Annual conference draws 400 accountants and bookkeepers.
This weekend cloud accounting software company Xero outlined its annual Australian conference in Melbourne a strategy to sell software through bookkeepers and accountants.
“Our model is unashamedly to put the accountant in the middle,” Rod Drury, Xero CEO, said. “We have a fundamental belief that advisers drive small business productivity.” Xero was putting more and more investment into its products for financial advisers to help drive new revenue, opportunities and business leads to accountants, Drury said.
The software company announced that it had acquired Spotlight Workpapers, a cloud application which connects to Xero and was owned by Xero co-founder Hamish Edwards and Richard and Julie Francis of Francis Consulting.
Spotlight Workpapers would be connected to WorkflowMax, the job management platform Xero acquired in January which it sold as a practice management system for accounting firms.
The practice management software was free for Xero accountants with 25 or more clients using Xero (its silver partners). The Xero CEO admitted the move was a huge investment but added that Xero did not want to “double dip” like other software companies by charging the client and the accountant.
“We believe the client pays – not the adviser. As much as possible we are trying to give you stuff for free or very, very cheap. This is a complete disruption to the industry,” Drury said.
Practice management software sold by competitors could cost more than $20,000 a year for a 20-person practice and required expensive servers to operate.
WorkflowMax lacked several features which were essential for running an accounting practice. Workpapers was one omission which the Spotlight acquisition had addressed. Spotlight Workpapers would be integrated by March last year, Xero said.
Another omission was the ability to fill out and submit tax forms electronically to the Australian Taxation Office. Xero announced at the conference that it would start building a tax platform and that it would be released in stages, reflecting the size of the undertaking, said Chris Ridd, Xero’s managing director for Australia.
However, Xero would not commit to a timetable for the tax platform.
A third omission was a mature document management platform. WorkflowMax released an integration with Box, an online storage service, and connected to SharePoint Online, Microsoft’s document management platform in its cloud suite Office 365, through a partnership with IT consultancy HubOne.
Craig Winkler, co-founder of MYOB and now director of and key investor in Xero, delivered the opening keynote on how Xero was riding the technology wave in cloud software in a similar way to how MYOB surfed to prominence on the back of the Windows operating system in the 1990s.
Xero “is a team who are paying attention to supporting customers and usability, and how businesses are working in a new way,” Winkler said.
Xero was number two in global market share for cloud accounting software for small and medium businesses, Drury said. Intuit claimed QuickBooks Online had 250,000 customers compared to Xero’s 78,000 customers in over 100 countries. “We’re chasing a million customers,” Drury said.
Xero was going to focus on the Australian market which had seen leaps in growth, Drury said. Australian business customers had jumped from 8,000 to 25,000 in four months after Xero added payroll through the Paycycle acquisition. Accountant and bookkeeper partners had risen from 400 to 1,000 in a year. Xero had processed $100 billion of transactions, $20 billion of which was in Australia, Drury said.
Australia was the most promising of the four countries in which Xero has a presence. Xero was already claiming victory in New Zealand with 50,000 business customers and “every accountant” using the cloud software, Drury said.
But Xero had found the UK market tougher to crack. Bank feeds were unavailable until last year, the economy was suffering and businesses were more conservative, Drury said. The US was also moving ahead relatively slowly with 10 staff in its San Francisco office.