Mobile application due in July.
While MYOB kicked off its entry into cloud services with the low-end LiveAccounts in May last year there has been little comment from its chief competitor, QuickBooks. Reckon, the Australian distributor for QuickBooks, released a hosted version of QuickBooks in 2009 but has not yet launched a local version of QuickBooks Online, the web-based application which has been available in the US since 2001.
Gavin Dixon, CEO of Reckon’s Business Division (pictured on right), sat down with BoxFreeIT to explain the company’s cloud plans for QuickBooks and Advanced Professional Solutions (APS), practice management software Reckon says is used by 80 percent of the top 100 Australian accounting firms.
An edited transcript of the initial hour-long interview and a second interview appears below.
BoxFreeIT: What are Reckon’s plans for the cloud?
Dixon: We are extremely committed to providing cloud solutions. But the way we’re going about it is different from the others at the moment. We wanted to provide a fully functional cloud solution and enable our customers to migrate from desktop to the cloud. We are using Citrix as a hosted service which allows us to provide cloud solutions.
BoxFreeIT: What kind of take-up are you seeing for QuickBooks Hosted?
Dixon: We’re adding 600 to 1,000 users a month. It’s just enormous, the uptake. People love it; it gives them all the cloud thing and yet they’re used to it, they know how it works. They can get training at the TAFE, it’s been around forever. So there are a lot of positives, in a funny way.
BoxFreeIT: How do you integrate with other web applications such as Google Apps or Office 365 if you’re hosting QuickBooks with Citrix?
We will be releasing an online SDK (software developer kit) before June 30. The development is all finished and it’s being tested. It will contain published web services that will give third parties the ability to integrate with our QuickBooks Hosted solution. A classic example is a website that has an e-commerce store and the website wants to send the orders for dispatch to QuickBooks, find the latest price, simple things like that.
We have developed a web services interface to the QuickBooks application which will also let it connect to cloud services such as SalesForce.com. The fact that we’re working in a Citrix environment doesn’t have any implication in terms of our ability to publish a web service API. It’s just an engineering task.
BoxFreeIT: Is the online SDK only for QuickBooks Hosted?
Dixon: We were approached by a lot of third-party vendors who have add-ons with QuickBooks (desktop software) who wanted to integrate with the hosted solution. We wanted to provide that ecosystem of add-ons for industry verticals so we designed the online SDK for QuickBooks Hosted.
CashBook Online (Reckon’s web-based application for recording receipts) has an SDK as well but we haven’t published it because it’s a pretty simple product and the SDK doesn’t have a lot of meaning.
BoxFreeIT: How do you run these hosted applications offline?
With QuickBooks and Elite and APS we have the opportunity to run both online and offline because it’s essentially the same solution. If you choose to have an offline appliance we will provide it for an extra fee and we will keep that synchronised (with SQL Server to SQL Server web synchronisation). We’ll manage that for you so you won’t have administration rights to that appliance, it will be a Reckon appliance.
What it means is that if you’re in a shop and you’re running Reckon Retail PoS Professional (point-of-sale or PoS software) online and the internet goes down, you will be able to switch to run offline and continue to operate your business until the internet comes back. And then the synchronisation will happen automatically and then you will be able to go back online. That’s true with APS, Elite, QuickBooks and PoS.
We want to give our customers the ability to work offline as well as online, and that gives them the freedom to leave. They can take their data and go, there’s no penalty for them. They obviously need to run our software but they’re already our customer now so it’s not like we’re doing anything particularly strange.
Next page: Bank feeds, SBR and QuickBooks Online
Quickbooks Hosted and SBR
BoxFreeIT: Can QuickBooks Hosted submit forms electronically to the Australian Taxation Office?
Dixon: We have something called Reckon GovConnect, it’s our SBR (Standard Business Reporting) interface. We do things like BAS lodgement electronically and this year we’re releasing payment summaries and FS70 company return (which includes trust and superannuation forms).
BoxFreeIT: What about lodging personal tax returns, is that coming soon?
Dixon: We’ve been involved with the SBR team since 2007 and I said to them all along, ‘Guys, you’ve got to get rid of the ‘B’ in SBR. Because while you’ve got it we can’t handle I-Returns.’ I-Returns (the personal tax return form) are by far the biggest transaction volumes of any accounting firm. And that means we’re going to continue to have ELS (the outdated Electronic Lodgement Service) so how are you going to get people excited about SBR? It’s not going to work. I’ve been saying this for four years.
But I believe they are looking for a way to lodge individual returns via XBRL (the technology behind SBR). And when they do that it will be easier to switch everybody to SBR.
QuickBooks Hosted and bank feeds
BoxFreeIT: How are you adding bank feeds?
Dixon: Reckon Bank Data is our repository for financial transactions. It has direct bank feeds with ANZ, NAB, St George, Bendigo, and we’re close to adding Westpac, AMP, it goes on forever. Except for the Commonwealth Bank, it’s missing at the moment. The banks are not fast.
