I made a big splash with my NetSuite (NetLedger) PC Magazine cover story.
Here is the start of this 9 page PC Magazine cover story:
Florida accountant Mike Block CPA encountered one of the major shortcomings of desktop accounting software when he tried to manage the books of his customers, which were scattered throughout North America. Block believed the only efficient way to update customer ledgers was to work on the exact same records, using the same software as his clients—an impossible task with a traditional PC-bound accounting program. So Block turned to NetLedger, an online accounting service, to do his bookkeeping. Soon he discovered several other benefits of letting the Net wear the green eyeshade.
“There’s no file trading—it’s always there,” says Block. “It’s the Holy Grail in terms of economy and accuracy.” And Block isn’t alone; many business owners and accountants are storing and processing invoices, bills, and other general ledger items.
Besides opening access to data from multiple locations, online accounting has other advantages, such as freeing your company from maintaining and backing up your data. And Web-based services can potentially connect to one another more easily than PC-based products, letting you link your accounting solution to an electronic storefront, online bank, or payroll service online.
“There’re huge natural forces that are driving this integration over the Internet,” says Todd F. Boyle, a Web ledger consultant and manager of General Ledger Dialtone, a clearinghouse of information about online accounting services. According to Boyle, there are compelling efficiencies created by exchanging data and money electronically between companies. “When I send a purchase order, I want it to show up as a sales order in the other guy’s software. There are millions of people wasting time on this utterly mechanical payment settlement stuff.”
The increased popularity of online accounting services is just a part of an industry drive toward Web-based business applications. According to market research firm Gartner Dataquest, the application service provider (ASP) market is expected to grow from $3.6 billion this year to more than $23.5 billion by 2004.
The advantages of ASPs include lower costs for implementing, maintaining, and providing support for a service. Block chose NetLedger, because it imports and exports QuickBooks files. He says NetLedger dramatically cut his back-office overhead. “My annual cost-per-client fell from about $200 to about $60, and that’s including DSL service, ISP service, and a router shared by four people.”
This PC Magazine cover story gave NetSuite four stars. Peachtree online got three stars and QuickBooks online got two stars. After long meetings, with top NetSuite execs, we knew they were missing many features. However, NetSuite was very promising at $5 per month, as it was rapidly adding features. My progress soon let Business Week report:
How It Works
Here’s a step-by-step on how to use an ASP. NetLedger.com customer Michael Block, owner of Block Tax, a bookkeeping and tax-preparation service, started using the accounting service last May.
Block finds NetLedger Web site and orders a $9.95-per-month online accounting service. Seventeen of Block’s clients also have signed up–each paying their own monthly fee.
MOVE RECORDS ONLINE
Block logs onto the NetLedger site, points his cursor to an Intuit QuickBooks file on his computer, and the NetLedger site automatically uploads the bookkeeping data. Block receives an e-mail alert when it’s done.
Block signs on to the site with a password. He works on his accounts or those of his clients. (Clients can limit his access.) He and a client look at the same Web page and talk about it over the phone. Calculating tools assure accuracy. The data is backed up.
NetLedger does not allow for online filing of tax returns. So Block prints out bookkeeping data and manually enters it into a tax-preparation program from another company. NetLedger hopes to fix this problem by next year.
The new $9.95 monthly price came far too quickly, as NetLedger was still missing many features. We also soon saw several outages, mainly due to adding new features without beta testing. As the only two-time winner of the top QuickBooks beta test prize, I knew how risky it was to skip beta tests.
NetSuite was, however, still a bargain. I dropped it when its price rose to $100 a month, in little more than a year. It was not simply the new price, but not knowing what would come next.
We later saw what happened. A new client dropped NetSuite after paying about $250 a month. There was no contract termination provision, so NetSuite wanted payments for a year after termination. Meanwhile, the speed and flexibility of QuickBooks, compared to NetSuite, delighted the client.
NetSuite has a weird history: privately funded by the founder of Oracle, staffed by a succession of Oracle transfers, merged into Oracle and spun off into a separate company that went public. However, as a CPA and former heavy stock trader, I would certainly say no NetSuite investment. Their stock only now near the highs it reached initially, despite chronic losses. This may relate to some recent big client signings, as I cannot justify share prices (about 10 times gross sales per share).
That gives me two reasons to keep saying no NetSuite.