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Buying an enterprise accounting system vs. hiring a programmer to build a customized system

Can you tell me the pros and cons of buying a full blown off-the-shelf accounting/enterprise accounting system vs. purchasing a basic accounting system with the source code available and hiring a programmer to develop a custom system to fit our unique needs?

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This is an interesting question and one we've run into several times as part of our consulting business. Since you're probably not in the business of selling accounting packages, my guess is that you're looking for a bit of customization from the package. With those assumptions, my recommendation would be to go with the off-the-shelf system.

If you were to hire your own programmer to do the work on a basic package, you'd spend potentially a considerable amount to define the requirements, do the implementation and testing, as well as maintain the package as your business changes. While that cost might be lower than the cost of the off-the-shelf package, the long term costs of your own development will cost considerably more.

The future cost of fixing bugs and adding extensions is complete sunk costs. As your business grows, it will cost more and more to maintain your custom software than upgrading an existing package. Additionally, if you have plans to grow substantially or sell the business, the cost of concerting your proprietary, one-off accounting package to a commercial package could be huge.

Before considering using a programmer to build your own, I'd look long and hard at the existing packages out there. For my business, we use Intuit's QuickBooks and have found it to be extremely flexible so that we are able to make it conform to our business relatively easily. Its cost is much less than if we would have purchased source code and gotten into the business of writing our own custom package.

This was first published in September 2002

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