Platform wars: Xero HQ signals a new phase

Xero HQ
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Xerocon was a rock and roll affair. The lights, the crowd, the suitably big themes. The “marquee event of the year”, as one attendee told me after the first day.

Beyond the style, however, there was unquestionably substance in the form of two stand-out announcements and their potential impact on both firms and the software community: Xero HQ and the new migration certification.

We’ll return to the latter in another article, as for now there is plenty to discuss around HQ.

HQ raises its IQ

Xero HQ brings some order to what has up until now been a loose collection of functionality. It brings with it the ability to store and view client Xero accounts in one place, view who is using which connected apps and which banks they use. Interesting, but not earth-shattering.

2017 Xero HQ sees a much-upgraded service with some strong new features (Xero Ask to help chase down client data), but there are two elements that raise it to a far more significant piece of software and provide the groundwork for the practice platform: the main core of software you’ll need to run your business and your clients’ affairs.

Deep connections, deeper into workflow

Firstly, the deep connections established with an initial eight of the most popular connected apps bring their activity feeds directly into the Xero HQ environment. Permissioning and filtering will allow staff to view all their client tasks and activities (related to those apps) in one place, such as all Receipt Bank tasks or the activity for all connected apps for a particular client.

The idea of being able to pull in not just alerts and tasks, but visible insight, starts to put HQ squarely in the ‘only place you need to work’ category.

Not Xero? Welcome aboard

The ability to bring non-Xero accounting clients into HQ is the other essential ingredient. Having core client data in one place makes life a whole lot easier, and if you are also able to make use of the data from the other app partners, what does it matter if they use a competitor for core bookkeeping? You can get all the benefits anyway. But wouldn’t it then be easier to just tidy them all up and move them to Xero as well?

Practice management is dead, long live practice management

Add this to its embedded workpapers solution and an evolving Workflowmax, and what we have is the one app to rule them all. A flexible, integrated and (broadly) open practice management system.

Firms might well start asking themselves why they need to pay for specific practice management software when much of the core functionality is now being wrapped up for free in Xero HQ? For smaller firms with limited access to powerful practice management software and increasingly cloud-centric clients, this could be a compelling choice.

The platform play

The challenge of moving data from bookkeeping software to accounts production and tax software is still an issue. However, Xero integrations with Thomson Reuters Digita, CCH and now Iris have all been launched, although the take-up seems relatively small at the moment.

Once commonplace, and with practice management largely taken care of by HQ, the threat to some of these providers is that actually they are just considered apps to be connected to. Xero as the platform and them as the specialist add-on partner to deliver the final compliance pieces.

Such a move could have real consequences on existing license revenue and product roadmaps, or risk being exposed to others who could come in at relatively low cost with new tools that utilise the full capabilities of the platform and pulling from a complete range of client data.

Platform wars

It won’t be long before others start to follow suit. Intuit launched QuickBooks Accountant hub earlier this year, and more recently Sage Accounting Cloud is a shuffle in this direction. With the majority of the SME market still to turn to cloud in a big way and momentum in firms gradually speeding up there’s much still at stake to win hearts, minds and wallets.

The traditional consideration around whether you go single house or best of breed with your software approach could become irrelevant, and replaced by which platform best suits you.

Why choice will continue to exist

If connectivity and client data flow becomes an important factor in software selection, what if the majority of your clients chose differently to you? If you’re Xero HQ committed but the majority of clients have chosen Intuit, what happens then?

This conundrum could only be solved if the platforms become open to their rival bookkeeping software, which doesn’t seem likely any time soon.

Because of this, the new tide of cloud practice management could soon find their place in the sun. Senta have a number of tight integrations pulling core data from the bookkeeping software providers and neatly side-step this issue. Also, larger practices may struggle to find the complete feature set they need from an early stage platform.

One thing is clear, however: the investment in Xero HQ signals a new phase in the accounting software landscape.

About Richard Sergeant

Richard Sergeant

Specialist insight and business development support for accountants and their vendors. Cloud advocate with a pragmatist eye.

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09th Nov 2017 11:47

More from XeroWeb, just waiting for the name change to be confirmed.

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to Silver Birch Accts
12th Nov 2017 22:01

Ha ha, I bought the domain, but no one would buy it.

Thanks (0)
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09th Nov 2017 13:02

Not sure I agree with your assertions regarding practice management.

Xero is a great bookkeeping system that has alot of bolt ons, but it is strictly a bookkeeping system.

It's attempts to become practice management software such a Xero HQ and workflow max are very poor and I would hazard a guess that no professional practice would use it as their core practice management software.

This was similar to Xero's current attempt at a payroll module, extremely poor.

We have many clients on Xero but we don't use their payroll module. I trialed workflow max just to have a look and again it is very poor a a practice management tool.

With regards to Xero HQ not sure this adds anything to my practice at all

Xero should stick to what they do best and provide the best bookkeeping product on the market in the small business sector.

Thanks (4)
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09th Nov 2017 15:28

I will stick to QuickBooks Online for now thank you. preparation of statutory accounts in association with Taxfiler is superb and Taxfiler now writes back the corporation tax charge in QB)

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By Briar
09th Nov 2017 23:21

Didn't understand a word of it! Buzzwords, buzzwords and yet more buzzwords (e.g. "deep connections" +"permissioning")

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to Briar
12th Nov 2017 22:02

Always good to be reminded, ta.

Thanks (0)
13th Nov 2017 17:02

Hi Richard
I was very impressed with the announcement of Xero HQ plans at Xerocon.

At present its a bit over promised as a lot of the functionality is not available yet and it is very much a work in progress, so I don't you could switch over your in in house PM solution over to this just yet, but I am sure that it will develop very quickly. As functions seem to be getting added on a weekly basis.

Having all you clients in one area is the ideal solution everyone is seeking, but it is not there yet. I suppose we need to use the time that the delay in MTD has given us to crack on get that type of solution in place.

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