Business Intelligence Capabilities Sage MAS 90 ERP and QuickBooks Enterprise Solutions

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1 A Comparison Of Business Intelligence Capabilities Sage MAS 90 ERP and QuickBooks Enterprise Solutions February 1, 2008 Charles C. Chewning, Jr. Solutions 1256 Providence Knoll Drive Richmond, VA (804)

2 What s Right for Your Firm Sage MAS 90 ERP or QuickBooks Enterprise Solutions? Executive Summary As companies grow, their organizational structure and decision-making processes may grow in complexity beyond managements ability to run that business by the seat of their pants. Companies in this situation need systems that will collect information that offer true business intelligence in order to make complex decisions. Given this, one of the key factors that firms that are outgrowing the capabilities of their current entry level accounting system must consider, is whether the products they are investigating will be able to meet these complex business-intelligence requirements. We have examined QuickBooks Enterprise Solutions (QuickBooks ES) and Sage MAS 90 ERP (Sage MAS 90) with respect to their business intelligence capabilities in the following categories and have come to the following conclusions: Chart of Accounts QuickBooks ES does not support a segmented chart of accounts structure in the traditional sense one would expect. However, the system does support five levels of Classes that are user defined and available at the transaction level. These Classes give users the ability to segment their business but only with respect to revenues and expenses. There is no departmentalized Balance Sheet. Sage MAS 90 supports a 12 segment, 32 character chart of accounts structure. Sage MAS 90 also supports user-defined fields at the transaction level that further extend the chart of accounts and therefore increases departmentalized reporting capabilities. Closing Entries Sage MAS 90 supports a 13th period into which year-end adjustments can be posted without distorting the results of the 12th actual period results. QuickBooks ES does not support a 13th or adjusting period although it would be possible to create financial reports that do not include these transactions. Financial Reporting Tools Both products support a financial reporting tool. While the Financial Statement Designer of QuickBooks ES is very easy to use, it lacks the power and versatility of the FRx Desktop utilized by Sage MAS 90. FRx also supports consolidations of multiple companies while QuickBooks ES supports consolidations only through Excel. Crystal Reports could be used to produce financial statements, but it requires a great deal of work since it has no knowledge of the Chart of Accounts structure. User Defined Fields Both Sage MAS 90 and QuickBooks ES support user defined fields for all master files (customers, vendors, items, etc.). Sage MAS 90 supports an unlimited number of fields while QuickBooks ES supports 15 for customers and vendors and only 5 for items. These user-defined fields are not table driven in QuickBooks ES. They are simple text boxes and therefore there is no logical error checking. This makes subsequent reporting based on these user-defined fields potentially less accurate. As indicated earlier, Sage MAS 90 also supports user-defined fields at the transaction level which further extends its data analysis capabilities. Graphical Data Presentation QuickBooks ES supports the graphical presentation of data through Excel as well as the recently released Intuit Business Connect, a web-based application. Sage MAS 90 also supports Excel graphical reporting as well as the Business Insights Dashboard, a native graphical reporting tool. In addition, Sage MAS 90 supports through FRx Desktop graphical reporting of financial (general ledger) data. User Defined Reports and Ad-Hoc Reporting Both Sage MAS 90 and QuickBooks ES support report designers and drill down from financial statements to individual transactions. Sage MAS 90 also supports the Business Insights Reporter and Business Insights Explorer that further extend a user s ability to analyze data, drill down, or drill around all within the business management system itself, thus presenting current information and correct information. QuickBooks ES does give users the ability to extract and analyze data in Excel as does Sage MAS 90. As practiced by many firms, the Business Insights Explorer can serve as the main workspace for many users. In addition to the Explorer and Reporter tools, users can create a user-defined menu that includes all of their most frequently accessed accounting functions. Exception Management Sage MAS 90 supports user-defined alerts that track key data values, including calculated values. If a value falls outside the defined acceptable range, the system will automatically notify a user. This enables users to monitor critical business conditions with Sage MAS 90 without having to actually update and review reports relating to those critical conditions. QuickBooks ES does not support Exception Management except perhaps via Excel reports, which would be difficult to create.

