Over on ACCMan, Dennis posted about the partnering strategies of SaaS vendors. His
post was initiated by a new partnership entered into by SaaS accounting vendor
Xero, but his words ring true for
other vendors also. Dennis stated that;
I have believed for some time that the key to making partnerships successful
comes in providing easy on ramp. I have no insight into what Xero is doing in
that regard. Elsewhere, I see precious few signs of meaningful partnerships that
could help jog that process along
Which, to paraphrase, says that a feel good partnership adds nothing if it
doesn’t facilitate the conversion of potential customers into paying ones. No
truer word have ever been spoken… as they say.
Jason commented on his post, specifically talking about account applications,
saying that
There are many theories about how to build sustainable saas businesses, none
of which have been proven for the long term.You are right Dennis, as SaaS is only just starting to stick and so it is too
early to know the best course of action, but one of those courses has to be
getting the accountants on board, let’s be honest Sage only got to its current
position by partnering with accountants.Sage did have an advantage way back when; they had an easy to use
computerised ‘bookkeeping’ package which would mean accountants could get bigger
clients off manual time consuming records and thus make more money.Now the problem the SaaS market have is to convince the accountants to move
from tried and (not always so) trusted Sage onto something else, and that is the
dilemma!
I’m going to go out on the edge here and disagree with Jason. The way I see
it, traditional desktop accounting software (and potentially other classes of
software could be included with this argument – but I’ll concentrate on
accounting) was sufficiently complex that accountants didn’t feel a huge amount
of anxiety over whether they’d lose custom to the new systems.
To this end I contend that the software vendors almost consciously designed
their products to fulfil the needs of their professional partners (accountants)
more than their end users. They new that in order to drive the change from
manual to computerised accounting for small businesses, the accountants would be
useful validators.
The move from desktop to SaaS however is a totally different beast. I believe
that SaaS has the ability to truly disrupt much f what professional advisers do
for businesses – features like automatic benchmarking, real time connection with
other businesses, acceptability of taxation advice, online filing of returns etc
etc pose a significant threat to accountants gravy train.
And therein lies the dichotomy – many SaaS accounting players are utilising a
strong accountant partnering strategy in order to build their sales base – it
seems a little strange to be partnering with the very people that, rightly or
wrongly, consider themselves threatened by your product. As I commented in
Dennis’ original post;
I can’t but think that partnering with accounting firms is less than optimal
for SaaS businesses. The way I see it traditional desktop accounting software
was complex enough to not concern the bulk of accountants – it was still
difficult enough to do the real accounting stuff that they felt no real threat.
SaaS however is different and has the ability to leverage connectedness to
disrupt the accountants (at least in part).Sure I know all the messages about giving accountants more high value work
and allowing them to “value add” but I don’t completely buy that theory. I talk
to a bunch of accountants and they tend to be pretty skeptical or anxious about
SaaS – to make these same people your primary partners seems
illogical.
So – what do the readers think? Are professional partnerships a necessary
evil, an exciting opportunity or just a marginal investment for SaaS
businesses?
You bring up some interesting complexity – but I think it is in how the application is positioned and what it is offering to accountants as well as the “end-user” SMBs.
As a user of computer accounting apps, I find them to be unnecessarily cluttered and with far too many steps to be really “inviting” to use. I’ve done regular, double-entry, columner pad accounting so I know where the steps iin the process come from – but that doesn’t make the applications that mimic the process any easier to use. As you wrote, something needs to break the pattern and come at it from a more logical direction for the business user.
On the other hand, accountants who receive the output do need to see the information in standard accounting contexts. So – why isn’t there a separate “pro” version of the SaaS app that is for accountants – online. What if those accountants who had online accounts in the app, could set up contracts with their customers to use the online business user version – and share their data with their accountants?
Why would accountants want to do this – have you seen accountants’ offices? Do they generally have IT resources? (no – certainly not full time or senior level) Do they need more reliable systems? (imagine a break down at tax time – it happens frequently) If the SaaS app provided resources for downloading the data to local sources and smart extractions for local spreadsheet development – and it offered a way for the customers of an accountant to use compatible software without buying it or more hardware or more headaches – it would be hard to say no…
But to do this – as you point out – the “end-user” version for SMBs has to be really designed from the ground up for them – not a clone of existing desktop accounting software. The accountants version has to allow for review of several client accounts on a regular basis and to answer questions as they arise. It is a different direction and the product managers for the application have to step back and think about the new opportunities an online system can leverage.
@Michael
Thanks for your comment – great thought. As you say a lot of “revisioning” has to happen. My bottom line? The accounting industry as a whole isn’t up to that yet.
Cheers
If anyone believes that accountants are not an important channel for accounting software then they do not understand the accounting market. Our initial market research showed that in 80% of cases, if a small business owner has an accountant then the accountant chooses the software.
Accountants work with small businesses in a range of ways and over the last year we have delivered on most of those scenario’s. In many cases the small business owner doesn’t even see the accounting software. Xero Accountants Edition handles that. At the other end of the spectrum accountants are becoming virtual CFO’s. Xero flys at that.
What we’re working on now is a range of additional tools for accountants that allows them to do proactive management reporting, which is now cost effective for them to do now the data is all in one place and they don’t have transfer it between the accountant and small business as the desktop model requires. Feedback has so far been excellent from our accounting partners.
Accounting software needs to link into the Practice Management systems of the Accountant, or you just don’t get sales traction as they accountant does not want to double handle data.
Selling to accountants is much easier when you have generated end use demand. Interest from Accountants accelerated when end customers demanded Xero and accountants lost customers by not offering Xero services.
Yes accountants do take some time to move. Traditionally they have not had a great experience with software so you can understand that. The frequent release cycle possible with SaaS accelerates that trust relationship because each month you can prove you are listening and delivering. But it still takes time. Maybe 2-3 years.
But it’s worth taking the long term view as accountants are a very leveraged channel. Each one may have hundreds or thousands of small business customers. You can’t win accountants overnight but when they start flipping to your software then they will drive a significant proportion of new customers.
SaaS accounting does change the balance of work between the business owner and accountant. Some will save money, all will get better value with their accountant and the accountant can be much productive and profitable but it is not a black and white situation where software takes over the role of the accountant. That is just fantasy.
Well designed software will empower and create value for all stakeholders and understand the reality of your market. SaaS does present a challenge for accountants to look at how they redefine some of their services but no way does it cut them out of the picture.
My 2 cents.
@Rod – thanks for the comment – I appreciate your forthright contribution.
I guess I liken the SaaS accounting/Accountant situation to that of SaaS PM/PMPs. SaaS PM software has, to a certain extend, obviated the need for PMPs.
Put it this way – a traditional accounting practice that does primarily compliance work can hire a semi (or not at all) qualified accounting technician for $20/hr and charge them out at many times that. The move to the scenario you envisage – where accountants do high value work means they’ll need highly skilled (and paid) commerce grads or post grads. For this there charges risk many times and hence the pool of work does also.
It’s a numbers game and I’m just not sure the economics or the market allow for the wholesale move to a higher value add model.
But as always I’m happy to be proved wrong!
Cheers
[..] Xero’s strategy is very much one of partnering with the accountants and leveraging that relationship to on-board new customers. I’ve been avocal scepticof their strategy thus far – I felt it was destined to mediocre results at best, relying as it did on partners that, to a certain extent were being disintermediated by the very product Xero is trying to sell. I have to say my perspective has changed with this announcement, But first some background. [..]