Practice cloud race: 2016 form book
Step right up, ladies and gentlemen… AccountingWEB’s tic-tac man John Stokdyk is here to give you the rundown on the runners and riders in accountancy’s hottest software race for years.
Coming into the spring of 2016, followers of the software trade are in for a treat with a raft of contenders lined up to claim the cup for cloud applications that cater for all the needs of a modern accountancy practice.
As is often the case, some lesser known names have already got there first, but even though they’ve made the early running, do they have the stamina to last the pace over the long term?
To inject a bit of extra spice to the subject, this article is presented as a form guide, reviewing the runners for you and identifying strengths and weaknesses that may influence the result as the cloud practice race evolves.
But first a couple of handicapping notes: true cloud applications made their first appearance on AccountingWEB in 2006 but the technology remains firmly rooted in the bookkeeping side of the profession. Tax and practice tools have lagged a long way behind - partly because the developers have been preoccupied with other priorities such as the need to comply with iXBRL, RTI, CIS and other HMRC initiatives during that period.
The imminent arrival of personal tax accounts and quarterly reporting is the latest twist, but rather than hampering developers in their quest to deliver cloud tools, HMRC’s digital strategy may encourage accountants to review the market for tools that will help them operate efficiently within the new regime.
The second complicating factor is the relative dearth of holistic practice management tools within the profession. IRIS carved out a lucrative niche with its integrated suite of practice tools, but figures from AccountingWEB’s 2013 software satisfaction research showed that a minority of firms had invested in practice management software. In many cases, client management tools are bundled in with compliance tools, so firms don’t really see much need to invest extra in client record databases.
With those markers in mind, here’s how the form book looks at the moment. Please note, the odds quoted are entirely based on the writer's hunches and interpretations of comments from a variety of sources. The odds do not represent any kind of judgement on the quality of the products available, but are a rough estimate of something viable arriving from these companies this year. And remember, they are likely to be just as reliable as the forecasts you would hear at any racecourse...
Gbooks - reigning champion
Other stables are making so much noise at the moment that it’s easy to overlook Gbooks, which has been running this course with a of practice tools for a good three years. Gbooks has been out on its own for most of that time, but the race is going to become a lot more intense. It includes tax preparation, time and fees, a prospect list and a new “tax locker” for transferring and authorising documents. (Ed's note: Gbooks does have an accounts production capability, contrary to a suggestion in an earlier version of this article. See comment below and apologies for the oversight).
Gbooks was sounding relaxed about the prospect of more competition this year. “Our system is aimed at small accounting practices that may not be the main targets of the big providers. We don’t feel threatened by [them]. It would be good if they did launch their cloud services. It would put the idea of a cloud accountancy suite into the minds of accountants. When they’re looking at those products, clients might also look at other alternatives out there.”
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Capium - the young pretender
Hot on the heels of Gbooks comes Capium, another suite from a small accountancy practice that decided to enter the software stakes. It’s taken Capium a few years to put the product through its paces, but with a full set of modules available online (tax, bookkeeping, accounts production, CRM and document portal) it now looks ready to enter the paddock and take on the wider market.
Contenders for the 2016 cloud practice crown
IRIS - Evens
Among the big players IRIS set the early pace for the cloud transition, but seemed to lose momentum after it acquired the KashFlow bookkeeping system in 2013 The company has been undergoing a permanent overhaul since and found it heavy going to push the cloud agenda forward while sustaining the momentum behind its existing integrated on-premise Practice Management suite. IRIS almost has an end-to-end practice solution in place with its IRIS Open platform, but is still missing a cloud accounts production system to close the loop. Rumours point to a big announcement later in the spring, setting up the possibility of a photo finish with Sage at the Accountex event in May.
Sage Impact - Evens
Sage One - and its cloud practice offshoot Sage Impact - has been playing catch-up with IRIS for several years now. But the past 12 months have seen its odds shorten considerably with a concerted development surge. Where IRIS lacks an accounts production tool, Sage just needs to plug its corporation tax gap to complete the core set. Prodded by backers in the City, the tactical brains at Sage have shaken off their ambivalence about the cloud, but still have a few hurdles to overcome, including many users who may be reluctant to follow them down this course. There’s also a question about focus. Like a cash-rich Arabian stable owner, Sage can afford to saddle two horses in this race with its mid-market Sage Live offering, but the effort to get that suite up and running could draw attention away from Sage Impact.
Thomson Reuters - 11/2
We’ve heard very little from the Digita stable about the cloud challenge in recent years, but we’re getting flurries of interest from punters who think that something could be stirring down in Exmouth. Don’t forget that Digita has some hefty backing in the shape of its parent company and has form for translating products from across the Atlantic to the UK - such as the recently announced Onvio Client Centre and document portal, which connects to Digita’s desktop Professional Suite. In comparison to other contenders, the Thomson Reuters stable will be hampered by the lack of an in-house cloud bookkeeping and payroll capability, but it’s an interesting outside bet to make an impact this year.
