SaaS, Accounting, Microsoft Money and Hyperbole.

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..