IRIS debacle and ASPs

IRIS debacle and ASPs

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By using online payroll (and other online systems) the hassle with backups, software upgrades, indirect support and historical data can be avoided. I can understand there may be a fear of the internet but the advantages easily outweight the disadvantages, and everone is comfortable with online banking, aren't they?. So why are accountants reluctant?

The background to my question is as a provider of online system (including payroll). In 2002 we built a .Net online payroll and approached numerous accountants either directly or in partnership with online accounts providers. Only the largest accountancy 'chains' were interested. We discussed a contract with a supplier of tax data to accountants but they pulled out at the last minute, when they got cold feet over their customers fear of the internet.

We have ceased selling to the accountancy world and now only do commercial companies, but I remain perplexed as to why accountants don't use online systems, when it seems to me they are ideally suited to the small practice.
Terry Cann

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By AnonymousUser
28th Apr 2006 17:24

Hmmm

Anywhere access in an office - I think the LAN can deal with that?

Slow response for me is measured in looking at the reactions of people 'waiting' for a page to refresh before they can carry on, as well as time - even with the current AJAX technology this can still be an issue for 'heavy duty' apps.

Slowness can be exacerbated by poor programming, although browser apps have a handicap to kick off with (the server round trip).

And this is the critical point - browser based apps are best for some scenarios, while desktop (possibly internet connected rich clients - so called 'smart clients') are better for others. The key is what are the criteria to decide between the two.

The 'patch' point may be less of an advantage with the advent of smart clients (although I don't know why we haven't had an explosion of those - any thoughts?).


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By listerramjet
28th Apr 2006 15:33

your off the mark
how would an ASP model have solved the basic problems experienced by the users of IRIS payroll? It was c**p software rather then problems with backups, upgrades, indirect support or historical data (whatever most of that means?).

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By AnonymousUser
28th Apr 2006 16:53

Revealing answers
Interesting and understandable views. However...

'Anywhere' access also means your clients can access and even input their data (payroll,accounts,etc) while you do the clever stuff. It also means that even in a single office you have access from any PC.

Slow response is due to poor progamming not the limitations of the internet. It is feasible to achieve sub 5 second response even on dialup with most data entry screens. And the user experience and less sophisticated interface problems are as much due to poor design as to browser limitations. (With the coming of the rich client interface this one will change).

Of course people are reluctant to let third parties hold their data. However I have been into some practices that have no idea about access security or disaster recovery. If they were to suffer a break in and have their payroll PC nicked, I suspect they would be out of business pretty rapidly. The right ASP will have the data stored behind a lot of physical and electronic security.

And yes, ASP software can be as buggy but it is much less likely to get out into the user community or cause so much chaos. This is partly due to the simpler upgrade and support path. There is only one version to support and all the users are on it. Any data conversion has happened when the new version goes live. And if the unthinkable happens it is much easier to apply a patch or roll back to a working version on the servers and have your customers working again, than it is to create and distribute thousands of patch disks to them.

I don't pretend the ASP/Internet route is without it's problems, but there is a government department that processes over 50,000 employees on an internet/intranet/browser based payroll system satifactorily (I employ the guy that designed it...).

Does mentioning the government automatically lose me the argument?

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By Philip Hoyle
28th Apr 2006 17:22

Lots of reasons
Firstly, it may surprise some people in the large cities, but many areas of the UK, perhaps areas where the smaller accountancy practices are based, have only recently been able to get Broadband, and there are still areas where Broadband is still not available. Without broadband, you can just about forget the internet. In fact, our local industrial estate only got broadband about 6 months ago, despite our local town centres having it for around 3 years, and our village only got it in 2004.

Secondly, accountancy practices have had to suffer the well publicised failures of sites such as the Inland Revenue so havn't really had good experiences of the internet in the past.

Thirdly, whilst a lot of the traditional accountancy software is outdated, old fashioned, fit only for the scrap heap, etc., a lot of the new applications don't have a decent data-conversion path, so any firm contemplating a change must factor in the time costs of data conversion/input. I have no doubt a lot of this is down to the previous suppliers intentionally writing-in data structures/languages etc that were not industry standard to encourage clients to stay with them. Also, a lot of data needs to be accessed for at least 6 years, and many programs require ongoing licence/support renewal to facilitate recovery of old data - again tying firms in to them.

Fourthly, I wonder whether such applications as you refer to were brought to market before the market was ready. I am sure that there is nowadays a much more likely demand for the new generation of programs, particularly due to increased familiarity with the internet, and also due to more widespread broadband availability.

