Accounting software is a critical tool for any business. But the rapid pace of change can make it tough to stay current. While it may be your job to make sure your company is taking advantage of the opportunities software technology presents, we figured you wouldn’t mind if we pitched in to help identify the five most impactful trends we’ve witnessed redefining the accounting software landscape.

Long-term developments in accounting software

1 Cloud Software

The emergence of cloud technology is a hot trend in accounting software that doesn’t show any sign of slowing down. In a recent study lead by venture capital firm North Bridge, 75% of C-level executives and IT decision makers reported that their companies were using at least one cloud based business application.

Why the attraction to the cloud? A cloud approach is a compelling choice for companies looking to outsource hardware and software support in order to normalize costs and concentrate on core competencies. Natively web-based options also allow an easy extension of system access to remote users and branch offices. The ability to directly access systems with just a web-browser is enabling another core benefit–the ability to utilize business data and systems anytime and anywhere. Finally, the subscription pricing model is proving to be appealing to companies looking to spread software costs out over time and avoid larger upfront investments.

2 Comprehensive Functionality

If you’ve spent any time looking at current accounting software systems, you’ve likely noticed that they typically include many modules and applications that stretch the traditional definition of “accounting software.” Accounting software packages are now just as likely to include functionality to support the supply chain, manufacturing, HR, marketing and sales, and other functional business areas.

Comprehensive accounting software packages (often referred to as ERP software) offer a few major benefits. The breadth of functionality means less need to support complicated inter-module integrations, which can greatly help to reduce support costs. Single systems also provide a consistent data-set, so that changes in one area of a system are reflected in real-time in others. Along with less duplication of work, a single data record can help improve transparency and remove interdepartmental bottlenecks.

3 3rd Party Application Integration

While comprehensive accounting software (ERP) packages are becoming increasingly common, another trend to be aware of is the improvement in integration options for companies looking to leverage existing systems. There is a burgeoning community of software developers specializing in 3rd party add-on software designed to work with the more common base accounting software platforms.

Core accounting system developers are doing their part too, by becoming increasingly accommodating in terms of helping 3rd party developers extend core system functionality. Significantly, developers of base platform systems are putting more work than ever into developing, documenting, and publicizing application programming interfaces (APIs) that allow 3rd party providers to pass data to and from accounting software. The trend towards increased API availability is only anticipated to continue. In fact, Brian Koles, a software industry expert and the Head of Business Development at ChallengePost, provocatively titled a recent article on ReadWrite.com, “A Company Without APIs is Like a Computer Without Internet.”

4 Remote Implementation Support

Accounting software systems are complex by nature. Because of this complexity, they generally require outside assistance from technology specialists to properly install, configure, and support. Access to remote implementation support services is greatly expanding the amount of choice buyers have when it comes to selecting a company to assist with software set up.

Widespread broadband access and the availability of virtual network computing (VNC) technologies (such as GoToMyPC from Citrix or terminal services Remote Desktop Connection from Microsoft) has changed the game in terms of where software support companies can be geographically located. The practical upside of improved remote support means that many companies–who once had been restricted to only considering software options which were supported by local companies-- have a much larger base of options to consider.

5 Analytics

The desire to use data to guide strategic decision-making is not new. The pronounced emphasis on what’s come to be known as business intelligence tools in accounting software is a new development though. It turns out the effect of business analytics tools on corporate performance is measurable, as well. A recent study by the Aberdeen Group (free registration required) identified that of the SMBs they surveyed, the top performing companies were almost twice as likely as the bottom performers to integrate business analytics tools with their ERP.

Companies today are looking to go beyond analyzing assets and liabilities and revenues and expenses when considering financial performance. The ability to assess more granular key performance indicators is a demand the software industry is working hard to meet. This trend is visible in the increased number of management dashboard type modules being offered and the variety of graphical options for displaying data. Similarly, there has been a widespread focus among software developers to simplify report creation, so decision makers are better equipped to turn data into actionable business information.