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.
The Story of Crunch – An Interview with Darren Fell [11:20]
@ben: you need to be a tad careful here. There’s a difference between accreditation and endorsement. ICAEW doesn’t endorse any applications but does provide an accreditation scheme. In this case Crunch is using the ICAEW logo – which it may well be entitled to do by virtue of it appearing in the ICAEW directory of firms. That’s not an endorsement either but will be construed as something similar or at least perceived as such by members of the public.
It does however bring into question the issue of governance which I have raised as a separate matter directly with ICAEW.
@Dennis – point taken – but endorsement or accreditarion it’s still a bad look….
Thanks Ben for the article above, and thank you for the invitation to clarify some points made; I welcome the opportunity to respond.
The response to the launch of Crunch so far has been terrific – we are taking on new customers daily and were recently featured on BBC Radio 2’s drivetime show with Chris Evans, which has prompted a huge number of people to contact us asking for help for a number of reasons: they love the concept of an online system and support from real accountants, some haven’t had a very good experience of accountants so far or they just want to pay a fair price.
The comments referenced in your article made by Michael Rose, who is a contractor to Crunch and who works in our marketing department, were made by him as a Crunch user – not as an accountant advising a customer. His words were intended as a helpful response to an unrelated accountant who had commented on an article about Crunch on the IT Counts web site – Michael has been a contractor for less than a year and has not yet gone through the process of year end accounts, so this would explain the gap in his knowledge. He’d like to thank the accountant for correcting what he said.
The blogger who then wrote a story claiming Crunch was giving the wrong advice, has twisted what actually happened; also calling Crunch and asking Michael, who deals with marketing, about the ins and outs of taxation.
A point worth reminding people reading this blogger’s words – and he did indeed disclose this fact in an article in February 2009 – is that he has vested interests with a direct competitor accountancy software company and is a share holder. And we are actively winning customers from this company.
If I may I’d like to leave a couple of testimonials from two Crunch customers – the chartered accountancy practice behind Crunch has been providing sound advice to hundreds of satisfied customers since 1991 and we are proud of all aspects of the service that Crunch offers.
Steve Hearsum: “I have asked loads of questions over the past three months, and always been happy, and occasionally even delighted. For example, it was pointed out to me if I switch to flat rate VAT I will be £600 better off this quarter, so of course I am happy.”
Jono Brain: “I spent a lot of time looking for an accountant. When I came across Crunch it finally seemed what I was looking for – a simple, cost effective, complete solution. Any questions I have I just send a quick email to Crunch support and I usually get an answer back within an hour. The advice I have had is the most tax effective way to pay myself, on managing my expenses and getting setup to be VAT registered. Crunch has taken care of everything for me and has been a great choice for Digital Blah Blah.”
Darren – thanks for the comment – if he sees it I’m assuming the “other blogger” (AccMan) will want to reply but, in fairness to him, I believe that he has actually divested of his shares in Free Agent Central. Your other points relating to his line of questioning I won’t comment on.
Once again, kudos for fronting up and replying
I fail to see how the blogger in question has “twisted what actually happened”.
What Michael said in answer to my question on IT Counts was unequivocally wrong.
And also, if Michael deals with marketing, why was he making a posting about tax in the first place?
Good early reviews from customers are not enough to establish real credibility in my view. Any product can be made to look good in the short term, it’s only long-term that the real effects are known. You only have to think of the thalidomide tragedy to know that.
M
I’m a customer at crunch and had nothing but excellent advice from the team at crunch. I’ve just found this posting from Duane Jackson and now realised why Dennis tried to make a storm in a tea cup over this….Check this out:
http://blog.kashflow.com/2009/08/17/accmanpro-time-to-disengage/