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Mid-marketing and ERP software usage grows in 2022 insight survey
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Finance system upgrades take off in the mid-market

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AccountingWEB’s latest software State of the Nation report uncovered signs of renewed activity among users of mid-market and enterprise accounting (ERP) software solutions. John Stokdyk takes a closer look at the numbers.

29th Jun 2022
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Microsoft Dynamics 365 emerged as one of the biggest winners in the latest survey from AccountingWEB’s insight team, which revealed encouraging signs of activity among mid-size and larger organisations.

Microsoft’s cloud finance suite was the biggest grower among respondents from medium and large organisations in the 2022 insight survey, up 5% from 2021. That increase boosted Dynamics to a 7% share of users among the overall sample. 

There were also positive moves for Oracle NetSuite, 2% up on the year to a 4% market share, SAP (up 1% to a 4% market share) and AccountsIQ (up 1% to 2% share).

Sage gained ground (2% overall) in the battle with Xero and QuickBooks in the market for small business bookkeeping software, but remains a big part of the mid-market accounting software conversation.

With mid-market and enterprise users spread between Sage 50cloud, its Sage Intacct cloud acquisition and a variety of desktop systems such as Sage 200, the Newcastle-based developer experienced mixed fortunes among larger organisation respondents during the past year. While Sage usage grew 6% among mid-size firms, it dropped 7% among the biggest organisations. 

As tech strategy lead at accountants Beever and Struthers, John Toon has witnessed some of these developments within his client base. “Things are definitely changing for Sage and we are seeing more interest,” he said.

“The Sage results show that Intacct is doing well. It’s a natural fit for those who want to make the cloud transition from Sage 50 and has a growing marketplace of a couple of hundred add-on apps, though they’re still mainly American.”

Further upmarket, Sage Enterprise (formerly X3) is an excellent product, Toon added.

Dynamics 365 debate

In terms of user growth, Microsoft Dynamics outpaced Sage in the latest survey. Like Sage, Microsoft Dynamics 365 lagged behind some of its peers on Net Promoter Score recommendation ratings, which are commonly viewed as a leading indicator of future growth. 

State of the Nation report author and AccountingWEB head of insight Julian Green commented: “Though users find Dynamics 365 easy to use and feel it is a complete package, they said work is needed on its functionality, features and pricing.” The Dynamics NPS story would change, he added, if some of those who gave Dynamics a satisfactory, but passive recommendation rating of 7 or 8 out of 10 raised their scores to 9.

In Toon’s view, the recent Dynamics 365 revival is probably down to Microsoft “getting its act together” on integration with other Microsoft components, including Office 365 and Teams. “Dynamics is a complex beast and can be difficult to set up, but Microsoft pulled out all the stops over the past couple of years to make integration better,” he said. 

Larger businesses tend to stick with Microsoft Office apps like Excel, which opens the door to integrated ERP and finance systems, Toon continued. “The Microsoft Dynamics-CRM integration used to be pretty clunky, even with Outlook and Teams. But now it’s a much more seamless experience.”

Following through on buying intentions

These positive market movements confirm the findings of the equivalent AccountingWEB insight survey last year, when 14% of larger organisation respondents said they planned to invest in new ERP software. While buying intentions in surveys like this can often be more aspirational than realistic, many bigger businesses appear to have followed through on their accounting overhauls.

Green explained that this year’s weighted survey sample included more representatives from the business community. While the software conversation is dominated by the three big cloud accounting platforms, other software providers are embedded in segments of the market where more complex solutions are required.

The traditional pipeline for mid-range and enterprise accounting software come via upgrades, most frequently from desktop apps such as Sage 50 and Pegasus. In Toon’s experience, however, Xero and QuickBooks are becoming fertile hunting grounds for new customers.

“There’s definitely traction in the market,” he said. “You’ve got high growth companies that started with Xero or QuickBooks and busted their volume constraints and needed to move on. Those size businesses tend to move to Xledger, iplicit and AccountsIQ, which are much more suited for their requirements.” 

The mid-market segment is “wide open”, he continued. “Those products are very capable. They have similar feature sets, but the differences between them are fairly nuanced. Xledger is strong among charities and schools, while iplicit is good for stock-based, multi-entity groups. AccountsIQ is also good for multi-entity businesses, especially those doing ecommerce. There’s not really one clear definitive winner in those terms.”

Both AccountsIQ and iplicit picked up votes and AccountingWEB mid-market/ERP software awards in recent years. Digging back into the more controlled survey data from 2021 and 2022, Green noted that use of AccountsIQ as the first or second choice accounting program doubled, admittedly from a small base. 

“This growth was attributable to uptake from small, ‘early adopter’ respondents, whose AccountsIQ use grew from 5% last year to 8% in 2022,” he noted. Among those early adopters is a little outfit called PwC, which chose AccountsIQ last November as a platform for its MyFinancepartner outsourced accounting service.

Influence of virtual finance practitioners

AccountingWEB’s insight research and other sources such as entries to our Accounting Excellence Awards have been flagging up a growing movement of practitioners who have followed PwC’s example and started to offer outsourced bookkeeping and virtual finance director support to clients.

Over at iplicit, chief executive officer Lyndon Stickley said that the virtual services channel was still “small beer” compared to cloud migrations from on-premise business software users. But those virtual finance practitioners represented a great growth opportunity. “Accountants in the top 100 firms are telling us business is coming in the door for a variety of these services,” he said. 

“Many of them started clients off on Xero, but band-aided it and added apps to fill the gaps. Now they’re paying thousands a month to consolidate and report on multiple software instances to produce management information that could be provided instantly by a comprehensive system.”

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Mark Lee headshot 2023
By Mark Lee
29th Jul 2022 17:18

I was talking with someone who works in a big 4 firm earlier today. He said they are still trying to wean themselves OFF of their in-house bespoke solutions. They've made big headway and embraced MS solutions. Made me laugh though when he told me that they have a bespoke plugin that pops up when they start a letter in MSWord.

The purpose of the plugin is to ensure that all the firm's letters are in the same font and layout etc. And it adds the firm's logo and footer etc.

The template asks for name and addressee of course and who will be signing the letter. Those fields are all compulsory. The voluntary fields include STILL: fax number and landline number and extension (none of which are still used in the firm!)

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