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Practice cloud: What's available now

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23rd Oct 2013
Editor in Chief AccountingWEB
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In his third article on cloud software for practice, John Stokdyk examines what’s currently available, and what’s coming soon.

AccountingWEB’s Software Satisfaction Awards have tracked the rapid adoption of cloud computing by the profession over the past 5-6 years, but a change in our surveying process highlighted the extent to which accountancy has lagged behind wider industry trends.

Where the pool of respondents previously included CRM and HR software users, the percentage of cloud users within last year's sample was 59%. The survey focused on accountants only this year and the figure fell to a more realistic 42%.

During 2012, cloud-based solutions for practising accountants were nowhere to be found. Only newcomer TaxFiler had an application capable of handling 2011-12 tax returns online. But the race is now on, with IRIS releasing its OpenTax program in April and Sage promising cloud tax, accounts production and practice management programs by this time next year.

Tax and practice cloud tools have dominated the 2013 autumn conference season and fast-growing cloud accounting specialist Xero has started to roll out its Practice Studio in the UK to challenge what it calls the industry “incumbents”.

Intuit, meanwhile, has cloud tax and practice capabilities in the US and has a strategy in place to broaden its offerings internationally.

But TaxFiler and IRIS aside - or going for a hosted solution where desktop apps are operated via web terminal services - most of the announcements are to do with what’s going to available after the SA deadline next January.

This article sets out to explore what’s actually available now and assess the rivals’ current cloud products and strategies. The momentum is building so quickly that our snapshot will quickly go out of date - so feel free to add your thoughts and observations about cloud tax and practice software by commenting at the end of the article.

A previous article in this series asked why specialist tax and accountancy software suppliers took so long to move into the cloud. Compliance fatigue among UK accountants was one explanation.

Xero talks about the freedom it enjoys because it doesn’t have to worry about legacy customers on desktop systems. And Phill Robinson, the ex-Salesforce.com executive who is now CEO of IRIS Software, recognises the challenges for those who have thrived on the back of desktop and client/server systems.

“Companies that supply the UK accountancy sector are companies that developed traditional desktop products,” he argued. “There are all sorts of examples where traditional enterprise business software struggled to migrate desktop software to the cloud. They’re different disciplines; it’s very hard to provide desktop software to one group of customers and cloud to another.”

The effort to do that requires extra investment in R&D and backing from investors, which is why there’s something of an investment arms race going on, with IRIS, Sage and Xero publicly boasting about the extra millions they’re putting into developing accountancy tools. “We’re effectively doubling our engineering resource,” said Robinson, who pledged man extra £2m to his company’s cloud R&D efforts - not to mention adding KashFlow to its portfolio last week.

Cloud computing demands a different culture to bring products to the market. It’s a service-driven approach, based partly on disrupting the traditional mysteries of software licencing. Cloud suppliers typically quote a monthly subscription rate, rather than concealing how much you’re likely to pay until as late as possible in the purchasing negotiations.

And to hear the messages coming from Xero and IRIS, it’s a much more combative marketing approach - a style that Robinson may have picked up from Marc Benioff, the notoriously full-on CEO of Salesforce.com.

For example, turning his attention to Sage, Robinson commented, “They’re finding it very hard to get to grips with cloud computing. It’s providing a challenge for their viability for the future. In five years’ time software companies that haven’t made the transition to cloud won’t be here anymore.”

“Sage wants to deliver very low-end products [Sage One] for bookkeepers or payroll that are functionally deficient compared to the desktop because they don’t want to cannibalise their revenues.

Sage has put forward some interesting counterpoints to that argument. At the beginning of this week, it announced the launch of Sage One Extra to challenge the SME sector that IRIS will now be targeting with KashFlow. Both

Paul Tooth, the managing director of Sage’s Accountants’ Division hit back by telling AccountingWEB he was doubling his R&D team to focus on the cloud too.  “We’re also investing in sales, marketing and commercial teams. We’re recruiting people who understand cloud and where we fit in.

“I’m confident because of the strength of our core business. We see cloud at the core, and can leverage the experience we have from existing platforms and our in our compliance team.”

Sage desktop and cloud tools will benefit from shared technology and product offerings and work very closely together. “Compliance sits on top of that,” he said.

In spite of their differences, the cloud message from all the main tax/practice software players is very similar. They recognise that cloud is nearing a tipping point in the wider world and within accountancy, but that no one will be force-marched into the new environment. At every software meeting AccountingWEB has attended this autumn, the marketing executives have repeated, “It’s all about choice.”

