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The Accounting Crisis

Bringing in Accounting

Word processing, spreadsheeting, file transfer, and terminal emulation. These were all areas where Novell acquired products that were popular, workable, and easy to install. Then came the quagmire of personal computing in general and Novell in particular: The accounting packages.

One of the hallmarks of personal computing in the ’80s was its simplicity. The standalone personal (micro)computer system was simple compared to a minicomputer. It consisted of a CPU, a terminal, and a disk system. The operating system was simple; it had to deal with just one computer and one user. Even buying one was simple: Just walk in a retail computer store and buy one.

Most application software was also simple.

You want to word process? You buy a word processing package.

You want to spreadsheet? You buy a spreadsheet package.

You want to program? You buy a programming language package.

Then comes accounting…

The difference between accounting and the other commodity applications is you can’t tell someone how to keep accounts without telling them how to run their business. Worse, computerized accounting tends to be very deterministic—it’s hard on the fuzzy, seat-of-the-pants styles characteristic of small business people who were attracted to personal computers rather than minicomputers. Worse still, people ask for, or at least they’re impressed by, accounting packages designed by CPAs—who are the most deterministic of the people who deal with accounting. (It would be better if they asked for accounting designed by a housewife who tends three kids after school!)

The confluence of these trends created a marketing challenge in selling accounting packages that was similar to that faced by the life insurance and funeral plot industries: Selling something that’s considered important but rarely used.

Most of the buyers of personal computer accounting packages bought them as justifiers for getting the computer but used them only briefly. They used the computer’s word processing and spreadsheeting pretty much as they had anticipated, but because the accounting packages were too procedurally rigid to suit their needs they instead used a hybrid spreadsheet-manual system to accomplish their accounting goals. The accounting package ended up sitting on the shelf beside the BASIC programming language package; the optimistic user might mutter, “Someday, I’ll get back to that and make it work.”

This use dynamic made the marketing and presentation of accounting packages more important than the content. One of the first to discover this was Ben Dyer, the driving force behind Peachtree Software in Atlanta, Georgia. While other personal computer accounting houses were selling their product in plastic baggies he started offering handsome vinyl binders and spent big money on offices, customer support, and advertising.

One group he attracted was top management at Novell.

They wanted to offer an accounting package. Like WordStar, Peachtree had a reputation as something that would fill the need. The decision was made to carry it.

Roger got the shudders when he heard that Novell would be supporting any accounting package.

Peachtree, Plumbing, and Jack Saying “Yes”

The first purchaser of a Novell Terminal Computer was Novell’s landlord. They wanted to computerize their accounting and Jack offered them a Novell system. The following excerpt from Roger’s diary continues the story.

With the shipping of the first units, my job [customer support] came on line. The first unit we shipped was to our landlord, K&P Plumbing. He bought it direct from Jack Davis at a discount. Jack sold him not just the hardware, but a complete accounting system—and we were going to install it. Trouble City!

Gary Dan Hill [in Technical Support] and I got saddled with the installation. We were to install the full Peachtree system—GL [General Ledger], AR [Accounts Receivable], AP [Accounts Payable], Payroll and Cost Accounting.

Dreams, Dreams, Dreams! Peachtree was just converting from Series 4 to Series 5. All the packages were buggy. Payroll wasn’t ready yet and, it turned out, it wouldn’t be for months. There was no cost accounting [which K&P specifically needed] planned for Peachtree and no easy way to do it—Jack had not checked before he said, “Yes”. Jack was also reluctant to sell K&P anything but Peachtree since this was to be our accounting package. The hardware was also brand new so it was somewhat troublesome.

Finally, the K&P people had hired a new woman to run the system and this was her only job. She was an experienced operator on mini equipment, but new to micros and CP/M. Worst of all, she was new to K&P, so her job depended on the performance of the computer.

The net result was six weeks of constant attention from Gary and me. We were constantly back and forth between Sandra at K&P, and Janice and Janet at Peachtree in Atlanta, and Jim Bills at HQ, trying to get things diagnosed and fixed.

