Internet accounting's second coming

@Bob - you're right - it depends on the kind of business you're seeking to address. You've seen the demographics I'm sure and will know there are certain verticals that will get on much better with an online solution than others. Your plumber example is spot on in that regard. I'd argue differently re: service based businesses. Point is we don't both have to be right or wrong.

@Mark - you're running the risk of making some over generalisations that dilute the argument you seek to make.

"By collectively making more noise, we will improve the accounting
industry's awareness of what the online approach has to offer. Surely
this is a good thing and the headline was no snub to the incumbent
providers?"

Making noise and having impact are two entirely different things. Even in the face of a clear business case, you're going to find enormous resistance because it means 'change' - that most difficult of things to legislate against.

"Technology never stops advancing and software vendors who have the
financial resources to do so will continue to evolve their applications
to make them ever better."

That's fundamentally untrue and doesn't follow the pattern of s/w development we've seen ovr3 the last 30 years.

We can only go on our benchmark tests which show offline is the fastest environment. Data entry speed and fast data validation is a key element in our business model of guaranteeing perfect bookkeeping to accountants. Interestingly, we are just moving away from an online CRM system to an offline one because of continual complaints from our employees over speed affecting productivity and causing frustration.

Getting up and going quickly is not as important to us as getting up and going correctly but I agree online help is a good idea, that’s why we have an online knowledge base with videos as well as a telephone helpdesk.

We could argue all day about what is best online/offline but it’s all horses for courses. For example, we have many mobile users like plumbers, electricians and mechanics. They have laptops and printers in their vans and when they do a job they print out and invoice and give it to the client straight away. If they get paid straight away they record the receipt and job done. They don’t need a mobile data card or to be in a WIFI service area. So, in this case online would be negative.

For every example I give of where online wouldn’t work as well I am sure there is an example about why it’s better but at the end of the day unless the user has a very specific reason (like multi-site) to be online it really doesn’t matter. We haven’t heard any small business saying I won’t use MORE because it’s offline but we do come across a noticeable number of people who are not either not comfortable with using online systems or online would be hassle for them becuase of connectivity.

What really allows accountants to collaborate effectively with their clients is not online or offline data but good quality and up to date data. The environment is which the data is collected comes second. Data can be collected and accessed online, delivered by email or viewed by using online meeting tools. Accountants can connect with clients over the Internet without the client using an online accounting system.

Accessibility of the data is not as important to our model as speed and data quality. That’s why we think we’re not missing the point, we have a different point and at the moment offline works best for the purpose of helping accountants systemise the micro and small business department and delivering a bookkeeping service to clients.

It's horses for courses and we have a fast reliable one designed to help the accountant win his/her race.

Bob
www.moresoftware.biz

Inferences that online applications can’t operate quickly enough for some users are wide of the mark. The capabilities available in web applications nowadays are such that we can deliver a fully online solution that’s both quick and simple to use, while at the same time containing the depth of functionality demanded by more sophisticated users. This means that (some) online applications can adapt to the needs of accountants and clients, light and heavy volume users, small and large companies. It also means that you can get up and running without the need to shell out on expensive training and consultancy. You simply start using it, utilise the online help and call the helpful people on the hotline whenever you have a question (a very, very important part of the “service” element of Software as a Service).

It is only in a fully online, real-time environment that co-operation between accountants and their clients can be taken to the highest level, something that previously couldn’t be contemplated without spending vast sums on bespoke software, hardware and networks. Today’s standards-based online solutions enable businesses of all sizes to achieve giant increases in operating efficiency, which in turn makes a significant positive impact on the bottom line (for both accountants and clients). In a nutshell, you can get much more done with the same or fewer resources.

Aside from improved usability and efficiency, a solution that is fully online and delivered according to the SaaS business model comes at a fraction of the price of comparable installed software. By retaining complete control of the solution that everyone is logging on to, it can be delivered to each user, wherever they are located, at a price that’s significantly lower. Software that’s installed in multiple locations can’t be distributed and supported at anything like the same price/value point, the logistics involved don’t allow it.

Bottom line: Accountants (and their clients) who are successfully exploiting the potential of the best online solutions are able to achieve a greater return on investment than their competitors.

Mark Davies
info@e-conomic.co.uk
www.e-conomic.co.uk

Something that has most surprised me about the comments made on John’s article is how much "defending of territory" there has been from some solution providers (even by some online providers who have been in the market for a while).

