Accounting Software Selection and User Satisfaction
Relevant Factors for Decision Makers

By Fara Elikai, Daniel M. Ivancevich, and Susan H. Ivancevich

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The purpose of the study below was to provide insight into which factors and features are most important to users in selecting, retaining, or changing accounting software packages. The survey also asked respondents to identify the most satisfying features and those that most need improvement. The authors also compared the software ratings of large versus small firms to identify key differences between the two groups.

The Study

The authors contacted members of the Institute of Management Accountants (IMA) located in the southeastern United States to identify interested participants. Detailed questionnaires were sent out and generally were followed up with a phone interview. In total, 57 individuals participated. Based on the diversity of demographic characteristics of respondents (i.e., industry, size, and geographic location), the authors have no reason to believe the sample is not representative of nonrespondents and the population as a whole. Demographic information for participants is shown in Exhibit 1.

Exhibit 1 shows that controllers comprise the largest category of participants, followed by managers, accountants, and financial directors. The average age of participants was about 44, and they had about 20 years of experience overall and about five years of experience in their present job. All but one had a bachelor’s or master’s degree.

The largest category of participants came from the manufacturing industry; remaining participants were scattered fairly evenly among other industries. Roughly 40% of the participants’ companies were located only in the United States, while approximately 60% had international operations as well. Only one company had no presence in the United States. The size of the companies (based on sales) varied from less than $10 million to more than $1 billion. The number of accounting/finance employees in the surveyed companies varied from less than 10 to more than 200, with most companies employing less than 50 people in accounting/finance.

Findings

Participants were asked which software packages they currently use. Exhibit 2 shows that a total of 63 different packages were cited and no one package was dominant. Because participants were asked to fill out the survey for each type of software used, 97 responses were tabulated. QuickBooks, SAP, PeopleSoft, and Oracle were cited most frequently, followed by ADP, Great Plains, JD Edwards, and Peachtree. The remaining 50 packages were used by two or fewer respondents.

Exhibit 2 also shows that the various accounting packages used by each company were fully integrated in 65% of the cases. The most common operating system platform was Windows (84%), followed by Unix (9%).

Major Category Rankings

Participants were then asked to rank the importance of major categories from 1 to 6 (1 being “most important” and 6 being “least important”) to indicate the broad factors they considered in selecting a primary accounting software package. As shown in Exhibit 3, functionality/capability (which includes flexibility/customization) was rated as the most important category by a large margin. Cost was rated as next most important, followed by compatibility with other software. Contrary to the findings of prior research (J. Carlton Collins, “How to Select the Right Accounting Software,” Journal of Accountancy, August 1999), vendor stability/viability and vendor support were rated less important to users. While the authors considered user friendliness part of functionality/capability, some participants listed it separately under the “other” category.

Rankings of Individual Features Within Major Categories

Participants were next asked to rank detailed features within each category (as chosen through review of the literature and consultation with IT experts). Exhibit 4 presents the detailed features by category, in the order they were ranked above.

Exhibit 4 shows that flexibility (customization) is rated as most important within the functionality/capability category by a large margin. Companies seem very interested in ensuring that any new software selected could be adapted for effective use in their individual business. This finding is not surprising given the critical role that accounting software typically plays in businesses today. Real-time processing, user friendliness, security, and the ability to upgrade are also rated as very important features. Interestingly, multicompany features, web access capabilities, international capabilities, and graphics are rated as relatively unimportant. This finding may be a function of the demographics of our sample, as small firms are less likely to value such capabilities. (Comparisons by firm size are provided later.)

Overall, the cost category was rated as second most important in accounting software selection. Exhibit 4 shows that the cost of the initial purchase and annual operating cost were considered more important than installation and training costs. Installation and training costs may have been rated lower because of the type of software packages prevalent in this survey; that is, software that accountants may already be proficient with.

