The next salvo in the cloud accounting software war is due in less than two weeks – an update to Xero’s cloud-based practice management software, Practice Manager.
The cloud accounting company has been drip-feeding information through its company blog promising a range of efficiency gains.
These include a faster way to add time entries without leaving the current screen, a global search function that lists quotes, invoices and jobs within the search box for that client, a work-in-progress (WIP) dashboard customised for each accountant, and a powerful filtering function that can show lists of tax returns in progress, WIP for jobs the user is managing and draft invoices for a specific partner.
The release is significant for several reasons. The first ground-up overhaul since the acquisition of job management program Workflow Max that underpins it, Practice Manager will become much more closely integrated with Xero’s cloud accounting program.
A sneak preview of the interface (press the left direction key to scroll forwards and right to scroll backwards) shows it is deeply integrated into the “green” Xero used by accountants and bookkeepers.
This new interface is more than just a refresh. The ability to update information automatically between the client accounting app and the practice management suite is a major selling point of Xero’s single-vendor pitch.
Xero believes accountants can work more efficiently and effectively by staying within a single ecosystem. Xero’s ecosystem will no longer have several legacy interfaces from its acquisitions (Spotlight Workpapers is in there too) and accountants will move more easily between client app and practice tool.
This is a big opportunity for Xero. Many accountants become a Xero partner because a client has asked to move from QuickBooks or MYOB, but the percentage of clients on Xero in their practice overall remains low. The new Practice Manager could give them a strong incentive to lift that percentage themselves, multiplying the effect of Xero’s marketing campaign and increasing the rate of customer acquisition.
In Australia the average Xero accountant had 15 clients using Xero in FY14, unchanged from the previous year. During the same period New Zealand accountants increased the number of clients on Xero from 26 to just over 30. The average for Australian accountants is likely to edge up to the high 20s if they adopt Xero’s Practice Manager, realise the efficiency benefits promised the integrated package, and start pushing their clients to swap accounting programs as a result.
A conversation I had last week confirmed that the shift to cloud accounting is in a large part about efficiency. A mid-tier accounting firm in Sydney told me it was in the process of moving its customers from MYOB to Xero because of the amount of time it could save per customer (their bugbear was multiple versions of desktop software).
Will the attraction of greater efficiency run up against fears of single-vendor lock-in? By July we will have begun to find out the answer.