We’re going live with Yodlee (a US-based financial data aggregator) in a week’s time. Yodlee is a different kind of solution which has a problem in a way. You have to give them your internet banking credentials. We are refusing to take them. So we are putting up a form which you’ll see in a week or so in which we say you’ll need to check with your bank that they are happy for you to give your internet banking credentials to a third party.
BoxFreeIT: How does Reckon Bank Data organise the feed data?
Dixon: It has a rules engine, which is a web service based application. You can create accounting rules to say if this transaction has the words “Coles Express” 80 percent goes to petrol, 20 percent goes to personal drawings. It’s part of QuickBooks Hosted and Cashbook Online. It will be part of APS and QuickBooks Elite later this year.
BoxFreeIT: Why use Yodlee if you’re concerned about security?
Dixon: We’re quite open and honest. I’m happy to give Yodlee as a service because it gives you 8,000 banks and we’re never going to have 8,000 bank feeds. We’re going to concentrate on bank feeds in Australia and New Zealand – building societies,credit unions, the big banks.
We have a project team and that’s all they’re doing, talking to the banks and signing agreements, getting the feeds. So we’re committed to doing the direct feeds. And when people sign up to Yodlee, as soon as we have a direct feed for a particular bank we will take you off Yodlee. If you still have other Yodlee accounts you will keep them.
BoxFreeIT: What’s your target for adding banks?
Dixon: You can’t talk like that with banks. We have a spreadsheet this long and we are talking to all of them. Everyone has a unique agreement, different technology, and so on. We’re also adding all the superannuation wrap accounts.
BoxFreeIT: So Reckon has the licence for the QuickBooks desktop software in Australia and New Zealand. Does it have a licence for QuickBooks Online too?
Dixon: No. QuickBooks Online isn’t available in Australia.
BoxFreeIT: But if you decided to expand your web applications beyond Cashbooks Online would you have to negotiate another licence with Intuit?
Dixon: We would be happy to do that. QuickBooks Online was originally a US-only product and then they released it into Canada and the UK last year.
We are very close to Intuit, we have all their source code and we do all the development for QuickBooks in this region. And we’ve talked about bringing QuickBooks Online to Australia and at this stage we don’t have a project to do that. But that could change.
It’s more about them deciding that that’s what they want to do next. My guess is that when they think about the world they tend to think about places like China and India.
Next page: mobile application coming soon
BoxFreeIT: With this move to the cloud and hosting, will Reckon continue to sell desktop software?
Dixon: We’re still going to sell QuickBooks as a desktop product for years. We are a $100 million business and it comes from the desktop. The online area is less than 10 percent of our revenue but it’s growing at over 100 percent. So in five years it will be a really different story.
And we are absolutely paranoid about being the number one guy in Australia and New Zealand for cloud solutions. If we don’t do that then we will have a problem at some stage in the not too distant future.
BoxFreeIT: Will you only do hosting with Citrix for your cloud solutions?
Dixon: When we finish the PoS rollout by March all our core products will have been put into the cloud using Citrix. Then you will see that all our new products will be web based in terms of their architecture and design, including HTML5. The first of these applications will be released in July. It’s more of a product designed for people to do billing, time expenses and debtors ledger.
QuickBooks Hosted has a lot of functionality but there is a market there for entry-level solutions built around iPhones and Android devices that provide basic accounting functions for mobile users, which is below the QuickBooks market.
BoxFreeIT: So this new application will be built specifically for mobile platforms?
Dixon: I think everything has to be on the desktop but in the first release our focus is going to be to make sure that all of the core functionality is available for mobile users using Android or iPhone phones or tablets.
BoxFreeIT: Will it be different to Xero and Saasu?
Dixon: I think you can’t be that different in core functionality. Those products have been in the market for a number of years and they were first developed on a browser and then added some mobile functionality. I think the emphasis for us is around addressing functionality for mobile users as the first priority and delivering solutions to desktops and laptops as a second priority.
What’s driving that is the incredible adoption rate of smartphones and tablets relative to desktop solutions. So I think we need to change our focus towards what uses our end customers will have.
BoxFreeIT: Won’t this mobile application cannibalise QuickBooks at the lower end?
Dixon: There is a slight possibility that it could cannibalise QuickBooks at the lower end but I doubt it. We would have to live with that. If we had one QuickBooks customer going to our new mobile solution then, from our point of view, that’s good. We keep the customer in one form or another.
BoxFreeIT: And you will be able to address issue of losing work by accidentally shutting the browser (See previous Reckon story here)?
Dixon: Yes, that’s exactly right. We can control the navigation inside an application on an iPhone or tablet but we can’t control it inside a browser.
BoxFreeIT: Is it the only web application you will release this year?
Dixon: I think so. We have a lot of ideas of what we want to do and some things in progress; as to whether they will come out this year I’m not sure. An example of something we’re working on is a mobile payments solution but I don’t think it will come out this year.
