Accountancy · Ch 8 — Computerised Accounting System
Types of Accounting Software
Types of Accounting Software
Not every business needs, or can afford, the same kind of accounting software. Depending on the size of the business, the volume and nature of its transactions, and its budget, accounting software is generally classified into three broad types.
1. Ready-to-use (off-the-shelf) software
This is accounting software developed generally, for a wide range of businesses, and sold as a standard package without any changes made for an individual buyer. It is designed for organisations that carry out a common, fairly standard range of transactions.
2. Customised software
This is software whose basic structure/source is a general package, but which is then modified to suit the specific needs of a particular business — for example, adding a special report format, or a particular voucher type the standard package does not offer, on top of an existing base package.
3. Tailor-made (tailored) software
This is software developed specifically, from the ground up, to meet the exact requirements of one particular organisation, taking into account its own specific accounting and reporting needs; it is not an adaptation of an existing general package but a fresh package built around one business's own processes.
The table below compares the three types on the practical factors a business actually weighs when choosing between them.
| Factor | Ready-to-use | Customised | Tailored |
|---|---|---|---|
| Cost | Low, since the same package is sold to many buyers | Moderate — base package cost plus the cost of customisation | High, since it is developed exclusively for one organisation |
| Suitability | Suitable for small and medium businesses with fairly standard, common accounting needs | Suitable for medium and growing businesses whose needs are mostly standard but have a few special requirements | Suitable for large organisations with unique, complex, or specialised accounting/reporting requirements |
| Training needs | Relatively easy to learn, since manuals and training material are widely available for a standard package | Requires training both on the base package and on the customised additions | Requires dedicated, often ongoing, training since the software and its logic are unique to the organisation |
| Flexibility to change business needs | Limited — the buyer must generally work within what the standard package offers | Moderate — some further modification is usually possible, subject to the base package's own limits | High — the software can, in principle, be altered or extended to match any change in the organisation's own requirements |
| Time to implement | Quick — can be installed and used almost immediately | Takes longer, since customisation must first be designed, built and tested | Takes the longest, since the entire software is built from scratch |
General-purpose accounting software developed for a wide range of businesses with common, standard accounting needs, and sold as a standard package without modifica …
Accounting software based on an existing general package that has been modified/adapted to meet certain specific additional requirements …
Accounting software developed from the ground up exclusively for one organisation, built around that organisation's own specific accounting and reporting requirements rather than adapted …