One approach that has given many practitioners the best of both worlds is hosting, where their existing Microsoft Office and specialist accounting tools are hosted remotely and served to the user via a remote desktop or terminal server. IRIS and Thomson Reuters both offer their full suites via in-house hosting services, and third party organisations such as Online 50 and Hosted Accountants have also found a niche within the profession.

IRIS has such a service, but Robinson explains that it does not share the same economies of scale as “true cloud”. If you host 100 clients on the web, you have to create 100 unique systems for those clients, and the cost of maintaining those virtual machines have to be passed on to the clients. Where hosting doesn’t deliver substantial savings on licences and server costs, cloud applications sit on a single shared resource. All the clients are segmented and secure, but are managed on one physical infrastructure.

“The licence fee bears no incremental tax for hosting, because it’s an efficient central infrastructure,” Robinson argued.

Cloud computing has kept AccountingWEB’s members and editorial team very busy in recent months and the conversation will obviously continue, with more flashpoints and dramatic revelations sure to come. To hear Robinson tell it, this might even be one of the industry’s primary objectives: “The more vendors talk about cloud, the more we amplify each other’s voice. If everyone is talking about cloud computing, the market will be moving towards it. That’s not a bad thing.”

But what is equally clear is that for this autumn, accountancy in the cloud is still mainly talk. Most practitioners will be getting their heads down and planning their self assessment campaigns using tried and tested desktop tools, perhaps aided by client document portals for collecting documents and returns authorised for submission.

But a big spring surge could be on the cards - if the developers can shake themselves out of their previous rut and start filling in some of the gaps in the application table below.

Products, not words - cloud practice vendor assessment

You’ve read all the hype. But where do we stand when it comes to tax and practice cloud applications to deal with the self assessment workload this winter? Here’s what’s currently available:

Supplier

Books

Portal

Accts Prod

Tax

Prac Man

CCH

Twinfield

CCH Portal

     -

     -

     -

Digita

   -

NetClient & FileCabinet

hosted

hosted

hosted

IRIS

KashFlow &
OpenBooks

OpenSpace

hosted

OpenTax

hosted

Sage

Sage One

Collaborate

due 2014

due 2014

-

Xero

Xero

     -

due 2014?

-

Practice Studio &
Workflow Max

TaxFiler

   -

     -

     -

TaxFiler

     -

CCH has the end-to-end model and a capable accounting engine in Twinfield, but yet to signal a shift to cloud for its practice tools. It took CCH quite a while to integrate Twinfield into its practice systems - which themselves required significant work to bing acquired MYOB  products into the ProSystem suite, so CCH has some catching up to do when it comes to producing cloud practice tools.

IRIS Currently setting the pace with the launch of IRIS OpenSpace in 2012, followed by the release of OpenTax and deals with both Free Agent and KashFlow. The PTP user base among smaller firms could prove to be very fertile testing ground for IRIS’s cloud transition strategy. “IRIS looks to be in the lead, with someone who understands cloud at the head,” says Ledgerscope’s Adrian Pearson.

Sage Identified by analysts as the biggest potential victim of the cloud revolution, but now committed to a cloud future under new Accountants’ Division MD Paul Tooth. It has a bookkeeping platform (Sage One) that has been designed to support tax and practice tools, but, like CCH, Sage has to overcome a lot of technological and perceptual hurdles in its path.

Thomson Reuters - Apart from its NetCenter document portal, the company’s UK subsidiary has little online software to show accountant customers and is currently relying on a hosted-led transition to cloud applications.

Xero Making a play to disrupt practice market by offering Practice Studio tools for below-market rates. Not really a threat yet in specialist practice and tax software because it doesn’t have the local technical expertise to support UK tax and GAAP applications, but is exploring links to suitable UK third party developers. However its disruptive strategy could succeed in derailing some of the leading incumbents.

Who else? If everyone is talking about cloud accounting applications, some developers are sure to be working on them. Keytime has a good UK user base for its desktop tools, but has not yet jumped on the cloud bandwagon. TaxFiler is the UK pioneer in this field, but is focused on personal tax applications. If its product catches on, it could expand into other areas such as accounts production. Forbes is something of a maverick. MD David Forbes has talked about the possibilities of developing cloud tools in the past, but always claimed, “Users don’t want it.” Perhaps his view might be changing.