I’d be interested to see further comments from accounting practices, but appreciation goes to Alan Moore (13th March) for putting forward a view that some practices may see as radical – i.e. give something for free because it reduces costs. So which business model is most profitable? Which offers the best combination of price/value? Which is ultimately going to prove to be more successful than the rest?

Our experience with thousands of accountants and clients is that the fully online approach creates opportunities that are not possible with other models. Instant online access to every aspect of a client’s accounts provides the ability to deliver new and varied levels of service in an efficient (read: more profitable) and controlled environment.

The fact that more players have recently announced their entry to the UK online accounting market is no doubt the main reason behind the “second coming” headline that seems to have caused this debate to really kick off. By collectively making more noise, we will improve the accounting industry’s awareness of what the online approach has to offer. Surely this is a good thing and the headline was no snub to the incumbent providers?

Technology never stops advancing and software vendors who have the financial resources to do so will continue to evolve their applications to make them ever better. So it seems probable that some of the newer entrants to the market will have made a good job of exploiting technological advances to the benefit of their customers, meaning that they could well have something new and valuable to offer compared to the offerings that came to the market before them. Perhaps this was another factor behind the headline?

@Tim - I'm surprised you make these points. The only exceptions might be where you don't have broadband but then I can't imagine a business NOT using broadband in this day and age.

@jc is broadly correct in what he says though I'm less bullish on AJAX for technical reasons in a multi-tenant environment.

Tim - A number of points

There are a lot of threads to this debate ranging from online/offline to degrees of 'new' online look & feel with a Web 2 approach, but essentially it's is all about offering the client the right tool for the job - not necsessarily the right tool for the accountant

As you know, online is a slower environment and speed is an important factor with high level data entry activities like bookkeeping. I’m fairly sure most business owners see bookkeeping as a chore and want to do it as quickly as possible. I also think they appreciate intelligent software designed to help get the job done right the first time. Businesses will make their decision on solutions based on benefits like speed and ease of use. Personally, I don’t think most care so much about if the system is online or offline.

My point is that at the end of the day online is just an environment, it’s like Windows it doesn’t actually do anything. When you boil it down the only difference is where the data is held and where you access it from. For MORE access to data isn’t as important as speed and the quality of data; it only takes a few seconds for an email. In the micro and small business market do accountants and clients really want/needs to work on the same data at exactly the same time? Do small business clients want to sit on the beach as see their books?
I agree that some Accountants seem to push clients to Sage and they suffer when they have to write-off time for sorting out the mess at the year-end. If more accountants took responsibility for client’s use of financial systems or offered an affordable bookkeeping solution clients would benefit. Firms that embrace implementation of software and build software and/or a bookkeeping service into their offer have a great opportunity to build a relationship and value. That’s the MORE model and to us it comes before the technically of the software.

Duane, I don’t think we’re missing the point; more that I think we have a different point. The objective of MORE is to ensure operators spend as little time as possible doing perfect bookkeeping. This is so the accountant saves time and the year-end so they have the time and information during the year to deliver more value.

To achieve our objective we use a number of strategies like videos and being offline is important to us because MORE has higher than normal data entry checks. Our idea is that MORE corrects and avoids mistakes at the front end so accountants don’t have to sort out a mess at the back-end. I appreciate that in theory the same checks can be included in an online system but practically the Internet isn’t fast enough yet. An example of this would be validating a cheque number on data entry. MORE asks has it been used before and should it be grouped with another cheque payment? This happens quite a lot when one cheque is used to pay more than one invoice. This cannot be validated without a round trip to the data source. In the online environment this can take a few seconds, in the offline desktop environment this takes only fraction of a second. Granted a wait of one or two seconds is not an issue if you are only posting a few transactions a month, however, we have users that post hundreds of transactions every month. We also have an increasing number of accountants who recognise that bundling bookkeeping into an all in fixed fee service is a great way to work with clients. In this case speed of entry and validation is very important and MORE is a system that can be used internally as well as externally.
We’ve looked at it and if we put MORE online now with all the validation checks it would slow the system down so much it would not be suitable for fast data entry. So, we’re not so much looking to build an argument for being offline but looking to justify moving online.

Dennis, I totally agree clients more want control while reducing costs.