BTCSoftware - 8/1
BTC is one of those software stalwarts that has been showing steady form on the desktop scene, while keeping its distance from all the cloud fuss - but not any longer. In recent months BTC has been putting its some cloud tools through their paces and is poised to announce its entry into the race with apps for self-assessment and practice management. “We’re very close,” says our source in the BTC stable yard, “but we want to make sure the horse is 100% before we enter the race. When that happens, the other modules will quickly follow.”
TaxCalc - 10/1
TaxCalc seems to be making more running in the Making Tax Digital race and HMRC’s API strategy than developing cloud tax and practice tools. That’s not to say TaxCalc is ignoring the cloud. The developer is currently working on Cloud Connect. Like Sage Drive, it will store client data in the cloud that users can access from their desktop software. “It’s our unique take on cloud,” the developer told AccountingWEB in January.
Wolters Kluwer 15/1
The Wolters Kluwer/CCH stable includes the Twinfield cloud accounting engine, which integrates seamlessly with the on-premise CCH ProSystem practice management suite. And the multinational stable already has a practice cloud suite in the market, with a CCH Software system marketed in the US under the name Access. But there are few indications that the company is likely to make the leap from these stepping stones into a full cloud suite for the UK market. Cultural and compliance differences with the US - such as the need to prepare final accounts for corporation tax - could be an inhibiting factor.
Exact Online - 20/1
A relative newcomer to this field, Exact is now testing a cloud practice management module that should emerge by the end of the year. This will pull together existing Exact Online CRM and document management modules with accountant-specific tools for billing and workflow management. Early prototypes include a customisable practice dashboard that lets the user include reporting widgets to the status of client work, along with social media-style timelines tracking any exchanges that have taken place with them. Exact Practice Management will certainly liven up the marketplace when it appears, but like other cloud accounting specialists, it has to rely on third party partners to cater for tax, accounts production and audit management functions.
Xero HQ - 25/1
The Kiwi developer has dabbled with practice management tools for several years, going back to its acquisition of Workflow Max in 2012. Since then, however, Xero shifted its attention to other areas such as payroll and business intelligence. At Xerocon in London last month, however, Xero’s stepped back into the fray by announcing plans to bring out a new Xero HQ product by the end of 2016. The company’s previously patchy form in this area would suggest a degree of caution until we get a clearer look at what’s on offer. But it’s a good each-way possibility for anyone who already follows the turquoise colours.
Receipt Bank - 33/1
Receipt Bank is something of a dark horse in this race, but worth tracking if recent efforts in this field continue to evolve. Any speculation arises from the Receipt Bank Practice Platform, which gives users a dashboard overview of client interaction, errors and completion rates, all designed to streamline bookkeeping management processes and alert the adviser to any developing problems in the client base. Receipt Bank’s strong position in data capture and OCR gives it route into the practice management market, but progress will be held back by the lack of tax/compliance and accounts production options, which have to be accessed via third party applications.
Practice Ignition - 33/1
Something of a dark horse emerging out of the Xero ecosystem, Practice Ignition initially focused on the process of turning prospects into client and bringing them on board with engagement letters and service agreements. But word on the circuit suggests that Practice Ignition could be putting some effort into grabbing a bigger piece of the practice action.
Practice Flow - 50/1
A relative novice, Practice Flow came on to the scene last year with a simple workflow tool mainly designed for young, small practices making the transition from manual admin methods to specialist online tools. As well as reminding accountants what needs to be done when, the app alerts clients when their returns are due and when they are expected to make payments. Don’t count them out as the race develops.
Is this a race that no one really believes they can win? In the short-term, smart punters would look towards smaller pace-setters like Gbooks and Capium who already have a foothold with full-service packages.
But nobody is ever going to feel completely safe in this market betting against powerhouses like IRIS and Sage that can afford to invest many times more into their products. The problem is the existing market leaders make such a comfortable living with their desktop products that they tend to dither when it comes to saddling up a serious cloud challenge.
If they continue to hang back much longer, either of the international giants Thomson Reuters or Wolters Kluwer, or mid-range desktop challengers like TaxCalc or BTC could surge up on the inside rail. Or some other surprise package might emerge out of the bookkeeping add-on world.
As we head towards the showpiece event at Accountex in May, the 2016 practice cloud race is hotting up. But remember it represents just one round in a much larger contest to win the market championship.
AccountingWEB’s Head of Insight has been with the site since 1999 and likes to spend his time studying accountants’ technology habits. When not nerding out, you can find him exploring obscure indie music and searching for the perfect organic sourdough loaf from his base in Brighton, UK.