What about the other cloud apps for a Practice?

They would be too slow.

Hi David, you mention hosted desktop and with that we, effectively, have all you mention in the cloud, albeit that the software is still conventional.  I suppose that, as with other "heavy" systems like Sage & Quickbooks, it's going to take time for IRIS and others to come up with their Cloud versions, but I have no doubt this will be here within 2-3 years.

Given how well the hosted desktop works I would still use "Cloud Iris" via that environment, as we currently do with accounting & payroll.

Peter, the speed issue for us is a bonus in that firing up and using Iris, Outlook, Word, Adobe Acrobat etc etc is quicker via my desktop on the web, than it ever was from my old pc & server.

I would agree with Peter Saxton but I'm no technical expert.

I'm a big fan of hosted.  For our small practice we have one "cloud" with all our desktop programs (MS Office, VT, QuickBooks, Tax Calc) but even more importantly all our data (including full daily backup with 7 year retention, which I had reason to test on behalf of one of our clients).  I haven't come across practice management or document management packages that meet our requirements (they're all just too clever for our needs!) but I have no doubt that when we do find them they will fit neatly into our hosted service.

To us hosted is cloud/SAAS computing only far better!

We have looked at both options and have finally concluded that 'on premises' is cheaper and much faster.  Out of our client base only one has expressed any interest in cloud based bookkeeping/accounting.

It is not that I am anti-cloud it is just that we have not found any benefit at all in going down that route.

Part of the issue could be the speed and reliability of our internet links.

I'm sure it will happen, but there is more than a little resistance to the idea of keeping client data in the cloud at the moment.

I can certainly see personal tax products being viable - relatively small amounts of data to store, and software that needs regular updates delivering to all users - all ideal for cloud-based applications.

You will note that most of the successful cloud products have come from startups with no 'baggage'.  The incumbent suppliers all have a huge investment in their current products, and they've not had great success breaking with that (Just look at Sage's attempts to create an SaaS bookkeeping product over the years).

There's another hurdle, which is that startup cloud providers can launch with a basic product, and then add features once they get the first bits of revenue coming in.  As a customer, I might be able to live with a bookkeeping product that doesn't have stock control, but I can't have a tax product that only processes half a tax return - Its all got to work on day one.  So - there's going to be a lot more up front cost before I can start selling anything.

Cloud based time & fees and document management are appearing - this is where it will start, with compliance later down the road.

I think there are signs of software companies getting into gear for this...

IRIS now has an MD with strong SaaS background, and they've invested in a cloud bookkeeping product (FreeAgent, under the 'Openbooks' brand).

CCH recently bought Twinfield, so now THEY have in-house expertise to call on.

You will also start to see cloud bookkeeping providers start to deliver basic statutory accounts production (for SMEs only at first). I think Xero are doing some work on this. Accountants who partner with cloud bookkeeping providers might well start to shift some of their accounts prep workload onto the same platform.

To expand on Charles' comment, Xero is just about to roll out the first phase of our Modern Practice initiative that attempts to address the basis of your original question, David.

http://www.xero.com/modernpractice/

Regards,

Gary Turner
Managing Director, Xero
@garyturner

Why is the Xero webpage all in dollars?

Hi David,

In most traditional accountancy practices, year end accounts and tax work still forms the bulk of the workload. Historically, their needs for tax return and final accounts publication software have been well served but, until now, there has been no software to help them automate the work they have to do in compiling accounts from client records - until now.

We have (finally, I know!) now made our new software Ledgerscope available - see http://www.ledgerscope.com. It's Cloud software and bridges the "software gap" between the front end client bookkeeping software such as Sage and QuickBooks and their own back end publishing software, provided by the likes of CCH and IRIS.

We hope to support the new, online providers such as Xero, KashFlow and FreeAgent very soon. This is when the real benefits of integration between complementary Cloud software will really shine through.

Adrian Pearson
Ledgerscope

@Peter It's just been launched in New Zealand, we will be launching in other countries (including the UK) shortly when UK pricing will be finalised.

Gary Turner
Managing Director, Xero
@garyturner

David

This is a very interesting debate to follow since to many of us the benefits of SaaS are considerable.  For example I started a new company last year, we chose Google Apps and a raft of other SaaS apps from the outset, and we have benefited hugely in terms of cost, convenience and productivity.  But then we're a SaaS vendor and we had the advantage of a blank canvas.  (Our accounts are still on Sage for a variety of reasons).

