I don’t want to enter into a debate about acronyms – Microsoft’s Software + Services moniker gets some die hard Software as as Service loyalists all fired up. For the purposes of this post I’m going to take it as read that we all accept the second “S” to be the most important one – that is, no matter which way you call it, it’s the service behind the technology that can best make a difference to users.

That’s why I was pretty excited to read a post from fellow SaaS evangelist Dennis Howlett discussing a new accounting SaaS startup called Crunch. Crunch is a software offering endorsed by the Institute of Chartered Accountants in England and Wales (ICAEW) Update - Darren Fell contacted me to advise that in fact Crunch is NOT accredited by the ICAEW. I’ve posted their video below but in essence Crunch is all about an accounting web application tied up with a professional services layer to perform the compliance aspects of accounting.

This isn’t a post about the Crunch software per se, but I will say that at first blush it looks to be an impressive and well designed application and, as an aside, it’s especially interesting to hear their claims that automated bank feeds for UK banks will be coming in the next few weeks. It took Xero well over a year to nail their first UK bank feed so it’ll be interesting to see whether Crunch manages to deliver on this promise. So for just under £60 per month, customers are getting a software offering with a professional services overlay.

So far, so good. Unfortunately the story takes a sad turn here. Dennis deserves another tip of the hat for breaking the news that some of the tax advice a Crunch employee was giving, was in fact wrong. The advice centered around the necessity, or otherwise, of owners of limited liability companies to file personal tax returns.

There’s issues here on a number of levels;

Firstly the ICAEW connection: In other jurisdictions, accountancy institutes similarly endorse products – I’ve posted previously about the AICPA endorsing (and in fact onselling) Intacct. At the time I spent awhile talking to the AICPA and got a heads up about the thorough due diligence process they applied to the Intacct offering prior to endorsing it – suffice it to say it was both thorough and diligent.

In this situation however it would seem that ICAEW “endorsement” is little more than a commercial relationship where the software vendor pays for a rubber stamp of approval. I spoke to Duane Jackson, CEO of KashFlow  about ICAEW accreditation – his words are pretty strong and I’d welcome some rebuttal from the ICAEW itself;

I think ICAEW accreditation is a joke. A director of a very big public company that provides ICAEW accredited accounting software recently said to me that you need two things to get ICAEW accreditation: someone to tick the boxes on the form and someone to write the cheque. We looked at it for KashFlow, but it just seems to be a money making exercise for the ICAEW and consultants. From talking to our existing and potential customers it wouldn’t have affected their buying decision. So we decided not to bother
I really do think it’d be possible to get accreditation for a product that doesn’t even exist. I might even try to prove it one day.

It seems to me that this is very shaky ground for an organization purporting to be the hub of professional standards – even more so when the incorrect advice given was so fundamentally central to accounting practice. This wasn’t an obscure regulation here – it is a basic concept of accounting that anyone practicing in the jurisdiction should understand.

Secondly the Service Screwup. I have to say from the outset that I’m actually a big fan of the model Crunch is trying to follow. I’ve long said that the real way to gain traction with SaaS is to follow a model of SaaS/v rather than SaaS/s. End-to-end offerings like Crunch’s, that combine a software layer with a professional services layer are a smart play. Granted I have some reservations about the scalability of the model, and there may be some questions around professional liability in the event of an accountancy firm selling software without the services layer, but end-to-end for SMBs is a very smart play. But therein lies the rub – it relies on a level of trust being gained and maintained – that’s hard to do with the sort of basic mistakes we see being made by Crunch.

As I said before – the Crunch story is really compelling, there’s an interesting interview with the founder of Crunch, Darren Fell, on BBC Radio below – he’s obviously a smart guy who understands web business – however understanding small business accounting is another matter – it seems Darren has some work to do getting his house in order.