We’re picking that the cost business owners are increasing unwilling to pay is their time doing bookkeeping. That’s why MORE is focussing on speed and our accountants are using the new bookkeeper edition to do the books for their clients. This means MORE can be given to clients (external use) and used internally...either way the accountant only work with high quality data at the year-end.

It’s not software as a service, rather software in a service. For our model the question of online or offline is behind speed of data entry and qualify of data. Tim will post about why offline helps MORE get the quality.

To be honest, I don’t think accountants care too much about how the data is collected. All they want is good bookkeeping. And, I believe clients would rather use a fast system than a slow system provided the system is easy to use and does what they need it to.

Bob

If you ask the wrong question, you'll get the wrong answer. While MORE may be getting the answer they think they want I find that clients want control. They can't get that from traditional systems which were built for accountants and not for end users. Those same clients also want to reduce their costs. They can't have both without taking some level of responsibility. It therefore becomes a question of which service will work out best from the clients' perspective?

(sorry, my rant was over 2000 characters!)

John, we don’t see accountants as just a way of getting more business onto our software. We’re actually providing a product to the accountants themselves that enables them to easily manage their clients. Accountants are our customers - not just a sales channel.

We also have thousands of small business that are very happy to do their own books – and then realise they need an accountant for advice and preparation of accounts. So where do they look for an accountant? They come to us and ask us to refer them to an accountant in our network that's familiar with the software.

So as well as accountants putting more clients on to our books – the reverse is also true.

It’s not uncommon for us to receive a request from a user for us to find them a new accountant because their existing accountant is forcing them to use Sage. When our users are told by their accountants to choose between our software or the accountant - they choose to stay with the software.

I’m sure the other vendors would also have had similar experiences.

I’ve found both the article and the comments posted to be an interesting read and thought I ought to chip in my tuppence worth.

Compared to Liberty and some of the other players, we at KashFlow are a relative newcomer. The financial backing and support of our now Chairman, Lord Young, has helped us to grow very quickly leading to winning the Business Software Satisfaction Awards arrange by Sift Media last year.

I’m inclined to agree with Alan Wrights comments. The new entrants to the market don’t bring anything groundbreaking in terms of functionality that I’ve yet seen and I don’t see how it could possibly be argued that they’ve yet contributed to any change of attitude from the profession.

Personally I was very pleased to see the news that so many companies are now aiming for a slice of the UK Online accounting market. To me it’s just further confirmation that others see the same opportunities we thought existed when we first entered this market. A vindication of our offering and business model if you like.

Bob, I think you’re missing the point a little here. It sounds like you guys have decided not to go online and are now trying to build an argument to support that decision. From what I’ve seen there’s nothing to say that clients don’t want to do the bookkeeping themselves.

If it’s possible to do it quickly and accurately then they are very willing to do it rather than pay someone else. It means they know their figures are up to date and they have an immediate insight into the key numbers.

Having someone else do it just slows everything down. The opposite of what this revolution is trying to achive.

The accountants we speak to don’t want to do the bookkeeping either. They want to spend time on the more profitable and enjoyable areas of their business

There are no validation checks you can do in your offline product that can’t be done online. The only part of your argument that I think may possibly stand up to closer inspection is the speed of data entry.

John

While I agree from personal experience with the underlying premise of this article that "attitudes within the profession are becoming more receptive to hosted systems" I take issue on a couple of points:

Firstly your title - "Internet accounting's second coming" seems to suggest that the two new packages you refer to in the article are somehow responsible for the change in attitudes and are providing something that was not previously available in the UK. This is not the case.

Secondly the inference that the existing UK offerings are not sophisticated or accountant friendly does not do justice to the range of online accounting software currently made available in the UK through the development and evangelising efforts of a number of pioneers in this area. There is a broad spectrum of products already available online in the UK, ranging from basic cashbooks to systems that include accounting, payroll, stock management with costed bills of material, asset ledgers and online filing to HMRC for payroll and VAT.

The new entrants to the UK marketplace all seem to come from relatively small marketplaces where the accounting professionals have been more enthusiastic in their uptake of this new means of delivering accounting functionality than the UK profession (I have my views on why this is and it is not just about UK accountants being "technology laggards" as per ACCA survey). Having established themselves at home they look at the UK market and understandably want a piece of the cake. It will be interesting to see whether this crop of new entrants actually do the localisation work required to make their offerings more relevant to UK business needs. We are hearing that earlier foreign entrants to the UK continue to concentrate their development efforts on the needs of their core home market users.