Here are some of the reasons why adoption is slow:

1.  Developing new software products and establishing them in the market takes a very long time in b-b.  Stability, functional sufficiency and advocates are pre-requisites of widespread adoption.  And that only happens after the vendors themselves have achieved brand awareness and sales traction (Kashflow, for example, have done a great job - but were founded in 2004 and I think only relatively recently reported revenue > £1m).

2.  Many more SaaS apps are coming but as with any new technology it takes a long time for it to be adopted by mainstream business.   The people following this thread are for the most part early adopters who are receptive to the benefits and convenience of SaaS.  People using on-premise applications are either not aware of the benefits (and feel it's not a priority for them to investigate) or feel that the benefits of what they have currently outweigh the costs (financial & non-financial) of switching.

3.  SaaS apps are less mature than on-premise apps in terms of integration.  Integrated workflow is embedded in many companies and they value it extremely highly because it reduces labour costs and improves customer service.  Even on-premise apps have only recently approached maturity in integration.  Fortunately the architecture and technology of SaaS means they will be able to catch up quickly.

My experience is of business software generally though I have enough familiarity with the Practice market to know that similar principles apply.

4.  As a vendor I observe that the reason for slow uptake of SaaS is not so much the competition from on-premise, but that doing nothing new is easier for most people...particularly in a recession when they are just concentrating on staying afloat. 

Our challenge is to present simple and compelling benefits...and it takes time to master how to do that too!

Back in the days before he devoted all his time to blogging and social media, Dennis took a close interest in an embryonic Cloud practice management suite. Nothing ever came of it, but perhaps he could enlighten us about why the market might not have been ready in 2006 - and why the same conditions seem to apply today.

We should also hear from Adrian Pearson - he's now involved with the Ledgerscope system. Before that Adrian was involved with HQ for Accountants for years. There is now an actual website up and running offering basic email, contact and diary/task managment features... but no sign of billing, timesheets and other features practitioners might expect.

I'm also surprised at the dearth of tax and accounts production tools. Some of the bookkeeping apps are moving in the direction of integration with AP (particularly around the iXBRL accounts output), but tax is a no-go area for the Cloud. This is odd, because the updating process around rate changes and new tax treatments should be one of the big advantages of a centrally served tax application. Again, David Forbes has looked at it in the past, but not felt there was demand there for such a product.

One reason why there has been so little innovation in this area is because of the dead weight HMRC has laid on the tax & practice software industry with its iXBRL diktat - and the reformatted, "no facsimilie" tax forms it introduced in 2009. Just as the Cloud presented a new challenge for them, the developers have had their hands full trying to keep up with major functional changes in the way their software interfaces with HMRC.

For the moment, hosting is the closest you'll get - and as we've seen here, there are quite a few happy practitioners who have gone down this route. I expect that when they do come - and I think they will - Cloud tax and practice tools will take off quite rapidly. IRIS and CCH have been nosing around this territory and making intriguing noises, but I also suspect the catalyst for adoption may come from beyond the traditional industry compound.

Both guyletts and John Stockdyke have identified a number of the reasons as to why we have looked at Cloud and currently rejected it.  we are not primarily a bookkeeping practice and need integration with AP, Tax, Company Secretarial, Practice Management.

Using on-premises bookkeeping products enables us to integrate the results into AP etc and to manage from our Practice Management suite, which we cannot easily do with Cloud products.

We have been advised by our software provider that they are moving to the Cloud for the whole suite of their programmes, but not for a few years yet (they are still coping with iXBRL and HMRC).  When they go that way so will we (I expect, though I may have retired before then).

There is also, in a period of recession, very much of an attitude of "if it ain't broke, why fix it".  Why should we move to the Cloud when we are able to manage our practice from on-premises but not from the Cloud?

Do not forget, moving to a new software house is extremely costly in up front fees, implementation, and staff training.  Bitter experience over a number of years has also taught me that the final product is never as glittery as the salesman's talk.

Essentially some of the apps we are talking about are annual based and this has to be factored into the equation

Historically with desktop apps new versions each year were great because they were a guaranteed annual revenue for a boxed product. Although latterly the likes of Sage have taken to 'non-releases' with accounting products every 18 months just to ramp up the revenue stream or encourage users to join their 'support club'

But quit frankly there 'artificial releases' on boxed accounting products are just that - artifical and potentially un-necessary within their current release cycles

However, the Cloud pricing model rather changes the dynamics of this approach because the revenue stream is present whether or not an annual product is concerned.

