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AIA

UK now one of Xero's biggest markets

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16th Oct 2014
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Cloud accounting software firm Xero's UK subscription revenue has grown 95% to £4.1m, and 85% globally, for the six months to September, according to its mid-year results.

In addition, the company's UK customer base has doubled for the sixth year in a row, similar to its results in Australia.

However its customer base in New Zealand grew 38%.

Both the UK and Australia are now "significant growth engines" for Xero, it said. Recently, it announced that KPMG had adopted the cloud accounting software package for its new SMB services division.

In June Xero launched its practice management software in the UK and in a summer roadshow the following month confirmed it had its sights set on a payroll and final accounts offering, potentially eventually moving into tax.

“The results underline the fact that a large scale migration from desktop to cloud software is accelerating in the UK,” UK Xero managing director Gary Turner said.

Globally, Xero's customer base has grown 76% in the last year. It now has over 371,000 customers and it passed $100m in annualised committed monthly revenue in the US - prompting its drive for that market and a US listing.

It added in reporting its results that global management is now focused "firmly on the North American market".

The company is aiming to publish its half-year report in November.

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By PracticePartner
16th Oct 2014 12:30

At the expense of .....?

Love Xero but not sure it can be all things to everyone globally? Does the clear focus on N. America mean UK functionality takes a back seat? After all, UK payroll and final accounts are big promises. Is there an argument for UK accountants to consider UK focused software or does the power of the brand win over?

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Teignmouth
By Paul Scholes
17th Oct 2014 09:41

But if basic functionality is all you want....

where's the pressure to change?

Despite it having been "flavour of the month" for a few years now, Cloud accounting is still new and many users (in business & practice) have not had the time, inclination or even imagination, to realise both the current and future possibilities for Cloud software and so have merely replicated what they did with deskbound stuff in the Cloud.

A good example of this is when I talk to users and see the look of surprise when I ask how many let their accountants into their Cloud software during the year and, when talking to accountants, discover that many only bother to login to the client's books once the year end has passed and the client emails to say the books are ready.

Similarly, if all someone has been used to is basic bookkeeping with perhaps an odd extra bell & whistle being offered to them every 18 months or so, why should they expect alot more from the Cloud?  After all, it gives them increased flexibility to work from various locations and, in the case of practices letting clients use it, they are now far more in control and many accountants and bookkeepers I talk to deliberately avoid letting clients into the software in case it reduces their work and fees.

This is where a system like Xero can easily step in, it's basic and relatively solid and even has a Sage feel to it, plus, as we all know, the marketing and "join our bandwagon" approach is huge. Consequently, despite the cost, the transition from Desk to Cloud is quite painless and, as has been mentioned several times on other threads, practices will commit to signup all or the majority of their clients, whether the software is actually the best fit for them or not. 

My view is that we are still at the start of the Cloud revolution, it starts with bookeeping but, being so much easier to build, redevelop and implement, functional & feature improvement & enhancement should be a monthly part of what happens, so, as PratcicePartner wonders, will companies like Xero be able to follow this model when users & accountants wake up?

 

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By lucy.danon
21st Oct 2014 17:14

UK Dev

I believe Xero now have development staff based in the UK which would make sense given the rapid growth outlined above.

We'd be happy for them to focus on the development of the core product (& payroll) as it's doubtful we would move away from our current software for accounts production, practice management, tax etc.

Agree with Paul on ensuring decisions are led by the right software for your clients. You don't have to put all your client eggs into one cloud provider basket.

You also make some some great points Paul on the changes a firm must make to see the benefits of transitioning clients into the cloud. If you move a client onto a cloud based software and keep providing the same 'once a year service' you can't expect increased revenue or a slicker production process to magically appear.

I also think we're still at the beginning of this change within the industry. Cloud software enables you to change the way you work with your clients but if your firm doesn't have a plan to map out how you'll actually change your service, expect things to stay the same.

 

 

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