User power! - IT Zone's review of 2006

On AccountingWEB, 2006 was the year when user power asserted itself, with members bringing to light their concerns about botched software upgrades and the lack of consultation surrounding Lord Carter's suggestion to bring forward the self assessment deadline by four months.

In each of these cases, the opinions voiced on AccountingWEB contributed to public apologies and/or shifts in policy on the part of the organisations concerned.

Towards the end of the year, I commented that I felt I had become an unofficial spokesma

Continued...

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Comments
david_terrar's picture

Ahead on points? - You cannot be serious (using best John McEnro

david_terrar | | Permalink

John,
As you'll guess, I'm onside with Dennis on this one, and I can see where John C is coming from too. A few things to add:

1. Twinfield are small in the UK up to this point because we've just started, but overall our service has over 22,000 subscribers and rising. If you compare that to the largest accounting solution provider on Salesforce's AppExchange, which is Intacct who focus on the larger US market, then they only have 15,000 users. Winweb's healthy numbers were mentioned - they've done a great job. I know both Winweb and Twinfield will be announcing major, large wins early in the New Year. I think the SaaS players are a stronger force than your wording suggests.

2. The UK IT market tends to lag around 18 months behind the US market. Consequently, I predict a lot more attention on the SaaS topic in 2007, if we follow their cycle. You rightly mention Nigel Harris's great articles getting attention, but the rest of AccountingWEB's coverage on the topic has been few and far between. Rather than following the current low level of reader input on SaaS, I think you should be taking a lead and educating the marketplace beyond the mere cost advantages.

3. Like Dennis, I don't agree that integration is an issue with SaaS. The better web services have made connecting to other systems one of their key strengths. That's why Twinfield have so many standard integrations with line of business, operational applications for doctor's practices, retail solutions, physiotherapists, pharmacies - our latest tie up is with a company that provides an excellent SaaS solution for retail furniture businesses. Assembling SaaS applications to provide a more complete solution is the direction that many of the providers are heading in. Partnerships will be very important for us in 2007.

4. I agree with Dennis that David C's favourite, SAP B1, is a good mid market solution. That's why SAP Netherlands have just announced a partnership with us to provide Twinfield as an alternative online accounting solution for B1 customers and prospects. We have a standard integration available now, which is being enhanced with joint development between SAP and Twinfield. Expect a UK press release on this next week (but you heard it here first!).

User power and feedback is incredibly important, but I suspect if you carry on making SaaS such a low priority, the readership will need to go elsewhere to find out about it.
David Terrar
Mailto:dt@d2c.org.uk
web: http://www.d2c.org.uk and http://www.twinfield.com
blog: http://biztwozero.com

dahowlett's picture

They already do...

dahowlett | | Permalink

A number of highly influential online media publications are talking about SaaS - not just ra-ra but serious people doing serious things. Much of what is said is aimed at the technology but there are plenty of folk out there figuring the business models.

Another data point: According to SAP's Claus Heinrich via CIO weblog: 'Expansion of the sales force will...decelerate as SAP relies more on the Internet to sell to smaller companies.' What does that say?

But let's change tack. On the Techno Rant page you have Kate Wingham talking about her data being fried due to a rogue HP box. Doesn't happen with SaaS.

QED for a benefit you only see when things go wrong yet which can be avoided at zero incremental cost?

jacp400's picture

Broadly Agree

jacp400 | | Permalink

Hi Dennis

I'm sure we broadly agree on the concept but have different perceptions of the impact on various markets (geographic, size, profile, product etc).

Incidentally, it occurs to me that I may have been unfair with my comments concerning Winweb about growth. I remember Pegasus offered a free download of their Capital Lite product a couple of years ago. There was a notional number of 5,000 available and at the last check only 800 had been downloaded.

Compare this to a newcomer in Winweb with 30,000+ users already.

dahowlett's picture

Won on points?

dahowlett | | Permalink

OK John - I can be baited. But then you know that. -:)

It's a bit disingenuous to declare DC a points winner in the SaaS argument when Salesforce.com grew at 80% to become a $500 million company, when Winweb grew 350% and Twinfield 100%+ in 2006.