Therefore there is slightly less incentive to take on annual products because the work of changing them each year can be immense and for what payback? Far better to opt for a standard accounts, doc mgt, HR etc package which may need tweaking/enhancing but provides a constant revenue stream without potentially needing to be re-written every year because of changes in the rules

Having done both (accounts & tax) for Cloud there are definately fewer issues with products that do not need to be re-written each year and for a simpler life just write the app once ...!

@david_terrar

Time & Billing - solutions already exist and have done for a while

Invoicing - some solutions already exist - and many others have attempted it. However, a number of them are invariably stand alone applications with no integrated onward processing. In any event a great many of them are simply data entry screens and fail to account for products etc. which when coupled with a 'stand alone' approach makes them virtually worthless except as a gimmick

Fully integrated systems - The questions here boil down to

• A single integrated system
• Using 'best of breed' in the appropriate areas

The latter (best of breed) would probably be the optimum solution because that would allow expertise in specialist areas, however the hurdles are:

• Lack of coherent industry standards
• Common look and feel over products
• Failure to use Web Services to their full extent

What does surprise one is the complete absence of any generic Web Services that provide the underlying processing for areas such as tax, p11d etc. Frankly it would be far simpler if all the interested parties clubbed together to produce a web service (or many) - single point of contact - containing the tax calculations for each year and then each one used it in their systems. Instead of each software house currently 'reinventing the wheel' every year in these areas.

Finally a lot depend upon your target market as the viability of projects at a cost effective price. For instance most software houses would far prefer a wider audience for their products (i.e. accounts, crm, hr etc.) rather than the fairly limited accountants specific market which by its very nature restricts ones sales and is very price sensitive

In this respect one only has to look at the endless stream of complaints about others costs on Aweb whilst at the same time charging £50-£400ph

JC - I share your conclusion on the reason why nobody appears to be close to offering SaaS practice app.  The market is small.  The simple SaaS revenue sum (users*subscription) shows you need to sell a whole lot to justify a new product.  One other factor in bringing such a product to market is that practice management for a small practice is dramatically different from a large firm, or even medium, where they accumulate all sorts of corporate housekeeping and reporting requirements overlaid on the basic computations and workflow.  So there are no big ticket sales to compensate.

As a potential investor in such a product, you're limited to a relatively small addressable market, with a tough (or should I say discerning?) audience, few new entrants (compared to the number of new business start-ups which are rich pickings for the SaaS accounting apps).  Getting people to change from a current system that works and is embedded in the practice and its people is no small challenge, as anyone else who's been involved in bringing one to market will know all too well.

So why did 'new-build' work for the on-premise apps in the first place?  How did the founders of Taxsoft, CSM, Hartley, Apex et al manage to sell up for a tidy sum?  Well, they were replacing manual computations and systems and they offered a compelling benefit.  Now, I'm a SaaS vendor (not accounting), but I'd be the first to concede that SaaS's many and significant benefits don't always constitute a reason for a practice to fix what ain't broke.

As for overlap between accounting and law practices, logically it's a very sensible option, but  the cultures are very different and the different working practices are too ingrained in my view.  It's a hard enough sell, without trying to offer a new vanilla way of working too.  And even double the market size still doesn't make the numbers worth it for a new entrant.  The opportunity I see in that sector is for the incumbents to evolve, initially via hybrid solutions that take the best of what's there, graft in the benefits of cloud, and keep going.  The ones who do will pick up business and guarantee their futures with relatively low risk and investment.

In the accountants' sector I'm pretty sure the pattern we'll see is incremental additions to SaaS accounting apps which grow 'outwards' into tax and practice management.  Cross-sell and up-sell by a vendor to an existing base is far more viable, indeed it's an important growth driver as that market matures (which it is nowhere near yet by the way). I think we're seeing the 'green shoots' of this approach in a certain Antipodean vendor.

Anyone else attend Iris World this week, they have nailed some of their colours firmly to the Cloud mast (sorry that sounds awful), couldn't fault their thinking, watch their space.

That none of the 'big boys' are innovators and yet are perfectly willing to jump on the bandwagon 10+ years down the line

This is surely down to management lack of vision and foresight which ultimately brings into question the calibre of those at the top in these companies; and yet they still manage to hang onto their comfortable positions

Now put the efforts of these 'management sheep' & laggards against real inspiration such as Steve Jobs and it very obvious that most of the CEO's are frankly not up to the job and are woefully out of their depth

On the Cloud front, it is not just IRIS, Sage etc. but also Microsoft who refused to commit - preferring instead to harvest their IP infringements as a revenue source rather than innovate.

