Companies reassess accounting apps

In light of the accounting problems that have plagued American corporations over the past year, there has been increased attention paid to financial applications and the role IT plays in their implementation and use.

Many companies are considering upgrading their accounting software in an effort to be more proactive in spotting potential financial problems. But there is uncertainty whether upgrades and new technology are the solution and what role IT has to play in these decisions.

One company taking the bull by the horns is Zebra Technologies Corp., a Vernon Hills, Ill.-based maker of printing products.

It has gone live with an expanded system, which is based on software developed by Hyperion Solutions Corp. Zebra’s audit committee wants the reporting system to do more than it could before, said Todd Naughton, vice-president and controller at the company. Users will now be able to drill down into financial data at more finite levels and manipulate the information in more complex ways, he added.

“It’s absolutely a big deal,” Naughton said. “We’re making sure that if there are issues, we find them internally before anything goes out to anybody.”

George Corcoran, a systems administrator with ALS Environmental in Vancouver, deals strictly with the implementation side of a solution. Though he said he will certainly voice his opinion about the technological aspect of new accounting software, the ultimate decision as to what technology to buy is usually done by the likes of a CFO. “It really isn’t decided on an IT basis,” he said.

“They don’t usually go to [the top IT] guy and say, ‘what should we get?’ It is usually the accounting department that ends up saying ‘this is what we are going to use,'” he said. His job is to make the technology work with the systems already in place.

But one analyst says technology is likely not the answer; rather, more attention needs to be placed on corporate accounting policies.

“I think the applications on the market today are certainly robust enough to handle the requirements that companies have to issue financial statements,” said Paul Hamerman, research director with Giga Information Group in Cambridge, Mass.

“I think that the accounting issues that we’ve read about in the paper are more in terms of (a lack of) execution of the proper accounting practices.”

But IT can help. “I think that [IT] can play a role in helping with the dissemination of the financial data…to the financial community,” he said.

Still vendors are likely to use the recent accounting scandals as a way to increase sales and upgrades.

Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Daly City, Calif., said the problems at WorldCom, Enron and other companies will likely lead to “a whole new level of reporting that may not have been done before.” To make that possible, he added, many companies will have to install data analysis tools that can reconcile their sales reports with operational data, such as inventory transactions.

The current focus on more accurate financial reporting could create new sales opportunities for SAP and other business applications vendors, as well as for developers of data analysis software, such as Cognos Inc., SAS Institute Inc., Informatica Corp., and Hyperion, Greenbaum said.

– with files from IDG News Service