3 Introduction How do you want to run your company? Maybe we should rephrase the question. How should you run your company? Having answered this critical question, you must then answer an equally critical question. How should your business management system support the process by which you have chosen to run your business? Depending on your point of view, there are many different ways to define a small business. A relatively small number of employees Revenue less than some defined upper limit A relatively small number of customers A relatively small number of products and services The key consideration in this, or any definition of a small business, is the notion of complexity and control. At its core, a small business supports relatively straightforward business processes and few people hold decision-making responsibilities; in many cases, it is just a single person who also may be the owner of the firm. Simple Business Models / Simple Accounting Systems Assuming the description above is viable, how can we most effectively describe a typical small business? Given that the business processes are relatively straightforward (do the work, pay employees, pay bills and collect customer payments), the business itself is transparent to the key decision maker. This person can feel the pulse of the company on a daily basis simply because he is intimately involved in each of the critical areas of the business: sales first and foremost certainly, but also pricing and the effective (customer satisfaction being the goal) and efficient (profitability being the goal) delivery of products and services. Notice that so far there has been no mention of the business management system. That s because the business doesn t require professional management other than the key decision maker who knows what s going on every day. All you need is a straightforward accounting system that pays bills and employees, prints invoices and collects payments, and generates financial statements for the firm s tax accountants; and allows for a glance at the financial statements by the key decision maker. The key decision maker in most instances needs nothing from the accounting system except perhaps the firm s cash-in-bank value to confirm what he already knows. His direct involvement in every critical area of the business allows him to see into the future, which will be reflected by the accounting system next month, next quarter, or even next year. A small business, at least the one defined here, will succeed or fail based on the efforts of the key decision maker, his knowledge, experience, leadership and yes, even his personality. Business Complexity Requires Greater Sophistication Now grow the business. Add more customers. Add more products and services. Perhaps move into new markets. Maybe even add a new location. As a company grows, the complexity of that business tends to follow a similar path. As the business becomes more complex, it reduces the ability of a single decision-maker to track and, therefore, manage the critical aspects of that business. The key decision maker can no longer cope with this added complexity and must rely on intelligence gathered from business operations to assist in the decision-making process. At some point thereafter, it is no longer possible for a single person to manage all aspects of the business regardless of how much intelligence the systems generate. Complexity will force firms to adopt a more diffuse decision making hierarchy. The key decision maker will remain at the pinnacle in the decision tree, but other people will have to concentrate on specific areas of the business. While these people may be able to manage their individual areas of responsibility using a more traditional seat-of-the-pants managerial style and decision-making process, all managers must share information. Now the key decision-maker (or makers) must rely on business intelligence in lieu of hands-on knowledge. The real question now is how to generate critical business intelligence that will support the decision-making process and replace what was essentially a manual or visual business-intelligence gathering process. While there may be only moderate changes to the actual transactionprocessing system (paying bills, paying employees, etc.), the information needs of the business may require substantial changes in the business management system. The decision-support system may necessitate a change in business management systems.

4 Business Intelligence: Key Elements We have been using the term Business Intelligence to identify any information stored in the Business Management System that will assist in the decision making process. Let s now select several specific examples and compare Sage MAS 90 ERP (Sage MAS 90) against Intuit s QuickBooks Enterprise Solutions (QuickBooks ES). Chart of Accounts The driving force behind most business-intelligence gathering activities is the Chart of Accounts. Each segment in any Chart of Accounts allows a firm to accumulate information (in this case revenue and related expenses) regarding a specific business activity. Sage MAS 90 supports up to 12 segments (with 32 characters) while QuickBooks ES supports a single segment of 13 characters. QuickBooks ES supplements this single natural account with 5 Classes, each of which can be used to define specific business units such as regions, product lines, etc. Many people refer to this as granularity. Once a segment or Class (in the case of QuickBooks ES) has been defined, users can then easily access a function by which they can define the specific entities within each segment. Sage MAS 90 also supports table driven user-defined fields at the transaction level (either header record or line item). These transaction analysis codes allow users to increase the depth to which information can be analyzed (granularity) without having to make the chart of accounts unnecessarily complex. As an example, users could track trade show performance (budget, actual cost, and revenue generated) using transaction analysis codes. Rather than having to create separate accounts in the chart of accounts (and therefore make the chart of accounts over the long-term very complex), users could track this transitory information using transaction analysis codes. QuickBooks ES does not support transaction analysis codes, and with only 5 Class codes, it becomes considerably more difficult to departmentalize financial results. In addition, the Classes within QuickBooks ES relate only to revenues and expenses, not Balance Sheet values. If you need to create departmentalized Balance Sheets, you cannot do so in QuickBooks ES. Closing Entries Although this may not seem to be that important, Sage MAS 90 supports 13 periods while QuickBooks ES supports 12. You can use this 13th period can to record year end journal entry adjustments that would otherwise distort the financial statements for the 12th period. If you want to use accurate data that reflects current operations, in this case the 12th period, year-end journal entries and other transactions not relating directly to the 12th period should not be included. Financial Reporting Tools There are really two types of reporting: 1) financial reporting that uses data in the general ledger; and 2) transaction reporting that analyzes data from various sub modules such as accounts receivable and accounts payable, including the analysis of master file related data such as customers and vendors. QuickBooks ES uses the Financial Statement Designer while Sage MAS 90 uses FRx Desktop. Both products do what they are supposed to do. The Financial Statement Designer in QuickBooks ES is very easy to use while FRx Desktop does require somewhat more training given its power and flexibility. Once users create a financial statement within the Financial Statement Designer, they can modify it and create new reports using some of the elements of the saved report. Users also can drill down from a displayed report to the source document (revenue invoice or purchase invoice). Data contained in that same report can be exported to Excel for further analysis or graphical presentation. The Financial Statement Designer offers users one significant challenge, though. While it is possible to create a trend report (e.g. a 12 column income statement for each of the last 12 months), it is not possible to create a trend report segregated by Class code. You could create a departmentalized trend report, but you would have to first create within QuickBooks ES a separate trend report for each individual Class, export that data to Excel, and then combine the data into the required unified departmentalized trend report. This same report can be created within Sage MAS 90 using FRx Desktop. FRx Desktop is an industry standard financial reporting tool used by many business management systems. In addition to its standard functionality, FRx Desktop allows users to create graphical views of financial data or create tree structures for reporting. Using a special tool known as the Cleaver, you can restructure your cost centers or carve out new account segments not possible in your standard general ledger. FRx Desktop also allows users to export a report to Excel, drill down to analyze transaction data or even create links that imports data from external spreadsheets into a report.