Replies (21)

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Teignmouth
By Paul Scholes
23rd Oct 2013 14:22

More cloud, rain & storms forecast

It wasn't that long ago that the choice of hosting & cloud facilities could each be counted on one hand and, whilst we had to do a bit of research it was relatively easy to pick the best of each and we sailed on up there.

Standing back within the safe confines of my hosted office (provided by the excellent and unmentioned(?) Hosted Desktop UK) what's so confusing and annoying is the noise and hype accompanying all of this, with providers each listing the same benefits of using the Cloud without going into great detail about why their method of using a bank feed, sharing a document or doing a VAT return, is better than the others.

As evidenced by John's article, there are a number of bandwagons and feeding frenzies and whether the reader is a traveller or an hors d'oeuvre (or both!) the choice is jump in or, sit & wait. And, I have to say, if it was me, I'd do the latter.

PS: Another to add to John's lists of ones to watch, and one I'm happy to declare an interest in Clear Books Pro

 

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By Hosted Accountants Ltd
24th Oct 2013 12:57

Cloud Confusion

Quite agree Paul. 

Everyone is eventually joining the bandwagon with differing success.

Digita now offer hosting, but ONLY of their products which means no document management, Sage, payroll, etc can be put in the same place. This defeats the object completely.

IRIS still offer (expensive) hosting but seem to have largely given up on this because it is very fiddly and time consuming with smaller firms.

Sage have finally started development of a pure SaaS solution but this will take years.

Hosting is by far the best choice right now. Use the same fully developed products that your staff like, but accessible from anywhere! Let someone else look after it and back it up. 

And just to provide some balance I agree ClearBooks looks great. Plus the idea of the community helping own and support it is really nice to see for a change.

http://www.clearbooks.co.uk/cloudfunding

Dan

 

 

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Stephen Quay
By squay
24th Oct 2013 14:01

Cloudy with sunny intervals

At Accountex earlier this year Digita was demonstrating their hosted solution. Like all Digita applications the cost escalates with the more clients you have and every option selected. I personally found the costs getting too much for a small general practice. That's a shame as we welcome all things cloud based but not at all costs. 

Also at Accountex I visited TaxCalc who had launched their integrated tax and accounts production solution using a client hub. This presented far better value for money for a small general practice and after extensive trials we signed up and left Digita. A big wrench after so many years. Whilst this is a desktop application only at present is was good to see in a recent TaxCalc users survey the question "would you be interested in a cloud version?" YES.

Other cloud applications we are currently using are MyPAYE for payroll, Xero for book-keeping, Autorec for converting bank statements and uploading into Xero. I await developments with interest.

Stephen Quay, Xero Certified Advisor

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Replying to Kent accountant:
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By chatman
11th Sep 2014 12:28

MyPAYE

squay wrote:
we are currently using are MyPAYE for payroll,

Hi Stephen - Did you evaluate any other payroll software, and does MyPAYE output auto-enrolment files that can be uploaded to to Now, Peoples Pensions etc?

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By wrowe
24th Oct 2013 15:13

Benefit led cloud and end to end integration

 

Online Accounting is a perfect example for delivering greater benefits through the use of cloud technology. Many practices see the real collaborative benefits in use of cloud with areas like accounting, document exchange, document approval and personal communications. Cloud also enables mobility and delivers massive benefits in terms of accessibility to data on the move.

CCH Software and Twinfield are focusing on benefit led cloud solutions ensuring that we innovate to meet practice need using technology as an enabler. Contrary to the article CCH and Twinfield are building on our existing cloud platform to deliver practice tools which will support anytime anywhere working needs.

You do not need to watch this space, as this year saw CCH Software release the remaining modules of  Corporation Tax and Accounts Production which complete the core integration into the single Client database suite, CCH Central.

 

Wendy Rowe

Head of Product Management, CCH Software

Wolters Kluwer

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By carnmores
24th Oct 2013 17:07

@ John

have AW had a look at GBooks yet , if not will you please?

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By leppam
30th Oct 2013 15:39

Exact Online

A pitty you didnt mention Exact Online ;-)... http://www.exactonline.co.uk/

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Replying to mrme89:
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By chatman
18th Nov 2013 19:06

Exact Online

leppam wrote:
A pitty you didnt mention Exact Online ;-)... http://www.exactonline.co.uk/

Can you tell us anything about it? I would have to have some reason to spend the time looking at the web site.

