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The lack of mid-market cloud solutions is a frustration. Exact looked very promising and has bailed out just as mid-sized businesses were starting to look for an alternative when they outgrow Xero and QBO. It's a gap that someone should be looking at seriously - is this going to be where Sage regains market share?
Let's hope it's not Sage. Really could do with an alternative.
Forecasting is also another one where the I'm not sure that Futrli is the best fit.
If mid-market by this definition is c. £3.5m turnover, the business population thins out fairly rapidly at this level and enterprise-level applications need to be able to charge a lot for each licence to get a return.
I don't think client firms at this lower end will be able to justify the cost of a NetSuite / FinancialForce level of application as they are over-engineered for such requirements.
It's more likely that an lite-enterprise version of Quickbooks or Xero-style products (which I know is not currently on the cards) - eg having better user management, permissions, controls, etc. - could be the key to this segment.
Hi John, not sure how you arrive at some of your conclusions. Gartner very bullish about mid market postmodern ERP sector.
Along with NetSuite and FinancialForce we seem to be dong OK with over 2500 users in 34 countries accounting now for some £533 billion of business on the Aqilla platform.
Last year we logged 506k sessions, up 70% on the previous year. I'd hardly call that shying away.
Maybe people are just too busy to respond to surveys or something.
The reason the mid market is not being well served by Cloud Financial Management Software [FMS] comes down to functional complexity and the agility required by growing mid-market businesses.
The higher end FMS solutions carry big costs in terms of implementation, maintenance and licence costs, which are simply too scary for most fast growing mid-sized businesses and often have functionality that demands complex processes, engineered for the particular environment and requiring resources to run those processes.
The entry level systems are designed to be easy to use for early stage companies and simply don’t have the functionality required as businesses grow and get more complex. To serve small and micro businesses well, they need to concentrate on simplicity and therefore avoid complex processes around FX, consolidations, inventory, Project Costing, inter-company etc. This requires knowledge of these complex processes from a design perspective as well as a professional on-boarding service that has the right skills to implement them.
The existing mid-market solutions were built around the VAR model [Value Added Re-Sellers] that offered implementation, customisation and key account support, with VARs participating in upfront licence revenues. The mid-market has been slow to dismantle this network and adopt Cloud delivery and to re-engineer complex desktop software that often took hundreds of man years to develop. Mid market cloud solutions have therefore been confined to innovative companies that have invested in developing solutions with the domain-knowledge of the requirements for growing more complex businesses, that takes time to validate. They are therefore passionate about successful outcomes, and tend to get business through referenceability and word-of-mouth, rather than big marketing spend.
At AccountsIQ we have built a team with that domain knowledge, that is passionate about its technology with customer success as part of its DNA. Our Cloud FMS has been built over 10 years and is targeted specifically at organisations with turnover between €1-100m that have a requirement for multi-location, multi-currency, Consolidation, Inter-Company, Advanced group wide Reporting, Integration, Approval workflow, Project Costing/billing etc. What’s different about our customers and partners is a joint passion and collaboration to building a fantastic Cloud FMS that is agile enough to grow as they grow.
Could the size of the marketplace have a bearing on all this?
Micro businesses make up almost 96% of the UK business marketplace as confirmed by the latest data from Parliament (published at the end of December).
5.445m micro businesses out of a total 5.695m
From a volume perspective suppliers have much more chance of recovering their development costs if they focus exclusively on this market rather than on larger businesses.
I agree Mark Lee about the size of the addressable market. However, as some of the other vendors who have posted above have confirmed, there are in reality a number of mid-tier providers who are achieving traction, and have some fantastically happy customers. At Xledger, we are enjoying a fantastic win rate as people see the value of automation within finance teams.