Fifthly, I was quite keen on internet based models and looked at several a couple of years ago. Quite frankly, the costs were prohibitive for a smaller practice like mine. One in particular was expecting something like a £25 per month, per client, fee which is just not viable for small practices and their small clients.

Sixthly, there were still few, if any, truly integrated models, which properly integrated payroll with the nominal ledger, with the cash book, with tax computations, etc. Most were still ledger based like Sage, which is OK for larger clients with book-keepers but hopeless for one-man bands, IT contractors, etc. I never once saw an internet based product based on the Quickbooks model or which did tax computations effectively.

So, quite a few reasons really - perhaps the software developers havn't properly considered the product needed by the smaller accountancy practices and havn't properly considered things such as lack of broadband, etc. I would certainly welcome a new batch of online accounting/payroll/tax programs but the ones I looked at a couple of years ago just didn't "do it" for me.

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Dennis Howlett
By dahowlett
30th Apr 2006 01:28

Get to facts/benefits
John - why are folk obsessed with functionality? What is it about online offerings that misses the mark for 80% of businesses in the UK?

Note I have never said that SaaS is a 100% alternative. I can see plenty of circumstances where on-premise is the better choice - especially if you are a channel master in your segment.

I don't buy the availability argument. Even here in 'backward' Spain I have no problem watching online TV - that's a decent test.

The point everyone misses is that on-demand has to earn its coin 24/7 because it's a service. On premise never has to earn its value because it's a license to use.

HJ - this argument is tosh. How do you think Tesco does its business - by hand? It's successful because it leverages the value of the network. For small suppliers that means EDI via mailbox or over the wire. For others, it's machine to machine.

I can now build a fully functioning business infrastructure over the wire, for multiple users in a matter of days. For professionals, I can build a knowledge management system, bypassing document management in the same amount of time. I can customise it for my own purposes in minutes and hours. Proof?

Dresdner Kleinwort Wasserstein built a 400 person system that is proving so successful that the traffic exceeded all other traffic on its intranet in less than 6 months. They could just as easily run the app over the wire - they choose to keep it behind the firewall.

This is not about whether an app works over the internet but whether it is more cost effective to run as hosted and whether I still get the flexibility I need to manage my business processes the way that works best for me.

The one area where I think on-line doesn't make sense is business analysis. The computing requirements along with the need to build custom logic doesn't work over the wire.

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By jacp400
30th Apr 2006 13:14

Functionality
Hi Dennis,

I'm not sure I really understand your question. Why invest in something that only does half a job and that would require me to manually work around the other half? I'm only speaking from personal experience but having reviewed a good number of products I havent found any that will do everything I want. I know of a handful of LAN products that would meet my requirements. I do want a SaaS based product because I have a distributed team who are quite often out of the office but I find I'm having to consider what functionality I have to compromise to get this benefit.

With regard having to get it right to keep the business going, this is certainly a valid point although consider Rent IT Systems (http://rent-it-systems.com). Their software is LAN based but they rent it monthly. It's the same affect as SaaS though, big issues with the product mean no revenue as clients can move away from them at any time. It's therefore worth remembering its not so much the delivery model (although this is still part of it) but the pricing model that keeps these types of businesses on their toes.

I would however say, that the bigger resellers of traditional LAN products will have £1m+ of revenue before the year has started from the support/licence of their existing customers. Authors will probably have more, so although the impact of poor product/service is less it will be significant to their business if customers move away. I'm sure there will be an impact on IRIS after this last financial year.

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By Ken Howard
29th Apr 2006 19:12

Non IT literate clients
I don't think that vendors realise just how many people out there still don't have a mobile phone or email. I've been working on my client base for over 2 years to get their mobile numbers and email addresses - and I still have 20% of my clients who claim not to have one or the other.

A lot of this is down to my rural location (Lake District) which has had a very slow broadband roll-out and also a generally older population, not to mention large areas of the county that had poor mobile phone coverage.

For me, whilst I embrace the benefits of technology with 80% of my client base, I still have to rely on good old fashioned meetings and correspondence for the other 20%. This does make life harder as I have to run parallel office admin systems.

I will, on day, sack the non IT literate clients, perhaps when the percentage is a bit lower, but surprisingly a few such clients are actually very lucrative for my practice.

I would dearly love the computer system vendors to work "with" the smaller practice to see just how different the reality is from their perception of how accountancy practices work. I get the impression that they only ever work with the larger city/town centre firms rather than the smaller 1/2/3 partner firms that actually form the majority.