5 User Defined Fields One of the easiest ways to increase the intelligence gathering power of any business management system is adding user defined fields. With its recently completed updates to the underlying architecture, Sage MAS 90 supports an unlimited number of user-defined fields for master records while QuickBooks ES supports 15 for customers and vendors and 5 user defined fields for items. The question then becomes one of scalability. Is the number of user-defined fields in QuickBooks ES sufficient? Sage MAS 90 also supports user-defined fields at the transaction level that are not tied to a master record. Users can add fields to the header record or to each line item, and this data is instantly available for analysis, particularly using the Business Insights Explorer. User-defined fields at the transaction level are particularly useful if you want to track temporary cost or revenue elements. The easiest way to explain this would be a trade show. While the natural cost account may be Marketing Expenses, a transaction analysis code could be created for a specific trade show to accumulate the costs for that event. You could even add a second cost element for the budget of that event. Finally, you could create an analysis code that tracked the revenue that was generated by that event. None of these costs or revenues would need to be created in the chart of accounts, keeping that structure relatively simple, but the details and results of the even could be tracked with relative ease. Graphical Data Presentation Business executives do not have the time, in most instances, to analyze detailed reports. Reports, even summary reports require time to analyze. A graphical presentation of the same financial data gives executives and managers the ability to see at a glance if specific areas of the business are on track. QuickBooks ES and Sage MAS 90 support the export of data to Excel where users can create charts and graphs. Sage MAS 90 also supports the Business Insights Dashboard, a native graphical reporting tool. Users can select up to 12 different standard graphical reports and include them on an individual s HTML-based start page as in the example below. An easy-to-use wizard creates the start page, allowing users to select which reports and graphs will be displayed, the order, and the level of detail that will be included. Users can access their dashboard from their desktop, via Microsoft Internet Explorer or Outlook. All information is refreshed automatically. Finally, users can drill down to a number of different reports from the Business Insights Dashboard. The Business Insights Dashboard gives busy executives and managers a graphical overview of key business intelligence.