Within the compatibility category, ranked third in overall importance, compatibility with the operating system was rated as more important than compatibility with hardware or with other software. This finding is not surprising, given that incompatibility with the operating system could render the software essentially useless. The authors have anecdotal evidence of many companies accepting some incompatibility with other types of software as long as the software met a strategic need. For example, it is not uncommon for certain data to be compiled using software that may not interface with the general ledger package. At a firm for which one of the authors worked, the company adopted point-of-sale (POS) software that was incompatible with the general ledger software. The company liked many of the features and controls in the POS software for use in its food-and-beverage outlets, so it was purchased anyway. To record sales from these outlets, the company manually compiled sales information from register tapes into an Excel spreadsheet and then manually recorded the summarized entry into the general ledger system.

The rest of Exhibit 4 shows that a vendor’s reputation is the most important factor with respect to evaluating vendor stability/viability, and technical vendor support is the most important factor with respect to evaluating vendor support, followed by user manuals and technical documentation. Interestingly, online help and warranties were not rated as important.

Satisfaction with Current Software

In addition to better understanding which factors and features are most important to users when deciding on software, the authors also wanted to identify which features of users’ current software they were most satisfied with. To assess user satisfaction, participants were asked to rank the top five features of their current software.

As shown in Exhibit 5, flexibility was rated as the top feature for user satisfaction. Real-time processing ranked second, followed closely by purchase price, annual operating costs and multibusiness unit functionality. Interestingly, all five of these items could be found in the top two categories of important factors in software selection as shown in Exhibit 3. Similarly, four of the top five items (flexibility, real-time processing within the functionality/ capability category; purchase price and annual operating costs within the cost category) were rated as the two most important features within their category (as shown in Exhibit 4). These results show that companies tend to be satisfied with the features most important to them.

The survey then asked users to identify the five features they would most like to see improved in their current accounting software package. Exhibit 5 shows the most commonly identified area for improvement was report-writing functions, followed by flexibility, annual operating cost, user manuals, and compatibility with other software. It is interesting that both flexibility and annual operating costs were among the top five features for both satisfaction and needing improvement. On the other hand, report writing, user manuals, and compatibility with other software were not considered as important, but still ranked high in terms of needing improvement. It is possible that these findings may be related to the lack of emphasis on training, which in turn may lead to lack of productivity or knowledge related to the capabilities of the software.

Software Retention and Change

The survey also asked about users’ plans to change software. Of the 57 respondents, 18 (32%) indicated that they had recently made or planned to make software changes. These respondents were asked to rank the top five most important features in their decision to change software. As shown in Exhibit 5, flexibility (customization) was rated as most important, followed closely by transaction volume, compatibility with other software, report-writing functions, and purchase price. Interestingly, report-writing functions and flexibility were also rated as the top two items with which users were least satisfied. The items ranked highly in terms of dissatisfaction are correlated to items ranked as important when changing software. These results also support a finding that functionality/
capability is the most important overall category for software selection, given that four of the top five most important features when changing software come from this category (only purchase price is unrelated). Last, the survey investigated why companies do not change software. For those companies that had not changed software recently and did not intend to change in the near future, the survey asked their reasons for not changing. As Exhibit 5 shows, the primary reasons for not changing software are the costs necessary and the disruption and hassle to the business. The next-most-important reason was that the users were satisfied with their current software. Many users also thought that the effort necessary to convert data was not worth making a change. Finally, many users thought that better products were not available. Overall, it appears that potentially negative effects of changing software weighed heavily in the decision not to change software.

Analysis of Firm Size

The authors partitioned the survey data based upon company size. The number of finance and accounting personnel employed by the company was used as a proxy for size. The authors chose this variable because they believe that it is a better proxy for size and complexity than total sales, because more accounting and finance personnel would be needed as the complexity of engagements increases. The survey sample was partitioned into two groups: companies with less than 10 accounting/finance employees (27 respondents) and companies with more than 10 accounting/finance employees (28; two companies did not provide data). The differences between these two groups are presented in Exhibits 6 and 7.

