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IRIS acquires Exchequer

15th Mar 2005
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IRIS Software announced on Tuesday that it had acquired Exchequer Software, one of the UK's leading mid-market accounting software developers, for an undisclosed sum.

IRIS, which began as specialist in integrated tax and practice applications has become increasingly acquisitive since Lloyds invested in the company in 2000. Having bought PAYE-Master and launched IRIS Financials, IRIS attracted further investment from HgCapital last year.

HgCapital said at the time that it saw the potential for both organic growth and "complementary acquisitions". The Exchequer deal falls into that category as IRIS appears to be set on emulating Sage by moving into serious mid-market accounting applications.

To give an idea of the challenge facing IRIS, its turnover combined with Exchequer's will be equivalent to £30m. Sage's revenue for the year to 30 September 2004 was £687.6m.

Within the AccountingWEB community, IRIS has been fighting for leadership of the tax and practice marketplace with Sage. With superior customer satisfaction ratings, IRIS got its nose ahead of its Newcastle-based rival. But with the weight of the 3,000+ Accountants Club and additional applications such as ACT! in its portfolio, Sage emerged as the dominant force in 2004.

IRIS Financials has emerged in the last year or so as one of the challengers to Sage in the entry-level accounting software arena, but like most of the also-rans, it has around a 5% share compared to Sage's 25% share of the market.

Like IRIS, Exchequer has enjoyed good user satisfaction numbers from both IT Zone and ICAEW IT Faculty user surveys. But Exchequer's market footprint is at a significantly higher level than IRIS's. Where three to four years ago, Exchequer had a strong profile among £1m-£10m turnover manufacturing companies, the size rather than number of its users appears to have grown in recent years. This means Exchequer has fulfilled its promise to help its users growth their companies, but its actual presence within the AccountingWEB community has not expanded significantly.

Antoher factor that faces both companies is the need to respond to the growing presence of Microsoft in the accountancy software market. Next year, the Windows developer has indicated it plans to launch a Small Business Accounting package as part of Office and Bill Gates's wider strategy is to create core components to which other developers as specialist features and functions. If they decide to join the Microsoft rather than fight, developers face a major technology transition to Microsoft's .NET architecture. For a developer of Exchequer's size, in particular, and even IRIS, this represents a significant ongoing overhead.

IRIS group chief executive Martin Leuw was not available to discuss the terms of the transaction, nor his acquisition or technical strategy.

IRIS has previously indicated that it plans to migrate its core practice software to Microsoft's .NET architecture. This is an area where Exchequer's technical team has considerable experience.

Exchequer founder Eduardo Loigorri (also current chairman of the software trade body BASDA) will remain with the new organisation, along with co-founder and commercial director Rob Steele. Loigorri commented: "Exchequer Software has always been identified as a benchmark within our industry, adapting quickly to current opportunities in order to maximise the value of our product for users.

"We are very excited at the breadth of experience, service and opportunity we will be able to bring with IRIS to the accounting software market. The combination of IRIS and Exchequer is a strong one and will create an excellent synergy within which our staff, products and customers, both here in the UK and overseas, can continue to thrive."


Replies (3)

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By AnonymousUser
17th Mar 2005 18:00

Iris PAYE Software
Does anyone have a back up problem with this programme. I have been using PAYE Master (the Bureau facility)since 1996 but since IRIS I have had quite a few problems. I cannot back up via the IRIS Programme as it corrupts on the larger clients. I have to back up via My Computer etc which is long winded. IRIS claim it is Microsoft's fault because of their updates and IRIS'S need to keep adjusting their software to keep up. Apparently I was one of very few people with this problem. IRIS said that they were not going to fix the 2004/05 problem as they were busy working on the 2005/06 programme, this was 6 months into the 2004/05 year. The only thing they could offer me was an extra 3 months back up on the programme which I reluctantly accepted. If you have several clients it is such an upheaval to change software suppliers.

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18th Mar 2005 09:05

Backup non existent
In reply to Mr Goldsmith, yes there is a problem with the backup facility in the fact that if you run a large payroll you cannot back-up to more than 1 disk. Nor does the data compress itself like Sage. It is alarming as I have a payrun for 75 employees and have been unable to backup since mid July last year! Iris's comment is that you can backup to the hard drive but knowing that the Company recently had a hard drive failure that is not an option. Furthermore, Iris keep on telling me that the techies are working on it but that has been the case for over 2 years now. Use Sage its so much better and much more user friendly. Trust this helps! Ali Castle

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By stenhousej
17th Mar 2005 12:26

Is IRIS following me?
It is interesting that IRIS seems to follow me or am I just ahead of the game? As an IRIS user for some 6 years or more I had been using PAYE Master since it's shareware days back in the early 90's. I had just decided to drop IRIS Financials as they appeared to be going nowhere and had just purchased a company that used Exchequer and was learning the joys of that system when I hear that IRIS has bought that too!
Oh joy!
When will IRIS allow me to sell there Time & Fees System. It strikes me that accountants are the best sales force they could have.

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