6 Intuit, the publisher of QuickBooks ES, has just released Intuit Business Connect, a web-based graphical reporting tool. Currently users can access this tool from a web browser and view three different pages: a Sales dashboard, a Profitability Dashboard and a Profit and Loss What If Analysis. The Profit and Loss What If Analysis is an interactive tool that allows users to change sales growth, the cost of goods sold percentage and the overhead percentage to determine the effect on net income. While the tool does allow users to manipulate data and see the effect on income, the relationships are very simple and applicable only for companies that exclusively sell products. User Defined Reports and Ad-Hoc Reporting QuickBooks ES does not really support true ad-hoc queries except via Excel while Sage MAS 90 supports the Business Insights Reporter. Excel is a very powerful data analysis tool, but it has two significant issues that companies need to address: 1) updating reports and 2) integrity of reports. Excel reports, once created, must be updated on a periodic basis, requiring a time investment. But, the more significant issue is the integrity of the data once it is in Excel. If business conditions change constantly, how can you make sure you are using the most recent data extracts from your accounting system? Old data is almost as dangerous as bad data. A related issue is ensuring you are viewing reports that have value. You can create very powerful and detailed reports using Excel data, but it is important to check that the relationships make sense. The Business Insights Reporter is a wizard-driven report designer that is very easy to use. The Business Insights Explorer is a powerful tool that displays various views of structured data sets in a grid setting. Users can then drill down or around summary data to get at detailed transaction level information or related information. In addition, users can sort data by a very simple drag and relate routine. One of the most powerful features of the Business Insights Explorer is its ability to change the context of the query, possibly starting with a view of all customers, but then looking at sales orders or payments. QuickBooks ES does not support this even through Excel, where the primary view cannot (e.g. customers) be changed. The Business Insights Reporter uses commonly understood terminology to select the data elements that will be required. As the report is specified, users can also create calculated fields. Once the report has been created, the output destination can be specified, including Excel, PDF or XML. Sage MAS 90 also supports the Business Insights Explorer, a powerful tool to analyze structured data within the business management system. As an example, users can view customer data presented 11 different ways. The top window in the display lists customers and the columns give the user a quick view of each customer s receivables balance. The bottom window displays for the customer selected in the top window specific data such as contacts, open sales orders, payments, invoices, etc. Users can drill down on each line item displayed in the bottom window. The Business Insights Explorer displays a number of columns that relate to, as in this example, the customer. Simply by dragging the Division column to the top of window, users can then see data sorted by Division as in the example below. With Business Insights Explorer, users can see summary data sets and then drill down to get detailed information.

7 Users also can drag the Salesperson column to the top of the display and sort data by both Division and Salesperson. Since the display is now sorted, users can display subtotals for each element group. One of the most important points concerning a reporting tool built within an accounting system is that the data is, by default, current. No updates or exports are required. When you open a window in the Business insights Explorer, you are looking at the most recent data. If you want to export data, you can simply create the view you want and then export that data in multiple formats as in the example below. While the Business Insights Explorer is a powerful reporting and ad-hoc query tool set, in some cases it can become the primary access point into Sage MAS 90. The menu that accompanies the Business Insights Explorer also lists Tasks, which open an Explorer-type menu structure where users can list all of the most commonly accessed functions within Sage MAS 90. (Notice in the example above that the last option in the left-hand menu is Tasks.) Exception Management The underlying objective of any business intelligence activity is the identification of opportunities for growth or the identification of opportunities for improvement. Rather than waiting for financial reports at the end of any given financial period, users should be monitoring business information virtually as it happens. This proactive approach to business management allows users to take action more swiftly to maximize profits or minimize the effects of less than acceptable performance. Since time is any organization s most precious asset, managers and executives cannot spend the whole day analyzing operational reports. Managers need to monitor the underlying conditions that affect performance, making a graphical presentation of data import. Responsible employees can see very quickly in a graphical presentation of information whether the conditions being analyzed are falling within acceptable guidelines (assuming they are looking at the most important pieces of data). Even a graphical presentation takes time if you have to look at 20 different graphs. One way to monitor performance conditions is to use the system itself. In this case, we are talking about an alert system whereby users define the conditions they wish to monitor and have the system play the role of watchdog. If the actual value of the condition falls outside the performance parameters specified by the user, the system will alert the user via internal or some other form of exception management application that lists the exceptions. As an example, the system could monitor inventory turns or customer balances, or anything that can be measured (including calculated values). This approach allows users to spend more time working on improvements and less time analyzing reports. Sage MAS 90 does support an Business Alerts application while QuickBooks ES supports only a few such alerts through Excel driven reports. Business owners and primary decision makers get the most accurate, up-to-date information and reports with Business Insights Explorer.

8 Summary QuickBooks ES is a very good product that has achieved remarkable market penetration since its release. Designed to serve the needs of organizations that are growing, it serves those needs admirably in many instances. However, QuickBooks ES will not meet the needs of all organizations in the same markets that Sage MAS 90 currently serves. Even though a company s back-end accounting processes might be somewhat straightforward, its business intelligence needs may be complex, particularly if the company competes in multiple markets, sells a wide range of products and services, or has a diverse management structure with multiple decision makers. This added complexity requires a more robust business intelligence system than QuickBooks ES can deliver, even with the use of available third-party reporting applications and Excel. Sage MAS 90 serves the needs of organizations of all sizes with more complex business intelligence needs. While Sage MAS 90 uses Excel as one data analysis and presentation tool, its chart of accounts structure and robust built-in reporting, query, and ad-hoc analysis tools, particularly the Business Insights Reporter and Business Insights Explorer, provide the level of robust business intelligence that many firms require. These same capabilities are not available in QuickBooks ES. 02/