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By jacp400
29th Apr 2006 20:53

Functionality
Ive been looking at SaaS for use within my team, and the one thing that has struck me is that the functionality seems to be considerably less than LAN solutions.

I suspect this is just a lag between LAN products which have been around for considerably longer and therefore had consderably more development hours attributed to them.

The argument about availability is still valid, but much less than it used to be.

I cant think of any other significant reason to dimiss a SaaS solution.

John Clough
BDO Stoy Hayward LLP

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By AnonymousUser
29th Apr 2006 21:31

Online suitable for all?

Dennis, if both were available at the same point in time, would you use Outlook's desktop or browser version?

If you had *many* transactions to enter at once, and quickly, would you prefer a desktop or web application?

The point is the user experience currently is sufficiently different between browser and desktop applications that the latter are more suited to heavy use/long session requirements.

As I indicated in my earlier post, this is mainly due to quicker responsiveness for the user and more options at the moment for richer UIs, as well as having more access to the file system and other resources on the users system.

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Dennis Howlett
By dahowlett
29th Apr 2006 17:09

Simply not true
HJ's vague argument that online is only suitable for certain apps is simply not true. There is a welter of onlone, on-demand (we don't use ASP anymore as the acronym...SaaS is the current acronym)apps out there that do very nicely thank you.

The problem for everyone (vendors I mean) in this space is that no-one is adequatley articulating the benefits in ways that professionals can understand in the contect of how their businesses are organised. That's what I do at AccMan Pro.

In order to see what this means it's important to understand how the current practice models are effectvely broken. By which I mean the model that says: "I am a CA and I am situated at X-office and if you want to deal with me then you come to me and I TELL you what you need to do."

It says nothing about the relationship aspect of being a professional in a world where everyone pretty much lives on their mobile phone.

Once you see what this means then it is a short step to understanding the value that hosted applications can deliver.

Example: Accounts are completed. What do we do? Send emai, send letter. Delay before seeing client to discuss???

How much more efficient would it be to publish the accounts in a format where it could then be automatically transmitted to the client's PDA/Smartphone? that's possible now - but only if your originating content CAN be published in this way. Which means stepping away from your Windows/Intel imprisoned applications.

And before the trolls poo-poo the idea as stupid then here's an alternartive. Make the key figures: revenue/GP/PBT/net assets/cash available instead.

So now we come to implementation and all the heartache that implies. The technologies to do this stuff are here and now. I am for instance negotiating to have my content delivered in this way. Because it is more convenient to the user, they retain choice as to what's important to them while I build a deeper relationship with readers. Win-win-win.

BTW - this is only one delivery method that takes advantage of the SaaS model. there are many, many others.

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By yardleystar
04th May 2006 13:54

ASP
We are currently developing an online module in a specialist sector for clients to input data via their browser with the facility to view real-time reports and tax computations.

Once the first project is complete, we have a pipeline for similar specialist sectors.

The key seems to us that the big boys will be looking at full accounting modules online but will ignore specialist sectors - and this is an area where small practices can look to prosper by fragmenting the market. General book-keeping and accounts via the web is a massive project, but specialist sectors can be accomplished and managed by a small team.

We can look at a scaled down ASP as we are not looking at users in the hundreds of '000s but just hundreds. Data security is easier to handle via secure servers at our ISP, which also means we don't have to worry about bandwidth or storage space. Backup is dealt width likewise.

We would welcome contact from any small firm lacking the skills to deliver ASP but who might want us to collaborate with them on web based projects.

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By AnonymousUser
28th Apr 2006 20:20

Now I understand, I think...
Thanks for all the comments. I think they demonstrate some interesting problems. I have long felt that the payroll/accounts software market was saturated, with the subsequent downward pressure on prices and companies milking their old products for all they are worth instead of investing in new ones. When it takes hundreds of thousands of pounds to bring a new product to the market (which is why smart client is slow to appear) and your customers can/will only pay Sage/IRIS prices you are unlikely to shift the required amount to make a profit. And you have to charge heavily for support or provide a poor service.
By using the ASP model it should be possible to bring the functionality enjoyed by large companies down to the SME market, and a number of providers are moving in this direction.
However this is reliant on confidence in the internet and the comments here suggest that is still some way off.
I can't help feeling that those SMEs who can't/won't use the internet are going to find themselves in the position that retail finds itself now. Their customers are voting with their feet (or not!) and shopping online.

