Thats not to say every accountant is using cutting-edge software, but the number of those still using decade-old tools is shrinking. For example, 88% of the survey respondents use some version of Windows as their operating system. Of that group, 35% are on Windows 3.x and a surprisingly high 49% used Windows 95, which is only a little more than two years old. Among Big 6 users, Windows 95 has 70% of the market. DOS users number only 8%. For details, see exhibit 1.

Another significant statistic is that 4% use Microsofts NT (which can be an operating system either for a single computer or for a network system linking many computers). While the NT users percentage is small, consider the fact that just a bit more than a year ago there were hardly any users—indicating the swiftness at which NT is moving into the accounting field.

In business and industry, NT is spreading at nearly twice that speed, according to our survey. NT has already grabbed 7% of that market. Meanwhile, Windows (3.x and 95) is being used by 82% of management accountants. Likewise, not-for-profit organizations use of NT is nearly at 6%, and in the academic world NT holds nearly 10% of the market.

Windows runs 92% of government offices computers: Windows 95 totals 31%, Windows 3.x is about double that, at 61%. But governments use of NT was too low to even register.

When asked why their organizations failed to upgrade to a more advanced operating system (from DOS to Windows 3.x or from Windows 3.x to Windows 95 or NT), 45% report they are satisfied with their current systems and see no need to upgrade. For details, see exhibit 1a, above.

Also coming as no surprise was Microsofts role in the accounting community. Most CPAs use the companys software applications—from word processing to spreadsheets—and its making swift inroads in the one area where it didnt even have a presence just a few years ago—network software.

THE NETWORK SPREAD

The use of local area networks (LANs) and wide area networks (WANs) is growing. In some areas, networks have reached full saturation: For example, the Big 6 and national firms say they are 100% networked. And even a majority of small CPA firms are networked, with 63% wired for computer sharing. Business and not-for-profit organizations also are heavily networked: 70% for business and 89% for not-for-profits. For details, see exhibit 2.

Of those not networked, three-quarters say they have no immediate plans to change—mostly because they are too small and so dont need to link with other computers. Only 28% say they have intranet systems (local Internets) in their offices.

Novell NetWare, used by 62% of the respondents, has the lions share of the network software market. Windows 95 has 14% and Windows NT 11%. But, as noted above, this market is in transition, with 14% of the respondents indicating they are ready to change their network software. Some 62% plan to move to either Windows 95 or NT (for details, see exhibit 2a).

OFFICE SUITES

A total of 66% of the respondents use office suites, which are collections of applications including word processing, spreadsheet, database and presentation software that provide nearly seamless connections with each other. The leader in the suite market is Microsoft Office, used by 80% of the respondents. The nearest competitor is Lotus SmartSuite with 9% and Corel Office Suite with 7%.

The switch to Microsofts Office appears to be growing. While only 6% of all the respondents plan to change their suites within the six-month period following the survey, 81% of that group say they would use Microsoft; only 6% plan to switch to Lotus and 3% to Corel.

Considering the fact that the DOS versions of WordPerfect and Lotus 1-2-3 were for years accountants most popular software tools, the rapid shift to the Microsoft products indicates how effectively the software giant has invaded this market—or, more correctly, how WordPerfect and Lotus failed to keep their products competitive with Microsofts products. For details, see exhibits 3 and 3a.

SPREADSHEET

Aside from accounting software, CPAs rely most heavily on spreadsheet applications to do their work. As exhibit 4 shows, 98% of the respondents use a spreadsheet program regularly and Excel leads the pack with 45% of the market; Lotus is 15 percentage points behind and Quattro Pro has only a 5% market share.

When asked to rate their satisfaction with their current products, respondents gave Excel the highest rating, closely followed by Lotus and Quattro Pro (see exhibit 4a). Some 14% of spreadsheet users say they plan to change brands within the next six months, with 41% going for Excel.

WORD PROCESSING

Everyone in the survey uses word processing software. Although Word has a nine-percentage-point market lead over WordPerfect (44% vs. 35%), those statistics dont tell the whole story (see exhibit 5). When asked to rate how well they liked their word processing software, Word came out on top (see exhibit 5a). When we asked how many planned to change, 16% responded affirmatively; 47% of those respondents said they would change to Word (see exhibit 5b).

This leaves the future of WordPerfect in some doubt because the application no longer is sold as a standalone product. To upgrade to the latest WordPerfect, you have to buy the entire Corel Office Suite, and as our survey shows (exhibit 3), only 7% of the respondents use Corel and only 3% plan to switch to it.

DATABASE

About half the respondents use database applications. Those who dont probably use their spreadsheet programs instead because theyre more familiar with spreadsheet operations—even though spreadsheets cant do the job as well.