Many of us are predicting that SFdC will become a takeover target in 2007 and the same will happen to NetSuite. That doesn't happen unless:
1. there's a bubble (no)
2. there's opportunity (yes)
3. there's a threat (most definitely)

David got it plain wrong. This isn't about integration at all but software assembly, the way you want it. SAP can't continue on its per engine pricing, it's already discounting up to 93% in some cases. Why? Pressure all around - including SaaS.

It is doing well with B1 at the moment but in part that's due to it buying accounts rather than selling software. And I don't have a beef with B1 at all. It's an interesting competitor in the marketplace.

If readers are interested, I've already got the bones of a combined accounts and practice management system kicking around on my development server. It's not integrated but assembled.

Check what can be done from near scratch in 3 days to build an interactive presence that adds value. IMO.

BTW - a link to David and I would have been nice.

BTW2 - I'd not describe myself as an 'evangelist' but a realist. I like to see the train wreck before it arrives so I can take the appropriate action.

BTW3 - I wasn't predicting on takeup at any stage but I'm prepared to predict that 'user power' will really take off this year. And that there will be multiple 'places of riotous aassembly.'

jacp400's picture

Last in line

jacp400 | | Permalink

I'm kinda with Dennis on this one but there are a few things to keep in mind;

1/ Comprehensive accounting, distribution, and manufacuting software takes time to create and deliver. Thats why Netsuite still cant touch the likes of Access, Iris Exchequer, SAP B1 etc for functionality, and for most people functionality is still more important than the method of delivery.

2/ The UK and to a lesser extent the US accounting software markets are very mature and mostly saturated. When I started 12 years ago, around 1 in 3 companies didnt have computerised stock, sales orders, or even in some cases computerised accounting software. Now almost everyone I see has something and is looking for a something functionaly better. Companies will not change accounting systems for the delivery method alone, there needs to be a compelling event. Even when that exists SaaS players still be competing against long established players like Access, Iris Exchequer, SAP, Sage etc.

3/ Many SME companies (I have checked on companies house) are still single site operations, and those that are multi-site are generally happy to run their software from the main office with a WAN connection which still suits many traditional accounting systems. Most SME businesses dont have roaming workers in their accounts departments, or the warehouse. By the nature of their jobs they are office based. The idea of delivery anywhere at anytime is simply unimportant.

4/ Most companies I see need integration with other systems - if youre other systems are LAN based then its is much easier to do this with a LAN based accounting system.

5/ Growth stats can look impressive when youre starting out. I could show you some great growth figures for my department over the 2005/6 year but when you start with a relatively small base it doesnt mean anything.

SaaS will happen in this marketplace but for all these reasons it will not happen quickly.

I speak as someone who has implemented Salesforce.com and Vivantio helpdesk, both SaaS solutions, in my department this year. Its fits a specific requirement of a small department with remote workers very well, but for most people I meet in the course of business I dont see the need for this delivery for an accounting solution.

Happy New Year to all.

John Clough
Head of Business Solutions
BDO Stoy Hayward LLP

John Stokdyk's picture

Let the debate begin for 2007!

John Stokdyk | | Permalink

Thanks for the feedback gents.

I've already had a word with Dennis for failing to acknowledge that my decision on the progress of software as a service in 2006 was based on the comments and experiences of users and vendors on AccountingWEB. Partly to encourage further debate, I presented our view as a microcosm - but one based on real-life feedback - rather than trying to deliver a verdict on the global marketplace. Aweb members, I think, are probably more interested in what's available to them now, for how much rather than divining the likely share price movements and M&A activity on Wall Street.

As John Clough so helpfully pointed out some SaaS vendors are experiencing high growth rates - (from a very small starting point), but Microsoft, Sage, Access and IRIS are not among them. The suppliers who are most prominent on AccountingWEB - Twinfield, Liberty and WinWeb, for example - are still pretty small fish. And the consistent response I'm getting from AccountingWEB is that they don't need SaaS at the moment, and aren't interested.