All very disapponiting - where are the bright lights in this industry.

We need leaders & those with vision (again Jobs) and not a bunch of jobs-worths who quite frankly have little to offer other than follow-my-leader - mmmmmm ........

Do these organisations even have R&D departments; because if they do then something has gone drastically wrong with their mandate to have missed the boat by 10 years when Cloud, SaaS has been staring them in the face for that length of time!

Well said, JC.

Good old Dennis Keeling used to talk about his Keeling Principle which he'd coined after observing many software companies and which I'll (badly) paraphrase to say that when a software company founder leaves, the business begins to decline and die.

I guess that needn't mean instant revenue decline, but certainly innovation decline which ultimately leads to corporate decline.

I'd bet there's a pretty clear correlation in most software businesses between evidence of lacking vision and innovation and the absence of the founder CEO.

Apple's story is a great example of it in effect and even how fundamental the return of a founding CEO was to reversing the dysfunction.

Gary Turner
Managing Director, Xero
@garyturner

I'm reading this blog during the coffee break of a cloud computing workshop, where I've basically been treated to an insight into the world of Google Apps integrating beautifully with various cloud based CRM & email marketing possibilities.

Why can't I take advantage of any of this for my practice?...Because everything we produce (out of IRIS incidentally but they are all as bad) relies on Microsoft office.

Comments above talk of a small and discerning market for a full cloud based practice management & accounts/tax production solution, but there's £10k a year of my software budget waiting for whoever comes along and develops what I need....

Scott Bradshaw,

Coleman Bradshaw

@colemanbradshaw

@colemanbradshaw

Not quite clear what you are after. Could you define in greater depth what integration you are looking for.

Is it Cloud based

• Practice Management
• Accounts/Tax production
• Other things? - define

and what do you want then to integrate with Google docs (M$ Office/365) - other?

Yes Google apps has 3 levels (small, medium, large), but look at what they are offering (the easy stuff!) and in the main they center around gMail, calandar, docs, market-place apps, Cloud connect (a wapper for M$ Office)

However, it is back to the fact that most of the Google apps are of a generic nature and not the specific buisness focussed solutions you want. In fact Google/M$ have huge R&D budgets but have chosen to steer clear of the type of apps you want - which must indicate a reason; i.e. not mainstream, reduced market, revenue implications, lack of innovation etc.!

Finally, what are your business drivers - cost, funtionality, x-platform access etc.

Whilst this is a M$ advertisement nevertheless there is an underlying truth about Google's invasiveness -  http://www.youtube.com/watch?v=yXqrTfOWx60

So do you want everything scanned by Google, in order that they can target you for advertising?

Dear all,

I fully agree that the big boys in the sector are deliberately very slow to innovate.

The large, established software houses have long since lost their innovative founders and are no doubt now externally owned and potentially listed.

This gives rise to the inevitable short term outlook on decisions, including R&D. Maximise this years profits with less concern for the customer or long term value.

Why take a risk and innovate when you can let an OMB developer do it, wait to see if it succeeds and then copy or just buy the business?

I also agree that they fear it will damage sales of their existing applications.

It seems clear to me that any application can exist in both cloud format to suit smaller practices that appreciate the reduced investment / flexibility and as normal applications for the larger firms that prefer the control of holding on their servers.

We have been developing our practice intelligence systems for 2 years now and most smaller practices we speak to have an expectation of a cloud offering - so this is where we are moving to next.

Best regards,

Ben

ben.norwell@whatsglide.com

www.whatsglide.com

@whatsglide

Interesting article in the suppliers section today about a practitioner using an iPad tp complete a tax return on the 9th hole - another advantage of cloud computing, albeit using a hosted solution - http://www.accountingweb.co.uk/press/tax-returns-golf-course-news-btc

I agree with what others have said, the big names aren't very proactive in offering a cloud based solution, however using a smaller player isn't something to avoid, our software was mentioned above (HQ for Accountants) 

Our clients can call our office and speak to one of the developers of the actual product not someone trained to troubleshoot common problems.  We can also tailor the software to meet your requirements.  However this far from makes the product amateur, It took 7 years to develop and was developed with accountants for accountants.

We also continue to develop the product by listening to our users, for instance we have just released the latest version which is Ipad compatible.  Something the big players would be hesitant to invest in and develop until their existing product stopped making them money.

Oliver