Luckily we also do ecommerce software...:o)

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By AnonymousUser
30th Apr 2006 15:30

Re: Ken's comment
Regarding Ken's comment about vendors working with smaller practices, our software (AccountsVision) was designed by myself, a accountant who worked in practice - which is why it takes a completely different angle to preparing working papers and accounts.

Most vendors designed their systems quite a while ago, when technology only allowed them to do so much and new ideas and features are constrained by what has gone before. With the power of the modern PC, new software has the opportunity to become more innovative - but costs of redeveloping are extremely high.

Most of our customers are of the size you quote, I imagine because they would have less disruption moving to a new system. Generally, larger firms go for the all-in-ones and so features are designed to suit them.

Since our customer base is therefore with the smallest of firm, they are who we listen to and as such, all of our improvements and little touches in our software come from them.

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Dennis Howlett
By dahowlett
01st May 2006 13:16

80% flop?
I'm confused now John. Are you referring to accounting apps or are you referring to something else? the on-demand financial products i've seen so far (about 20 of them) provide what I'd want to see in an SMB service.

If we're talking about something that's more than SMB then that's a different story at many levels with many possible outcomes.

If we're talking about on-demand ERP 'style' systems then we're not there though some vendors are working towards getting more useful functionality into the mix.

If we're talking practice management as an on-demand style of service then we're nowhere in the conventional sense though I have prototypes kicking around that could be developed.

Most will agree that on-demand is at a point wherre functionality is 'good enough' not perfect. I'm happy with that, helps avoid bloat.

Where clients really want something bespoke then a combination of XML and scripting can get you there pretty quickly.

If I'm totally off topic or missing the point altogether - let me know.

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By jacp400
01st May 2006 16:43

All Apps
Hi Dennis

Guess it's not a bank holiday over there is Spain?

My search has been for support and project management software - although I have looked at some accounting software along the way.

Of the accounting software, there seems to be plenty around that would compete with say Sage Line 50, ie single level nominal ledger, basic currency options, occasionally some element of stock control, sales orders, etc but nothing that would take you to the higher level, ie Access/Exchequer through to Navision and beyond.

I cant say that Ive spent much time looking at practice software and I do understand that this is the subject of the topic - I was just sharing my experience of SaaS.

Having read some of your previous posts I suspect that we would agree on many aspects of SaaS. My feeling is that it's just not in a position to compete with much of the LAN based software that's out there yet. It will be one day though...

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Dennis Howlett
By dahowlett
02nd May 2006 04:47

Recommendations
Hi John:
It is a holiday I'm just catching up.

You don't talk about team sizes or complexity but I'd try the stuff at 37 Signals and if there isn't anything suitable there then hop over to JotSpot where I think you'll find some pre-built apps you can combine into a wiki.

You can trial these for free. Both hosted. 37 Signals do some very cool but relatively simple things that might give you a starting point.

Jotspot is powerful but the wiki language they use takes a wee bit of getting used to. I've built apps with this and they've been fine for workgroup sizes - like 20-30 people a time.

JotSpot is pretty easy to skin as well. Finally, if you really like it then they do have an appliance that can go into your network Bit minted at $10K pa but I think that's negotiable. If you like it get back to me as I have a way to get to the CEO.

If you want any more information, you know where my place is and you know how to reach me :)

PS - I have some nifty ideas about how you can save a lot of time rsearching services.

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By AnonymousUser
28th Apr 2006 15:49

Intersting question

I think the answer is that online (i.e. browser
based apps) have certain limitations and only really make sense for people who need 'anywhere' access (e.g. firm with more than one office wanting to share).

The main limitations include:

Slow response/user experience (probably the major reason why 'productivity apps'are not browser based)

Less sophisticted interface available

There are other factors such as unwillingness for third parties to hold sensitive date although these are probably less important.

Of course the browser can make sense for limited/single functionality apps such as Amazon and Hotmail where each session need not last that long. Also, consumer apps may need to be online to reach a mass audience.

And why can't ASP type software not potentially be as buggy as desktop software?

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By David Carter
11th May 2006 11:47

but you have to learn a whole new system
Surely one of the problems with new ASP products is that users have to learn an entire new system, which neither their accountant or their book-keeper has heard of. They are (understandably) very reluctant to do this.

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By AnonymousUser
28th Apr 2006 19:22

A question of dependence, perhaps
I do not get involved in these decisions in our practice, but I have known, both in the office and at home, internet services to go down. Of course, a LAN can go "down", but relying on an off-site service just adds another thing that can go wrong, and I just don't see the advantages to counter that risk.

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