The most popular database application is Microsofts Access, and thats despite the fact that the version most users have—version 2—is a slow, clunky program compared with the new speedy and flexible version, which comes as either a standalone or packaged with the Office 97 Professional suite. That also says a lot about the competition—most of whose applications, by comparison, are hard to use. According to the survey (see exhibit 6), 56% of the respondents use Access, with Paradox coming in second with 9% and dBase with 7%. Before Access was introduced a few years ago, Paradox and dBase were the only widely used powerful database programs for personal computers. In the satisfaction ratings (exhibit 6a), Access placed first, and when users of other programs were asked if they planned to change (exhibit 6b), 12% replied yes, with 41% of them saying they planned to move to Access.

PRESENTATION GRAPHICS

As CPAs move increasingly “out of the box” and take on more management responsibilities, they need tools to make eye-catching presentations. The new breed of presentation software fits the bill: These programs are powerful and, more important, very easy to use. In our survey (exhibit 7), 52% say they used presentation applications regularly. Once again, the Microsoft product—PowerPoint—has the biggest share of the market, 72%. The closest competitor is Freelance, with 8%. PowerPoint also got the highest satisfaction rating (exhibit 7a). With 8% planning to change to a new program, PowerPoint again led the way with 33% planning to buy it (exhibit 7b).

TIME AND BILLING

Software that tracks the time spent working on a clients case and then prepares an invoice is used by 46% of the respondents. As shown in exhibit 8 there are many competitors in this market—in fact, many more than listed here. We included only those products that generated more than a 1% market share. Timeslips is the leader in the field with 24% of the market. Many of the other programs are proprietary in-house designs, which partly explains why the “other” category, at 57%, is so large.

There are some apparent contradictions about this part of the survey. For example, although Timeslips leads the field in market share, it did not score high on satisfaction ratings. Time & Billing Plus, which came in second, with 4% of the market, received the highest satisfaction rating (see exhibit 8a). While 24% of the respondents plan to switch to new brands, Time & Billing Plus did not make this list, but 8% said they would go to Timeslips.

Why are some of the results so puzzling? We cant say for sure, but in informal conversations over the past few years, weve heard that many accountants are not fully satisfied with any of the time and billing products on the market, and although they would like to switch, the more they look at new products, the more they decide to stick with what they have because at least theyre familiar with it.

TAX SOFTWARE

Like time and billing software, the survey of tax software contains apparent contradictions. For example, the three leaders in the field are ProSystem fx, with 23% of the market; Lacerte, with 21%; and TurboTax Pro, with 17% (see exhibit 9). But when the survey tallied the respondents satisfaction rate, AM Tax Pro, with only 1% of market share, led the pack by a wide margin (see exhibit 9a). In fact, the three market leaders scored average satisfaction ratings.

Some 9% of the respondents say they planned to change software, with 10% leaning toward Lacerte and 3% towards ProSystem fx.

For more on the economic problems surrounding tax software and a review of the leading products, see “Tax Software Buyers Guide,” JofA, Sept.97.

NOT-FOR-PROFIT ACCOUNTING

While there are only a handful of off-the-shelf not-for-profit accounting software packages, there are many customized in-house programs that use a conventional off-the-shelf accounting product as their foundation. Most of those in-house products fall under the “other” category and represent some 72% of the market. The three leaders in the off-the-shelf market are FundWare, with 14%; Axcent and MIP NonProfit, with 7% each. The product with the highest satisfaction rating is Axcent.

As shown in exhibit 10 the conventional accounting software products many not-for-profits use are QuickBooks, Solomon, MAS 90, Peachtree, ACCPAC and DacEasy.

ACCOUNTING SOFTWARE

In our view, the buying decision for accounting software—more so than any other product—should not be based on popularity. So, while the data in exhibit 10 are interesting from a market share point of view, we dont believe they should be used to rationalize a purchase.

The decision process in buying accounting software is not unlike that for buying mens suits off the rack: Italian suits, for example, are generally designed for the slim person. A Brooks Brothers suit, on the other hand, is styled for a more mature build. So it is with accounting software: Each product has its own design style and the buying decision requires matching the product with the business it serves. Although a bad initial fit can be tailored to the unique needs of the customer, its costly and the fit is never quite perfect. That said, check the survey results, but resist leaning toward a product just because its well liked and widely used.

Also, when reading exhibit 10 its important to understand that the products listed fall into two groups: mid-price and low-price products. The low-price products, which are used by many very small businesses (including CPA firms), have a market-size advantage over the mid-price products because small businesses outnumber mid-size businesses. The four low-price products in this list are DacEasy, One-Write Plus, Peachtree and QuickBooks.

The most popular low-end brand was QuickBooks. And the most popular mid-range product was MAS 90. But more interesting statistics were the satisfaction ratings in exhibit 10a. Although MAS 90 had the biggest share of the mid-range market, its satisfaction rating was not high. SBT, which scored low on the market share chart, scored highest on satisfaction.

