Over on Accounting Web, a right royal stoush was started when Aqilla’s Hugh Scantlebury wrote an op ed piece opining what the withdrawal of Microsoft’s Office Accounting product means and, more importantly, what is behind the move. For those who need the history, Microsoft discontinued its Office Accounting product line, having determined that;
existing free templates within Office used with Excel [were] a better option for small businesses, and the Microsoft Dynamics ERP products were appropriate for mid-range organizations
It’s an interesting move at a time when micro to small business is a massive proportion of global GDP and at a time when, coming out of a recession, one would imagine an upswing in micro business activity. Given this and the end-of-lifeing of Microsoft money, it’s clear something more has to be going on… more on that another day.
Anyway, Hugh starts of by arguing that the withdrawal of Office Accounting doesn’t mark the end for desktop software – a fact that’s hard to argue given the tend of millions of customers still using products from the main desktop app vendors. Hugh went on however to say that while the move doesn’t indicate a watershed moment, that there is in fact a;
gradual move to web-based or Software-as-a-Service (SaaS) accounting, and that’s set to change the industry
It’s an interesting forum to make such a bold claim – accountants are by nature conservative and he was taking a vision of the future over to their turf. This was made obvious by the first couple of comments on the post which, while dwelling on the negative aspects of this issue, were not without merit;
When my software carries on working even when I lose my connection and then synchronises data and programs on reconnection, then its time has come.
Cloud computing won’t really take off until we see reliable minimum internet speeds nearer 20mbps; good insured service from the software suppliers; guaranteed portability of data from one supplier to the other in the event of service failures and cost efficiencies that they can only dream about at present.
Over on AccMan, Dennis Howlett came out swinging with a critique of Hugh’s thinking concurring with one of the commenters on the original post who says that;
There has been a flood of vendor entrants, simply because it is a whole lot easier to put up a server than it is to go out and grab 1% market share, but the numbers don’t stack up. While the providors of web based systems are really cagey about their user bases it is a simple matter to check it out on Alexa. The traffic on all of them is abysmal.
At face value this is a sound argument. Xero, one of the shining lights of the “new dawn” of SaaS accounting offering had, at it’s latest reporting period, 12000 paying customers. KashFlow has several thousand as well. FreshBooks has several hundred thousand customers but remains very cagey about how many of those actually pay for the service – there are a plethora of other Accounting software vendors for micro businesses – but most of them have customer counts only in triple figures, and many of them in the low triple figures to boot.
These numbers pale in comparison to the “big boys” – Sage, Intuit (disclosure – Intuit is a client) and MYOB who, between them, have around 12 million paying customers. By these metrics alone, SaaS is little more than a rounding error on the scale of things.
But this contention conveniently ignores the fact that all of the traditional vendors are making moves (albeit nascent in some cases) into a cloud-y world. Sage had it’s SageLive offering (admittedly ultimately a failure) and Sage internationally is active with a number of SaaS products. MYOB too had a SaaS offering that was doomed to failure but they’re envisioning a world where the cloud is part of what they do and finally Intuit has the Intuit Partner Platform, a move that arguably gives them the best of both worlds. Clearly there is a general expectation that, whether or not you consider SaaS and the cloud generally revolutionary, there is a shift underway that no one can ignore.
Some define this change as a move to web based software or SaaS, while others see a more hybrid approach that marries some degree of desktop with cloud services but, either way, it’s a slow but inexorable move towards a world that ceases to rely solely on a physical server sitting in someone’s back office or, for that matter, a hard drive on a laptop..
Why are the service expectations around hosted services so demanding when most people still don’t back up their desktop PCs?!
The inherent challenge with cloud computing and SaaS is that of control, many organizations feel they have better control if they can see the physical server in their office. Now, that doesn’t necessarily mean the data is secure which in most cases it isn’t, but it is a false sense of security that they believe in. As a company, we do remote hosted desktops and see this first hand with our local customer base, many of which have outdated equipment, un-patched servers and applications running on what they call a server (Windows XP with a shared directory). In all most have poor backup plans if any at all with no redundancy in any of their systems, it is a recipe for disaster but one they naively accept because they have “control”.
Thanks for an interesting and informed post – certainly from MYOB’s perspective we’re seeing a significant trend towards cloud based solutions and we’re been active in that space for around 5 years now. We’re currently got around 78k clients using our cloud applications in Australia and New Zealand today (mainly in payroll, staff management and website services).
MYOB has often been singled out as a “traditional software” provider, and there has been much comment about the emergence of SaaS accounting solutions.
The reality from our perspective is that the platform for delivering a great service or solution is ultimately irrelevant to the SME client. We have a little over 1 million SME clients in Australia and New Zealand – and they frequently tell us directly, through user groups and via research that they aren’t fussed on the “infrastructure” behind the solution. The key requirement is that it “just works”, is a quality solution and makes business life easier.
At MYOB, we’ve always been about making business easier and providing businesses with choice. The ability to choose not only how they want to do business, but how they want to work with us and how they create a network of support from accountants, banks, financial advisors, staff and even the Government. We’re the people behind over 1 million businesses, so every decision we make is carefully considered. We can’t afford to rush to market, be drawn into fads, or have or clients spend their money on things that aren’t important for them.
I can assure you, for the average SME business owner, the “cloud” is not top of mind – they seek and reward vendors who give businesses the tools to make the complex, simple, and the time consuming, efficient. In essence, it’s all about making business life easier .
Certainly our R&D efforts and investment is heavily “cloud” centric – it just makes sense and expect MYOB to deliver real innovation using the “Cloud” in 2010.
What won’t change is our passion for doing the basics well and giving our clients the choice to work with us in a variety of ways, in a number of channels and via a wide range of business solutions.
Regards
Julian Smith
General Manager
MYOB NZ Limited
@Julian – thanks for your comment… I’m looking forward to seeing what 2010 will bring….