Alan Wright
Director

alan.wright@libertyaccounts.com
Liberty Accounts Online Accounting Software

P.S. John I recently sent you an email inviting you to to join us and some of our partners and clients on our Solent Cruising day to celebrate our 5th year providing online accounting to UK business. - Did you receive it? Email has become so unreliable these days with so much spam and over eager spam filters.

I agree with Alan on this; online accounting has been around for best part of 5 years and in this time we have seen numerous changes in technology that has increased the usability no end to the benefit of the users.

I think that us long timers have established more than sufficient experience in the UK market to know that we have got to overcome many obstacles and opinions that the smaller markets do not suffer with.

In my opinion "less is better" in online accounting - why replicate the sophistication of Sage or IRIS when it is generally agreed they are overly complicated. Businesses want simplicity in software - something that Sage has never realised.

However, although there are an increasing number of accountants that welcome the online revolution there is still a vast chasm of thinking between what businesses need and what accountants think businesses need.

Chris Mollan
Director

chris@youronlineaccountants.co.uk
www.youronlineaccountants.co.uk

I have no doubt that web-based accounting is going to take off in a very big way and Xero is an exciting new entrant, as I discuss on my blog at http://www.topaccountants.typepad.com.

On the blog posting is a sample management report produced from Xero which blew me away (and would more so a typical small business owner). I strongly encourage readers to have a look.

Of course, a report is just that, a report, and could be implemented in any accounting software, including the traditional PC-based systems. That is not the point - the point is that this new breed of developer is thinking so cleverly and innovatively.

It is clear from the previous comments that there are more players in this market then the original author mentions. www.WebsterAccounts.co.uk has been operating since 2002 as a full online software as service solution as well as the packages which were mentioned.

I'd like to widen the debate because our research (which we do every day) shows the real shift is not online or offline but clients not wanting to do their own bookkeeping!

Every accountant we speak with reports more and more clients looking for a bookkeeping service. I think the MYOB survey repoted here showed the same trend?

So, if Accountants are to give clients want they want (which is always a good idea) they are going to need start building bookkeeping departments.

How do online systems help? Yes, data is held online but you have got to get it there and if you have a modest budget to work within then data entry speed, operator control and data entry validation checks suddenly become critical.

Our question is how many transactions can you post into the system per hour? Can you get a non bookkeeper to use the system? How many data entry validation checks are in the application?

Xero has an interesting model of importing statements. MORE is just about to use importing statements for bank reconciliations. Six months in five minutes.

Online or offline is not as important as being inline with clients changing service requirements.

Bob Harper
MORE software

I have been part of the Kashflow program for over a year now (In fact I think I was one of the first) and I give my clients Kashflow free of charge if it is suitable for them and they want to use it.

Its free of charge because it makes my life a lot easier especially for the clients who would,before using Kashflow, have given me a hand written analysis book or badly completed spreadsheet.

Kashflow makes it so much quicker to produce their accounts and the fact that I have online access means that I can correct mistakes and provide advice based on up to date figures which vastly reduces my overall costs.

Interesting comment ap

Are you a reseller or a professional accountant offering your clients independent and impartial advice about what is best for their business?

I understand that the ICAEW code of ethics requires that members inform their clients of any commission made on product they sell to their clients.

I cannot speak for other providers but accountants and bookkeepers who use Liberty Accounts with their clients are charged for the product at a discounted rate - this discount can be quite substantial. How they subsequently package and pass on the cost is entirely up to them, but most choose to pass on the saving to their clients.

What would be a reasonable share of a monthly revenue for you to receive in your opinion?

Alan Wright
Director

alan.wright@libertyaccounts.com
Liberty Accounts Online Accounting Software

I think a lot of the reason accountants have not been quick to take up the online option is that the reseller deal offered by these companies range from poor to zero.

Some actually expect accountants to sell these products to clients with no commission whatsoever under the premise that it is best for the client.

Well on that basis if these firms a think it is great for their customers they should give it away as well. I don't see that happening.

For all their faults at least Sage, Access et al look after the reseller channel. A channel they will no doubt use to push their own online versions.