CONTACT MANAGEMENT

Only 12% of the respondents report that they used contact management software, which is essentially a computerized Rolodex, calendar and to-do tracker all in one. ACT is used by 35% of those who run contact managers. Trailing ACT by 25 percentage points is Microsoft Schedule+ (for details, see exhibit 11). Its surprising that Schedule+ is not used more widely because its built into Microsoft Office 95 and Office 97 and performs many, if not all, of the functions of many contact managers. However, another 4% used Microsoft Outlook, which ships with Microsoft Office 97 and is a more sophisticated complement to Schedule+ (Outlook can also do many communicating jobs). Equally surprising is the extensive list of other software applications that accountants have jerry-built to run as contact managers; see exhibit 11. Those efforts speak well of CPAs adaptability with technology.

Some 13% of the users report they planned to change products, with 29% of them aiming for ACT.

FIXED ASSET MANAGEMENT

Nearly half of the respondents perform fixed asset management duties, and the leader in the field—with 21% of the market—is Best, which is followed by BNA, with 13%, and Depreciation Solution, with 10% (see exhibit 12).

A look at the products used to perform fixed asset management, however, raises some disturbing and baffling questions since many of the products were not specifically designed for that activity. Some, for example, are simply tax preparation programs. That such packages have been adapted for this task proves either the users creativity or their failure to seek the most efficient tools for a relatively complex and important job. Only 8% plan to change products, with Best, at 26%, and BNA, at 16%, the products of choice.

TAX RESEARCH

Some 55% of the respondents use computerized tax research services. The market leaders are RIA, with a 41% share; CCH, at 30%; and BNA, at 15% (see exhibit 13). Only 4% plan to move to a new product, with RIA targeted by 37% of them.

BUSINESS VALUATION

Eight percent of the respondents use business valuation software, but the field is likely to grow in the years ahead as more CPAs expand into this service. For more on this, see “Business Valuation Accreditation a Reality,” JofA, Dec.96. The two software leaders are Wiley ValuSource, with 30% of the market, and Valuation Master, with 22% (see exhibit 14). Some 6% of the respondents say they plan to change to different products, but oddly, none were included in the list of products most often used.

CLIENT WRITE-UP

This task is performed by 40% of the survey respondents. The two leaders are Creative Solutions, with 19% of the market, and Accountants Trial Balance, with 16% (see exhibit 15). Some 9% of the users reported they planned to change to another package, with MAS 90 leading the choice, with 13%.

TRIAL BALANCE

Some 39% of the respondents run trial balance software, with 46% of them working with Accountants Trial Balance, 17% using ACE and 13% using FAST (see exhibit 16). When asked if they planned to change, 9% said yes, with 24% targeting ACE and 18% Accountants Trial Balance.

HOURS SPENT ON EACH APPLICATION

We asked participants how many hours on average they spent on each software application (see exhibit 17). As expected, spreadsheet work is the most demanding, averaging 11.7 hours a week. Tax preparation is not far behind, consuming 10.6 hours.

MEN VS. WOMEN

When we prepared the survey, we asked participants to identify their sex. We werent sure how we would use that information—in fact, we werent sure wed use it at all. But since the data were in the database, it took just a few keystrokes to run some comparisons. We found some curious results, which may be nothing more than a statistical anomaly but also may say something important about the differences between the way the two sexes work. At the very least, it could be nothing more than interesting cocktail conversation.

The first major difference we uncovered was that women CPAs appeared to favor the Microsoft Office Suite more than men: 86% vs. 78%. When we asked participants to register how many hours they spent on each application, more differences showed up. Why, we wondered, did men spend an average of 3.38 hours a week on time and billing functions while women spent only 2.03 hours? Women also spent fewer hours on taxes (9.19 vs. 11.06) and on word processing (8.62 vs. 9.05). One of the few areas where women toiled longer was spreadsheet applications (12.07 vs. 11.5). We report the full results in exhibit 17a.

OVERVIEW

How should a reader use this large collection of data? The temptation for some, as we said earlier about accounting software, is to see which products in each category are the leaders and then follow the crowd. For some products, there may be some wisdom in that decision—for example, word processing, spreadsheets, presentation graphics and databases are generic applications. It makes no difference whether the user is the chief financial officer of a Fortune 500 company or a sole practitioner. Both can use the same application with confidence: All those nonprofessional financial products work well, but each program is slightly different, and how well you like it depends on your personal biases and work style.

However, when it comes to professional financial software, such as accounting software and client write-up, the differences are more substantive: Following the crowd or a personal bias can take you off a cliff or at least put you in deep trouble. When deciding on those products, the CPA must answer affirmatively to two questions:

1. Does the software meet my personal need—do I like the way it works?
2. Does it meet my professional need—can it do the job for a particular client or my employer?

Therefore, we recommend readers use this information to open their minds, to see what opportunities exist, not to make a decision. We hope the data will inspire you to conduct more research into new applications.