Readers will recall that MYOB is the dominant player in accounting software in Australasia as well as having made forays into other markets. MYOB also recently release an initial SaaS product (review here).
Since the start of this takeover process MYOB has been silent on its intentions with its SaaS product – I invited them to brief me on their expectations but, not surprisingly, at posting time I had received no response.
Rod Drury, CEO of Xero (review here) takes the opportunity to prophesise the beginning of a “new generation” for accounting software with new players (and online delivery) unseating the traditional vendors with their on-premises products.
His rationale for why the traditional vendors are unable or unwilling to do SaaS products properly goes thusly;
- It is difficult to attract the design talent into an industry that has been slow to innovate and seen as boring.
- Internally there is so much drag integrating the various acquistions (sic) and creating a coordinated product strategy
- Maintenance and support drag is enormous
- Multi-tenanted applications are a huge mindset shift
- The channel model for online software is fundamentally different from the high street retail model
- As public companies it is difficult to cannibalize existing revenue’s
- These business generate huge amounts of cash and probably aren’t as hungry as the new entrants are. They are comfy. If a new competitor looks good they can be acquired
Which are all valid and proven contentions.
Further if one looks at the SaaS offerings of the triumvirate of SMB accounting leaders, all of which have recently been release (from MYOB, Sage and Intuit), Drury’s contentions would seem to be borne out.
While nothing thus far gives one any confidence in the ability of the legacy players to really dominate the new wave of accounting software, lets not forget they have some serious cash reserves and some serious market clout that, utilised correctly, could make some fantastic products.
But I have to say that on this one I’m pretty much in agreement with Rod’s perspective. Despite it being written from a biased perspective (as he would no doubt concede) – he’s entirely correct, a new generation is dawning and it’s hard to imagine the incumbents, and especially a soon to be venture capital owned vendor like MYOB, have the commitment to push through into the new world.