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Teignmouth
By Paul Scholes
30th Oct 2013 15:53

leppam

You would say that, you work for them, do you have a view on the points made in the article?

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By TaxMatters
29th Nov 2013 14:38

Lets make lif easier

As true supporters of our American cousins we should seriously consider putting all our confidential data in the cloud where the NSA, CIA and whatever they are all called these days can hack into the data with far less trouble. I suppose that goes for the chums at GCHQ as well. Cynical? Probably! but it gets more like 1984 every day. One CCTV camera for every 13 inhabitants and I hear from a client that they are working on long range microphones that can be connected to them so that we can be listened to whilst "they" are watching us. Of course that is for our protection and not to make parking fines easier to issue!

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Teignmouth
By Paul Scholes
29th Nov 2013 16:26

TaxMatters?

This was a bolt out the blue, is it because it's Friday afternoon or are you related to Paul Dacre?

PS: If I park illegally, why shouldn't I get a parking fine and surely better to have one person looking at 20 screens than 20 cold & miserable parking attendants trudging the streets getting abuse?

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By TaxMatters
29th Nov 2013 19:41

Just to put your mind at rest Paul

I am not related to Paul Dacre but from what I can see he doesn't do a bad job. SURELY I am not the only person that can see the dangers of the snowballing surveillance activity. We hear about foreign security services hacking into Merkel's phone etc. etc. and we still have no qualms about using cloud software?????? Not for me. I'll keep my data right where I can protect it myself. I wonder how long it will be before the first cloud scandal hits the news? How about an alternative to your parking suggestion - what's wrong with parking attendants being cold miserable and abused by their powerless victims? The next thing you'll be telling us they deserve a medal for the job they do or are you related to one Paul?

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By chatman
29th Nov 2013 20:02

@TaxMatters - How do you back up your data?

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Teignmouth
By Paul Scholes
01st Dec 2013 14:29

Tax Matters

Think your view of Paul Dacre says enough for me...fear on

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By chatman
01st Dec 2013 14:35

.

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By TaxMatters
03rd Dec 2013 12:10

so dammed busy

Sorry Paul just so dammed busy right now that finding time to reply is a task in itself.8 new clients last week alone. How do we back up our data? simple! during the night the server backs itself up to an external drive which is so handy. I swap the drive the following morning and take it home with me. since every one works on the server I have everything I need. No need for clouds

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By carnmores
03rd Dec 2013 15:41

taxmatters answer says it all Paul

so if there is a fire over night all lost ? how often are the backups restored as a test ?

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By TaxMatters
03rd Dec 2013 16:27

fire

hi carmores - max loss would be a days work but the back ups are not tested as often as desirable. The files are counted and compared daily but tested only once a month. what do other people do???? I used to audit some really big it departments but that is a few years ago. would be interesting to know what other people do in their practise

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Replying to andy.partridge:
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By chatman
03rd Dec 2013 16:44

I back up online

TaxMatters wrote:
would be interesting to know what other people do in their practise

I back up automatically online with Dropbox and Mozy.

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Teignmouth
By Paul Scholes
04th Dec 2013 12:59

I didn't ask about fire but...

agree, physical risk of fire, or hardware failure is far more real to me than the perceived, fear of someone hacking into my or my client's data.  That's why all of mine & my client's data is held in a secure state of the art server in a bunker somewhere in the countryside and not in a washing machine like server in the corner of my office.

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By Karen Bennett
21st Aug 2014 16:41

On the move

Recently one of our customers had everything destroyed in a fire. However, they had recently invested in moving all their files over to the cloud so all their data was saved. Otherwise they would have had nothing, no files and no business. We use Dropbox to share all of our files and have recently started to use Google drive to share files. While Dropbox is great at a company levels in terms of sharing files, it does only allow one person to have a file open and save a file at any one stage. We have found in the past that we had duplicate copies of the same files where staff members were adding changes to that file and saving it. With Google drive any number of people can edit a file at the same time. Also the owner of the file can also control who can view, edit, or just make comments about the file.

Thanks Stephen for the mention of AutoRec. The demand for cloud based solutions is definitely increasing as wrowe mentions above. OCRex has found that accountants are looking for solutions that are accessible on the move. As a result of this growing demand, OCRex will be launching a cloud based solution to convert bank statements into spreadsheets later this year. Also another solution that is in beta phase at the moment is DocuRec which will be another cloud based application that will extract data from invoices, receipts, PO's, packing slips and more. I'll update when they are released. 

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