I like a good argument as much as you do, but please also note the further comments I made that while the David Carter world view still prevailed on AccountingWEB in 2006, I noted distinct signs that the wind is changing - most notably in the high interest generated by Nigel Harris's surveys of the online accounting services and back-up markets.

Looking forward to continuing this debate in 2007.

John Stokdyk
Technology editor
AccountingWEB.co.uk

dahowlett's picture

Perhaps I should clarify

dahowlett | | Permalink

I was of course addressing the narrow topic and it would be quite wrong of me to ignore the market as a whole. The reality is that SaaS is growing exponentially at ALL levels, not just at the bottom end. And yes - you're quite correct - in virtually all examples they're coming at the market from a small base.

But it begs the question - if the market is assumed to be at general low growth rates, then what are buyers finding so attractive that they're willing to make SaaS investments at all?

I don't agree that what happens on Wall Street is of no consequence. It is a measure of market confidence at a point in time. And yes - we've seen comings and goings. This is different. This is about a genuine step change with the potential to deliver the kind of value we've rarely seen from software.

I agree that John Clough is broadly correct on deep functionality for the 'M' market and further up the food chain. No-one would (I hope) be arrogant enough to disagree with that. And I expect that to remain true for at least the next 2 years. But depth isn't always required. Many AW readers have, for example, been complaining about bloatware inside Sage. That could be a reason to consider simpler, more appropriate alternatives.

There is for instance a burgeoning VSB market that the Twinfields and Winwebs can address more than adequately. I think I'm right in saying close to 0.5 million new businesses each year? That's a large addressable market. This is where the SaaS boys can easily win.

At a practice level, I believe the reason professionals are not interested is because they don't understand the value proposition. That's not been spelled out on AW.

The only dimension I've seen argued is as an alternative delivery model that has (possible) cost advantages. That's one lens but it's not the complete picture. As I said here, SaaS has the potential to change business models for professionals looking to move beyond the tyranny of pure compliance. That is the single biggest challenge I see coming from professionals with whom I speak. Often at the lower end of the professional food chain but a genuine need nonetheless.

John C also talks about integration. I might have agreed 6 months ago but today I don't. I see this as a bout compositing applications. We can already do that and will see an explosion of that happening in 2007. check out Teqlo as an early stage developer in this field. (Disclosure: the CEO who is ex-SAP is a colleague in another venture)

As you say John (S), more to come in this fascinating debate.

A lot of hot air?

JSJ54 | | Permalink

Well maybe but this week's issue of The Economist has an an intersting slant on SaaS.

http://www.economist.com/business/displaystory.cfm?story_id=8450071

Two comments stand out:

1. a bigger reason than money for switching from traditional software to web-based alternatives has to do with the pace and trajectory of technological change

2. it is “absolutely inconceivable” that he and his staff could roll out improvements at this speed in the traditional way—by buying software and installing it on the university's own computers.

david_terrar's picture

Microsoft focussing on SaaS

david_terrar | | Permalink

jc,
Your so right. As well as the Microsoft® SaaS Incubation Center Program and the Microsoft SaaS On-Ramp Program mentioned in that press release, they have set up the Emerging Business Team at the Microsoft Start Up Zone. This group works with start ups and MS technology based SaaS companies to help them make use of those two programs, and a whole series of other initiatives, International, EMEA and local marketing programs. Notice that the whole team is encouraged to blog. They also have two technology evangelists who are regular speakers at all of the major SaaS and On-Demand events - Gianpaolo Carraro and Fred Chong. This is all in addition to their own Live products, including CRM Live, the first part of their SaaS based ERP suite, due out mid year.
David Terrar
Mailto:dt@d2c.org.uk
web: http://www.d2c.org.uk and http://www.twinfield.com
blog: http://biztwozero.com

Vendor lock-in

mikewhit | | Permalink

I suppose the same could be said of users of suites like Sage, but I'm surprised there's been no concern about vendor lock-in, especially when names like Microsoft start to occur ...