Just over 1 year ago, I walked out of my first Xero road show in Melbourne’s exhibition centre with my mind buzzing. The benefits of cloud accounting solutions were so obvious, it was going to take over and my imagination ran wild contemplating the possibilities of what was to come.
While relatively new to the Australian public accountancy world at the time, I had already concluded that the incumbent platforms, trumped by providers like MYOB had passed their expiration date. I knew that I couldn’t be the only person suffering the painstaking frustration of dealing with accounting software packages that were unable to share information directly with each other. Shifting from one programme to another depending on the requirements, if you were unhappy with the features, you hoped that next year’s update would fix it.
Cloud Computing Today
Xero, QBO and co have poked a sleeping giant in the accounting profession but given the breakneck speed of change in the technology section as a whole, it was ripe for disruption.
Just as a large part of an iPhone’s appeal is the apps that you use on it, by sharing their API (Application Programming Interface) with developers the cloud accounting solutions are adding immense value by allowing other 3rd party product developers to link their products into their host ecosystem. Also, similar to how your phone’s operating system updates automatically, the providers are rolling out new features every few months, often directly based off user input and requests, as part of your existing pricing plan.
These two key principles: (1) Ease of data exchange with a growing suite of “Add-Ons” and (2) Continuous system improvement, are key to understanding the inherent benefits over the existing dominant desktop based solutions.
MYOB, Reckon Quickbooks, Sage Handisoft etc previously bore all of the responsibility for innovation, but now useful niche features are being provided by progressive software companies like Receipt Bank, Fathom, Vend and Unleashed. The ease of integration is allowing business owners and their accountants to derive huge value from the synergies created.
Add-Ons in Cloud Computing
As the Add-On providers continue to disrupt and displace each other, competition among them will keep the rate of innovation high while keeping prices down.
With Xero reaching 500,000 customers and Quickbooks Online proclaiming 1 million paid subscribers worldwide the benefits of working in the cloud are well known at this stage (if you’re still not convinced, read this).
With the core accounting features in each offering built out, the providers have already started moving past their initial remit with Xero releasing Practise Studio, Tax and Work Papers, and Quickbooks Online integrating a secure document sharing portal. These systematic improvements, along with the rising number of sophisticated Add-Ons, will increase the benefits of this holistic approach to small business system management.
Competition is increasing with the recent entries of Reckon One and Sage One to the Australian market and NetSuite and SAP Business One should enter the conversation once your client’s business crosses the $5M turnover mark, but this presents a great opportunity for business advisors. By educating yourself on the range of available cloud business solutions, a topic on the tip of almost every small business owner’s tongue, you are positioning yourself at the head of a train that is leaving the station. 2015 is the year that cloud accounting become the norm, don’t be left behind.