Why hasn’t the accounting sector embraced SaaS for its mid-market clients?
The past decade has seen a meteoric rise with Xero gaining market share in the UK. No doubt, a real headache for the dominant incumbent, QuickBooks, but good for consumers who now find themselves with at least two great entry-level true cloud accounting solutions to choose from.
However, it’s a different story for those organisations currently outgrowing their entry-level functionality or using more comprehensive on-premise software to fulfil their organisational requirements.
Unlike their small business counterparts, FDs in companies with 30-300 staff have found themselves facing a very difficult decision – stick with what they have and compensate for the software shortfalls with multiple copies, numerous spreadsheets and manual workarounds or, enter the world of big business Enterprise Resource Planning (ERP) and expect to spend £30,000 or more per year for the foreseeable future.
Why is it that both the entry level market and the enterprise market have been serviced with appropriately priced true-cloud solutions for over 10 years, but medium-sized organisations – with budgets of £5,000-£25,000 a year – have had very little to choose from?
While they’re too big for basic software, they’re also too small to warrant a system that requires 50 days or more implementation and training, and punitive annual fees. In migrating to the cloud, it seemed like a sizeable gap emerged, for entry-level ERP – serious but agile, comprehensive yet intuitive and easy to use.
The battle to remain ahead of the curve
Once upon a time in the pre-cloud era, the accounting market was saturated with solutions which promised to serve every whim of small to medium-sized organisations. And for many years they did, successfully evolving their functionality to keep up with customer needs – some even outperformed the former leaders in their sector including Pegasus, Exchequer, Sage, and Access.
During the decade that followed, these companies continued to thrive, building up a loyal customer base who trusted and relied upon their modern and innovative solutions. However, as technology began to evolve at an increasingly rapid pace – and cloud computing took precedence – an ever-rising number of businesses became interested in software that didn’t need to reside on-premise.
The result? Many incumbent technology providers faced a dilemma.
As these vendors scrambled to devise new strategies which would allow them to retain their clientele, they attempted to emulate the opportunities presented by cloud. And, for a time, this paid off. But as customers have become increasingly frustrated by these techniques – especially following the growth in remote working – they’re beginning to question the status quo.
A missing piece
This has led to an influx of entry-level systems, such as Xero, with NetSuite serving those enterprises at the larger end of the scale. These cloud solutions came without the restrictions imposed by existing clients, old contracts, migration challenges, and cost concerns. Instead, they were able to build from the ground up, picking and choosing their functionality and creating intuitive platforms that far surpassed their predecessors.
But still, there was something missing. For those in the mid-market with 30-300 employees – whose needs were too advanced for entry-level packages but not ready for the complex tools at the other end of the spectrum – they were left without an option which adequately suited their operation.
This left them stuck in a cycle of on-premise software upgrades, which weren’t delivering the sophistication, functionality, or growth potential to meet their requirements.
This distinct lack of solutions was, in part, because developing cloud Software-as-a-Service (SaaS) technology requires a significant investment — both in terms of time and finances. And it takes bravery too. Dedicating several years to a solution, which won’t make any revenue for the duration, is a courageous and costly leap. And one that most are unable, or unwilling, to take.
Then there’s the fact that many have tried and failed to make it work – a powerful reminder that developing new innovative technologies is not a quick, easy or, indeed, guaranteed option.
Why the time is up for ‘fake cloud’ solutions
But as legacy software organisations have, instead, patched up their technology with ‘quick fixes’ – creating ‘fake cloud’ solutions which emulate true cloud software, but offer poor performance and a distinct lack of integration – consumers have begun to question their offering and whether it’s truly fit-for-purpose.
However, when these ‘fake cloud’ technologies are put to one side, there are only a small number of high-performing, cloud-native finance and accounting SaaS solutions available to suit the UK’s mid-market customer. Shocking when, compared to the pre-cloud era, there would’ve been a multitude of options on offer.
What’s next for SaaS accounting in the mid-market?
When the gap for cloud-native technology, capable of meeting the mid-market’s needs, became apparent, challenger brands raced to focus on what their target audience was missing. By disrupting the marketplace in this way, forward-thinking developers have begun harnessing their skills to create intuitive software that provides efficiency, flexibility, and an easy-to-use format which evolves alongside growing companies.
Taking note of what their predecessors had missed and including features such as accurate reporting, seamless integration, and real-time forecasting abilities — as well as the offer of monthly subscriptions rather than lengthy contracts — will stand these brands in good stead. This will become especially evident as prospective customers gradually become freed from their legacy agreements and begin to explore the options which have now emerged within the marketplace.
For those who’ve been held hostage by their previous software, it’s likely they’ll choose a tool with all the benefits and without the handcuffs – leaving them free to switch as they please. It’s important that accountants have all the information and know about the options available, so they’re firmly up to speed.
With the power finally in the customer’s hands, accounting solutions will deliver far superior products, a better service, and will evolve with the times – because when it comes to monthly agreements, there’s no room for complacency.
And so, while cloud software has been around for more than a decade, mid-market organisations are finally beginning to see the disruption. Benefiting from a greater level of flexibility, along with enhanced functionality and service levels, mid-market companies should prepare to garner more value from their accounting software than ever before.
Find out how iplicit can add value to your organisation
Get in touch today to find out more about iplicit's powerful accounting software. Call 020 7729 3260 or email: [email protected] to book your free demo.
You might also be interested in
Designed for accountancy practices and medium-sized organisations, iplicit’s award-winning Cloud Accounting Software is ideal for frustrated on-premise users and those that have outgrown entry-level software.