History of Computerized Accounting Systems Technologies
Till 1970th-80th the most common used system in accounting was “general ledger”. It was a book with assigned pages for each account, such as cash, receivables, payables, stockholder equity. Everyday transactions were entered by hand into a journal. After each transaction entry had to be posted in a proper general ledger account on the assigned page (Hous). Next step was an input of the numbers from general ledger into financial statements and preparing tax returns. All these processes where inefficient, slow, and manual. Even a minor mistake or inaccuracy in these processes led to long time spent for recalculations (Hous).
Through the 20th century developments in computing, data modeling, and telecommunications influenced accounting processes significantly. The first mention of the term “systems” regarding accounting emerged in the 1920’s and was used widely in mass-media. At the same time many scholars considered that development of computerized accounting systems technologies had begun even earlier. For example in 1890s, to meet needs of cost accounting, calculating machines, such as Hollerith device, were created (Badua, Watkins 3). According to Badua and Watkins, some inventions went even in reverse directions when particular area of accounting facilitated the creation of specialized machines or technology (3).
Invention of accounting software revolutionized accounting processes. Multiple developments forerun present-day technologies. A countess Ada Lovelace computing machine was the first machine created and used for accounting. The IBM 9Pac was one of the first programming systems that preceded the invention of many modern accounting systems (Novinson). SAP software was created in 1973 and provided opportunities not only for automated financial transactions but also for supported executive decision making. Before the invention of Peachtree program, all accounting computerized programs were unavailable for broad public. Peachtree was the first program sold in stores and accessible for everyone (Novinson).
In 1983 company Intuit introduced a computerized computing program for personal finance Quicken. After that TurboTax for calculation of federal and income taxes and QuickBooks for small business accounting purposes were presented to wide public (Novinson). At this point of the development of accounting technologies manual journal entries were left in the past and computer technologies made profession of accountant easier. Accounting software gave an opportunity to professional accountants to do their job faster and more productive. At the same time owners of small businesses, who had limited knowledge in accounting area, could keep their finance statements in order to use an accounting software (Hous).
The last decade of 20th century brought significant changes to data communication. It became faster, more reliable, and less expensive. The client/server applications in a “hosted” environment became popular among technology manufacturers and suppliers. This kind of model allowed a firm to operate complex accounting systems with just a little investment. The model also gave way to the on demand Software as a Service (SaaS) financial systems. SaaS application is designed in such a way that it allows user to work with rich accounting application through a thin client web browser (Accounting).