I’ve been running my Accounting 2.0 series since the very first day of CloudAve – now, seven months on, it seems a good time to look back on what I’ve seen.
In the past seven months I’ve reviewed around 25 SaaS accounting products, and written 30 or 40 analysis pieces looking at accounting 2.0. I’ve taken part in panel discussions, radio shows, seminars and conferences and done some formal and informal work with vendors looking at their product, their go to market strategies, and the wider ecosystem vision.
Some common threads have come out of all of this – the following is a general statement and is taken from information that is publicly available as well as numerous off-the-record discussions I’ve had with vendors – obviously there are always companies that buck the trends – but this is what I’m seeing overall.
Adoption is still tiny
Vendors are keen to proclaim the market success they’re having. Some get huge user-numbers through a free service, an attribute that in my view isn’t sustainable and so I tend to only look at real paying customers in my analysis. The number of paying customers across all the offerings can be measured in the handful of tens of thousands. While this is a great number – bear in mind it’s spread across dozens of vendors and represents an absolute drop in the ocean compared to the market penetration of the big three – Intuit, Sage and MYOB
Legacy vendors know SaaS is coming – but don’t know how to react
Both Sage and MYOB have introduced ill-fated SaaS offerings, while Intuit has a SaaS product which doesn’t in any way indicate the resource and momentum they could put behind SaaS if they wanted to. At the same time we have a bunch of examples of people from legacy companies jumping ship. The founder of MYOB invested close to $20million in a SaaS player, ex Intuit execs leave to create their own offering, the ex Chairman of Sage invests in SaaS players – the list goes on and on.
It’s been said time and again that the cultural issues hindering legacy vendors making real inroads into SaaS are huge – to be honest only one vendor seems to have morphed with any degree of success (and their people are quick to remind me of the fact – here’s a hat tip to you David Turner).
Companies still very much building the core functionality
In keeping with the Web 2.0 beta mentality, none of the offerings could be classed as “complete”. SaaS vendors with their regular release cycles are relaxed about rolling out additional functionality as they see fit. That said there are some glaring holes in the majority of offerings – in particular it rankles that, despite there being millions of businesses in the world that deal in physical products, almost no vendors currently offer stock functionality as part of their application. It seems to me that there is a disconnect between vendors, the customers they interact with on a daily basis, and the “average user”. I’ve long been a proponent of focus groups and the like to cross this chasm (to subvert someone else’s term).
Where’s the value add?
I’ve posted in the past opining that SaaS needs a value add. I’m still not seeing much of this in the field. True things like the automated bank feeds that Xero offers in some locations are really useful, and Pearl’s end to end integration of ERP, CRM, CMS, E-commerce and the like is really cool, but I’m not seeing anything really revolutionary.
In their defence their is much that stands in the way of this – but I’d like to see much tighter integration between banks and accounting software as well as better options around aggregating and integrating different application types.
The CloudAve SaaS Accounting Awards
The following are some completely ad-hoc awards. They’re my own picks and any complaints will be studiously ignored until this time next year.
The award to the vendor who’s pulled off the biggest investment deal of the year – Xero with the Craig “MYOB” Winkler Deal.
The award to the vendor with the best channel partnership deal – Intacct with it’s AICPA deal. Watch this one carefully.
The “Just make it easier for businesses” award – IAC-EZ. The ability to record transactions doubly – ie enter an expense and charge it to a customer within the same transaction, is a great move away from rigid double-entry methodology and puts a nice transactional viewpoint on how business really works.
The “get off Twitter and do some work” award – goes, not-surprisingly, to Steve and Allan from Less Accounting who would be doing at least $500 million in revenue by now if they spent less time a’twittering.
The award for best business use of the widget concept – Beebole who, despite still being pre release, have shown great vision with their concept.
The “answering the calls of real business” award – Saasu who, despite traditional business being less than sexy, fronted up and produced great stock functionality for their offering.
The “if salesforce.com can do it for enterprise, so can we for small businesses” award to the company aiming to be the “platform for the rest of us” – Ubikiwiti, plug and play for business apps.