Exhibit 6 shows the key differences found in the mean ratings of factors and features by large versus small companies. As shown in the table, the only overall category where large and small firms differ in their importance rating is vendor stability. Large businesses rate this category as more important than small ones do, possibly due to the higher complexity of operations typically associated with larger companies. With respect to specific features, several differences stand out. The most significant relate to international capabilities, user friendliness, and technical documentation. Large companies rated these features as more important than did small ones. Similarly, large businesses rated transaction complexity, multibusiness unit capabilities, and multicompany capabilities higher than did small businesses. Many of these findings are not surprising, given the tendency of larger entities to have more international operations, more business units, and more affiliated companies than do small ones. Similarly, technical documentation may be more important in settings where complex features of the software are being used.
Alternatively, small businesses rated user friendliness, graphics capabilities, real-time processing, and report writing as significantly less important than did large businesses. It is possible that larger companies have the resources to purchase software with enhanced capabilities in these areas, whereas smaller companies may be purchasing software with more-limited capabilities.

As a final comparison between large and small companies, the authors evaluated the two groups’ top five areas of satisfaction, areas needing improvement, and reasons for not changing software. The results of this analysis are shown in Exhibit 7. In terms of the top five areas of satisfaction, the findings correlate well with the earlier results. Key similarities between the two groups include satisfaction with flexibility and with operating costs. Differences exist with respect to several areas, however. Larger companies identify real-time processing, and multibusiness unit and multicompany capabilities as key areas of satisfaction, which may be related to their higher degree of business complexity and software capabilities. On the other hand, the inclusion of user friendliness, purchase price, and technical vendor support in the list of features with the highest satisfaction may be an indication of less business complexity and less sophisticated software on the part of smaller companies.

In terms of areas needing improvement, Exhibit 7 shows that large firms identify annual operating costs, user manuals, flexibility (customization), installation cost, user friendliness, and technical vendor support as the features to focus on. Small companies cite report writing, flexibility (customization), user manuals, annual operating costs, and security as their key features needing improvement. While there are differences in rank orders, the only differences between the two groups are that large firms mention user friendliness and technical vendor support, while small companies include report writing and security. Once again, these differences may be driven by differences in business complexity and software capabilities between the two groups.

Finally, Exhibit 7 shows that both groups identify the costs, hassles, and data-conversion efforts associated with changing software as key barriers to deciding to change their software package. Both groups are also highly satisfied with their current software. The only difference in the top five reasons for retaining software (aside from small differences in the number 1 and 2 rankings) is that large companies also identify integration with other application systems as a key reason, while small companies note that lack of availability of better products can be a reason. In sum, the reasons for retaining current software packages are quite similar between large and small companies.

Analysis

This survey examined the factors and features important in accounting software selection, satisfaction, and change. In evaluating the data, several key findings stand out. First, the functionality/capability of software is the most important factor category to users in selecting software, followed by cost and compatibility. Within the functionality/capability category, the flexibility (customization) feature was rated as most important by participants by a wide margin, while multicompany features, web access capabilities, international capabilities, and graphics were rated as relatively unimportant.

Flexibility (customization) also stood out as a key feature of user satisfaction, followed by real-time processing and price. With respect to features in need of improvement, users were least satisfied with report writing, flexibility, and annual operating costs.

For why companies change their software, once again flexibility (customization) rated as the most important feature, followed by transaction processing capabilities. Not surprisingly, the primary reason companies do not change software is because they are happy with their existing software. Nevertheless, the costs, disruption, and effort required to change are also quite important.

Key differences were also noted with respect to large versus small companies’ ratings of factors and features. Many of the items for which there were significant differences seemed to be driven by size, complexity of operations, or capabilities of software. Interestingly, the top five reasons for not changing software were fairly similar between the two groups.

Vendor support stands out as being rated as relatively unimportant to users. It appears users are much more concerned with how the software fits their business needs than with the reputation and support of the vendor. In other words, users appear to be attracted to a great product that fully meets their needs, more so than looking to a particular vendor in hopes of finding that its product comes close to meeting their needs.

Fara Elikai, PhD, is an associate professor, Daniel M. Ivancevich, PhD, is a professor, and Susan H. Ivancevich, PhD, is an associate professor, all at the University of North Carolina Wilmington.

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