BoxFreeIT: Will there be any overlap with QuickBooks Online and the mobile application?
Dixon: There will be some overlap in terms of in QuickBooks you can enter time and expenses and you can do bills. And that’s the kind of functionality that we will be delivering later this year. It’s a bit like if you have a Toyota Corolla it has an overlap with a Lexus because they both have wheels and you can drive them. But they don’t tend to cannibalise each other.
BoxFreeIT: What would happen to the mobile application if Intuit releases QuickBooks Online for global distribution?
Dixon: I’ll have to cross that bridge if we come to it. We have a very good relationship with Intuit and I would expect that if they wanted to do that then we would be involved in some form of it.
I’ll give you an example of what I mean by that. I think data sovereignty is becoming a bigger and bigger issue. One of the things I’ve been careful about is to make sure that all our customers’ data and all our application servers are in Australia, on equipment that we own, in a data centre that we lease, based here.
If we were in conversation with Intuit with QuickBooks Online coming to Australia then we would be having a conversation around us hosting it. But let me be clear we’re not having that conversation with them at the moment.
BoxFreeIT: Any other products you’re working on?
Dixon: No. They are too far away at this stage to talk about.
Next page: APS Private Cloud
APS Private Cloud
BoxFreeIT: What is APS Private Cloud?
Dixon: APS Private Cloud was released in November and it lets an accounting firm move into the cloud. It can run anything an accountant might need to run the practice by using dedicated virtual servers for each application. It will run MYOB, Office, and so on. If the application won’t run under Citrix then we can’t run it.
It takes all the service and management aspects of running an accounting firm’s IT infrastructure away. The biggest benefit is that accounting firms can focus on their business and not IT. It costs $200 per user per month. We think this will save 30-50 percent of IT costs. For 50 seats their IT costs are $200,000 per year.
BoxFreeIT: How did you work out how much it would save?
Dixon: We talked to a lot of firms and asked them who is your IT supplier and how much do they charge you and who in your practice looks after IT and how much is their charge-out rate, and roughly how much do you spend on IT yourself?
We tried to put into that number the actual cost based on the fact that accountants charge for their time. And if they’re not fiddling around with technology then they’re charging their time to customers.
BoxFreeIT: What applications are included in APS Private Cloud?
Dixon: You get Microsoft Office 2010, QuickBooks, APS and the software licences to run the APS virtual server such as SQL Server, IIS (Internet Information Services) and Exchange.
BoxFreeIT: One advantage of web applications is that they can be updated in the background without users knowing. What happens with APS Private Cloud?
Dixon: Updates are also seamless, in the background. The user does not need to know about upgrades. But when we change the payroll on June 30 the user has to know. So Reckon creates two versions of APS Cloud, one with the old payroll schedule for pre June 30 and one post June 30. The two versions are kept until 15 July, and we warn them a week before and each day until the deadline. Reckon keeps the older version for a year in case there is a problem but no-one has ever asked for it.
BoxFreeIT: So you can use it from any device once it has Citrix installed?
Dixon: Yes, you get Citrix Receiver from the (Apple or Android) App Store, it’s a free application.
BoxFreeIT: Does APS Private Cloud use the Online SDK to connect to web applications and e-commerce gateways?
Dixon: The APS Private Cloud doesn’t have an API subset. It exists within a world of its own, which is why we call it a private cloud. We have an option for third parties to host apps in the private cloud that aren’t provided by us. If an accounting firm wanted to run MYOB inside the private cloud then they can use a third-party application server that we provide as part of APS Private Cloud. That server would also connect with cloud applications.
BoxFreeIT: So even though QuickBooks Hosted and APS Private Cloud use Citrix they are different platforms?
Dixon: APS Private Cloud is a heap of servers that have dedicated functions and one of them is set up for third-party software support. Whereas QuickBooks Hosted is a published application so it doesn’t provide a dedicated server for which you would need to provide third-party support in that way.
QuickBooks and cloud ERP program Intacct
BoxFreeIT: Any comment on the Intacct relationship with Intuit (see background story here)?
Dixon: So I think the Intacct thing is a trial by Intuit. They are not sure, but what they are saying is that ‘we have never had an ERP solution’. And the only guys in that space are NetSuite, so they’ll go head to head.
We’ve seen a lot of people switch from mid-range ERP products, and I’m talking quite a lot, into QuickBooks Enterprise over the last three years. I reckon it’s the global financial crisis putting pressure on businesses to save money. And instead of saying we need to hang out for 100 percent fit to our business, they’re saying we can survive with less than 100 percent fit if it means we have a 90 percent cost reduction.
We are never going to put functionality into QuickBooks to make it compete with those mid-range ERPs because if we made it so clever then all of our customers would hate it. Because what they like about it is its simplicity. And you see that with the cloud solutions too, people say they like the simplicity. But sometimes it can be simple because it doesn’t do much.