We learned Peachtree. Oh boy, did we learn it! I was also totally discouraged at the stupidity of our getting involved in supporting an accounting installation at an end user site.

It was K&P that drove me out of customer support. I told Larry I needed to make more money and asked him what was the best way. “Go sales, young man, go sales”, he told me (I paraphrase). So I began negotiations on getting a position as sales manager.

In the meantime, the heat at K&P finally ended when Sandra gave up. She quit and K&P was slow to refill her position—the system gathered dust.

The problem Novell faced in selling Peachtree accounting was, ironically, that it was selling a big, expensive personal computer. The personal computer had a hard disk; it had function keys; it had a classy case. Purchasers expected more from it. It wasn’t the easily forgiven toy that an Apple II was. So while Peachtree could adequately serve the TRS-80 and Apple II marketplace where few users would actually use the product, it wasn’t going to meet customer expectation in the Novell marketplace.

Gary Dan Hill

Gary Dan Hill is another Novell two-timer. He comes in 1981, leaves in 1982, comes again in 1984, and leaves in 1987.

Applying Old Habits to a New Crisis

In a crisis a person’s heart rate quickens, the breathing deepens, and habit short-circuits judgment as a way of making decisions. Peachtree was a crisis at Novell. With the shipping of the first of the terminal computers, top management was finally getting some real—and harsh—feedback about their creation.

The habit that top management followed turned out to be calling on trusted outside consultants for a reality check. Since George was the top manager, the consultants he brought in were people he, not Jack, trusted. Unfortunately the people that George trusted were even more deeply steeped in conventional minicomputer practice than Jack’s associates were.

So Novell applied a principle from the good old minicomputer days: “BASIC is a bad platform for accounting and COBOL is a good one”. Peachtree was unceremoniously dumped on the excuse that it was running on an interpreted BASIC platform, and because it took too long to switch from one module to the next (about 30 seconds).

George’s consultant found a COBOL-based accounting package that had been ported to CP/M, recommended it to George, and it was declared the new Novell accounting package.

The first problem with this decision was that bad programs could be written in COBOL just as easily as in BASIC. This was amply demonstrated in the preliminary assessments of the package made by those who bothered to run it.

Top management didn’t listen easily. In fact, Novell was just about to sign on the dotted line when Robert Lundahl, newly hired into the Marketing section, suggested to Larry Edwards that he watch this new package do a close, the process that ends each business month. The close took an hour. Larry got the message; he showed the other top managers and it was finally back to the drawing boards once again.

The second problem was that this fiasco opened up serious questions about management competence. Novell management had goofed twice trying to pick an accounting package. The old saying “Fool me once, shame on you; fool me twice, shame on me” was in the minds of Novell resellers.

It wasn’t just resellers who were upset, either. Because of the Peachtree experience, Roger had already decided to depart Customer Service. He moved into Sales. And Robert, with the ink barely dry on his hiring papers, decided to depart the company entirely.

Robert’s outrage was deeper than Roger’s. When he had heard that Peachtree was going to be dumped in favor of a COBOL-based package, Robert offered Novell an accounting package he had himself written in COBOL. On the advice of George’s consultant, they refused it, faulting it as not comprehensive. When Robert saw the trash that the company had almost accepted, he sniffed the air and it smelled.

The Way Out: The Personal Computer Way

Habit hadn’t worked, but top management’s next step did: They ignored the problem and it went away.

It turned out that in the personal computer marketplace, it wasn’t necessary for the hardware maker to provide application software. That was the reseller’s role. The reseller could contact applications developers and distributors as easily as the hardware makers could, and so long as the operating system was standard the reseller could also install it just as easily. The simplicity, low capital requirements, and standardization of standalone personal computers had driven a change in marketing channel expectations. It made efficient system integration possible at the reseller level.

Novell stumbled onto this truth, but it was a hard one to recognize because other events were commanding most of the company’s attention.

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