FSN: Microsoft Office Accounting illustrates the way forward for integration

Microsoft Office Accounting illustrates the way forward for integration

21st January 2008
Integration should be at the heart of any systems architecture. These days, when information interchange is generally so much easier than it was 10 years ago, the notion that data should be duplicated between systems is increasingly unacceptable. Hence considerable effort has been expended by ERP and performance management vendors to interleave their applications so that both metadata (structural information, such as cost centres, divisions and charts of accounts) and transactional information can be shared across applications.

Broadly speaking such efforts have paid off and what might be termed “intra-application” integration can, with few exceptions be taken for granted. This means that in an ERP environment, inventory items can be accessed from, sales order processing, invoicing, purchase order processing, bill of materials and nominal ledger with ease. Similarly in a performance management setting budgets can be surfaced in financial reporting, forecasting, dashboards, scorecards and reports.

But what about “inter-application” integration, i.e. the link between these self contained application suites and the outside world? For the majority of organisations their core business processes often appear to operate in two parallel universes made up of transaction processing on the one hand and informal or unstructured communications through popular office applications on the other.

For the eighty percent of transactions that are processed without a hitch the lack of connectivity between the ‘transaction world' (or performance management) and the ‘office world' is not an issue. But when things go wrong or develop in unexpected way then most organisations revert to informal communications, for example, email exchanges. This is when the cracks start to appear.

For most organisations an errant transaction, a disputed order, a late delivery or damaged goods translates into walking the corridors between departments, endless telephone calls, photocopied documents and stick-it notes. Similarly, errors in financial statements or budgets have the same effect, often rendered more difficult by business units operating in different time zones.

The impact of these situations can be dramatic in terms of overall organisational efficiency, productivity and unit transaction costs. Some estimate that an erroneous or irregular transaction can increase the cost of a transaction by eighty percent. In a high or moderately high volume environment this is a cause for great concern. But the lack of integration can also prevent organisations scaling up when volumes grow, forcing them to add headcount to paper over the cracks in underlying process inefficiencies.

Like it or not the de facto standard for office communications is the popular Microsoft Office suite of applications. When things go wrong most people leap to their email, schedule conference calls, compose spreadsheets or write letters. But none of this important activity is integrated with the underlying accounting systems and casual users of business systems cannot get access to the information they need directly from within their office systems.

But this is set to change, as illustrated by the recent launch of, for example, Microsoft Office Accounting – Microsoft's first in-house developed accounting suite. This is built from the ground up to tightly integrate the transaction and office word and although targeted at the SME (small and medium enterprise) end of the market, its design has lessons well beyond this segment.

Where Microsoft Office Accounting breaks new territory is in the integration between Microsoft Outlook and the core accounting suite. For example, the customer and prospects database is common to both applications so that a prospect added to Outlook (Business Contact Manager) can be ‘converted' to a customer at a later date. Furthermore, a user of Outlook can peer into the accounting system to raise sales quotes, orders and invoices without ever being a regular user.

Documents flow seamlessly between email and the accounts system so that images of sales invoices can be instantly embedded in the body of an email or attached as a PDF or Word document. Integration has also been taken a stage further with PayPal and BACS tightly bound into the applications. For example a PayPal ‘button' can be inserted into sales invoices enabling customers (mainly small businesses and consumers) to pay for goods conveniently and quickly.

Tight integration such as this enables users to be far more productive, overcoming many of the limitations of traditional accounting software which confine users to application ‘silos' , preventing them from working across organisational boundaries. A process oriented view, supported by tight Office integration removes these impediments.

The same is true of performance management applications. For example, binding group reporting applications into Microsoft PowerPoint, as Hyperion (now Oracle) has done enables analyst and board presentations to be generated seamlessly without the risks inherent in transcribing complex financial results from one application to another.

As businesses seek to maximise their investment in technology, the ability to closely couple their preferred Office, accounting and performance management applications will become increasingly more compelling. For those vendors plying traditional solutions rooted in cumbersome practices that do not interlink essential office systems with business applications the writing is on the wall. Integration is vital to productivity and an insular approach is as dead as the dinosaurs.

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