Xero and Saasu targeting tax next.
Saasu and Xero continue to stack on features in the quest for new markets and greater efficiency. Xero recently celebrated the addition of payroll for Australian users which it hopes will entice the 820,000 businesses with staff.
Both are working on adding online tax lodgement so users can file business activity statements (BAS) and other forms directly from the accounting program. But many accounting firms yet to choose a cloud accounting provider are watching the two incumbents. The second half of the year is shaping up to be crucial for both.
Reckon says it has seen the light and is working furiously to move its programs to the cloud. CEO Clive Rabie says Reckon will launch a new cloud accounting application before the end of the year to take on Saasu and targeting larger SMBs.
It is unlikely to carry the Quicken or QuickBooks brand given that Reckon loses the right to sell software under those names in a year and half.
The pinwheel of applications behind the APS practice management suite are also moving to the cloud, if slowly. The first program off the ranks will be timesheet management, launch date unknown.
The company appears committed to its cloud strategy. But it will take a long time to rewrite all those programs.
How much time is there? The number of cloud accounting software sales in Australia is still tiny at an estimated 3 percent of all sales. But Xero and Saasu are signing up more accountants and bookkeepers every day which will have a multiplier effect on sales. The market could tip quite quickly.
The key question for Reckon is how fast can it make the transition to the cloud? And how soon will it bring out its Saasu competitor?
Although it started earlier on its cloud project, MYOB finds itself facing a very tough decision – the outcome of which will probably determine the survival of the company.
MYOB’s two-pronged approach to the cloud has so far misfired. LiveAccounts, a web application in the style of Xero and Saasu which targets micro-businesses, is clearly the right direction despite its lack of features and reputation for bugs, but it hasn’t received much attention.
MYOB still wants to sell desktop software – the company is clearly trying to find a way to move to the cloud without threatening revenue from annual upgrades. Its attention has been absorbed by its other cloud project, Huxley, which has chewed up millions of dollars in development.
Project Huxley, according to several sources, will not be a web-only application like Xero but a hybrid of desktop software and the cloud. The user loads the MYOB program onto the desktop as usual but the database which holds all the financial information will sit in MYOB’s data centre.
Account Right 2011 is the first iteration of Project Huxley and while it’s evident that MYOB management released the software before it had been properly tested, several of the reported problems are in line with the difficulty of running a hybrid cloud program.
For example, when a user wants to create a report the desktop software must pull all that data from the database in the cloud which puts a heavy load on the network, slowing performance. The user must have a copy of the desktop software installed on every machine they use.
And the user is still responsible for updating, protecting and upgrading the desktop software.
None of these issues are faced by web programs like MYOB LiveAccounts or its competitors. In fact, you would be hard pressed to find another business program these days that used the “thin client” model. Nearly all software makers are producing web programs.
Will MYOB make Huxley work, despite the considerable odds? Or do MYOB’s management or its new owners, Bain Capital, have the cajones to kill off Huxley and throw their efforts into LiveAccounts?
MYOB’s future depends on whether it has a good answer to at least one of those questions.
Correction: An earlier version of this article mistakenly claimed that Reckon would not be supporting desktop software. Reckon are committed to supporting their software in perpetuity.