Product life cycle

Accounting software and its state in traditional product life cycle

Product managers everywhere knows about product life cycle. Probably the best recent example of product that has gone through the complete cycle is analog mobile phone. People has always wanted to be able to communicate with anyone they need, anywhere they are. Back then there were Walkie Talkie, but it has limited range. Pager technology also helped, but it only provides for one way communication. People wanted two-way communication with higher mobility. Then the analog mobile phone was developed. At its introduction, it could only be afforded by rich people, for which time meant money (sometimes a lot of money), and being able to communicate right on the spot sometimes determined whether money is gained or lost. Slowly, the network grew, and number of analog mobile phone users increased worldwide. This was the growth phase. The growth seemed unstoppable. At one point, certain developed countries had so many mobile phone users that the term “country with highest mobile phone usage per capita” was symbol of national pride (Hong Kong took the title). This was the maturity stage. Then, out of the blue, came the digital mobile phone network, which offered higher security and lower cost per call. Country by single country moved away from analog mobile phone network to the digital frontier. By now, very few “ancient” people, if any, still use analog mobile phone network. Analog mobile phone has come full cycle, all the way to the decline stage.

Product life cycle
Traditional product life cycle

The business software considered the most mature now would be the accounting software. Accounting was strict discipline with set of rules for bookkeeping, before the advent of computing and after. Initially, only large companies could afford computer and, thus, was able to utilise it to automate the accounting process to certain degree. Few companies were offering ready to use accounting software. Great portion was more probably have been developed in house. With birth and population explosion of Personal Computer (PC), businesses of practically all sizes were enabled to use software to automate their accounting processes too. Software companies offering accounting software mushroomed. Worldwide, commercially available accounting software can easily numbered above a hundred. To achieve differentiation from their competitors, software houses began to add functionalities of other departments to the accounting software. Accounting software then covered more than just accounting department, but also purchasing, inventory, sales, and sometimes more.

Analog mobile phone
Analog mobile phone has gone through the complete product life cycle

By now, most businesses have realised the value of having software to automate the accounting processes. Demand for accounting software is, then, given. It now has reached maturity stage. However, the number of suppliers right now is simply to large for everybody to hang on to the pie profitably. Smaller suppliers dies off (but then again, many of the smaller ones have died all these years). Middle and upper market suppliers struggled to stay independent. Many succumb to the financial reality and merged. “Software supermarket” companies with up to a hundred products collected through mergers & acquisitions (M&A) are on the increase (Infor, etc). Yes, even at the highest market segment we saw consolidation (JD Edwards bought by PeopleSoft, which was in turn bought by Oracle). The market mechanism dictates that the M&A are just starting. Many more will go through this given the market saturation.

Moving from economics point of view to purely IT point of view now, there’s a question that tickles our mind; will single, globally-standardised accounting software arise out of this, so we can do away with the time wasted in redundant attempts by players to create good accounting software? You know, probably a single, globally-available accounting “class” with properly defined “methods” and “properties” that can be accessed from any other programming platforms? To get the answer for this question, we need to go back to the economics point of view, though. There has always been redundant repetition by players in any industry. Most probably, Mercedes-Benz, BMW, Lexus, et al, all independently researched the automatic levelling feature for their cars. Wasted repetition, it seems, huh? Makers of digital camera researched independently how to make a good digital picture at night. Another wasted repetition probably. Examples are abound in any business field. And that’s just how market works. No player who wants to be leader in its field would want to cede any (technological) advantage it has to its competitors. It will guard it and hope that its competitor is going to take a long time catching up (with its technology) and give it enough time to make more money unabated. So, no, there won’t be a single accounting “class” in the world. Beside, programmers, including those on open source world, are too snobbish to want to let all credits go to someone else. They have to claim some territories on their own. We’ve seen so many “forks” in open source products. And that’s just ego at work. Viva ego!


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