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Cloud Accounting – the year in review

2012 is drawing to a close and more importantly and imminently, I am heading overseas so it is opportune to review what is new and what is unchanged in cloud accounting software. There have been a couple of great moments, namely Xero launched its integrated payroll solution (Paycycle) and MYOB finally joined the celestial players with its AccountRightLive. But besides those two milestones there have been a raft of other changes as the key players jostle for front place.

MYOB finally joined the cloud players with a hybrid desktop and hosted version- AccountRightLive. Technically – like QuickBooks Hosted –  it is not a cloud product because it does not use a web browser but MYOB has used its marketing might to change popular definitions of cloud software and labelled it ‘second generation cloud’ According to MYOB, first generation is using just a web browser (i.e. Xero and Saasu) and second generation is a combination of desktop application and cloud to enable the user to reap the benefits of both. ‘Cloud without Compromise’ is the slogan coined by MYOB. It is actually even less ‘cloud’ than QuickBooks in that you must have the program installed on the local device to access the company file. This means that you must also continue to install updates on each device, however you can switch from Cloud to Desktop at any time, retain control of your data without continuing a subscription and manage your own backups, all of which may be seen as a plus. Because of this close link with the desktop, what you have on the desktop is what is in the cloud and there were a few neat changes in the desktop product this year including not losing all your detailed transactions when you run the year end close – although this is still the only software that actually requires a year end close! MYOB is planning to put out new releases every 6-8 weeks so we may expect some changes next year.

The software that moved the furthest and the fastest this year has to be Xero but the irony of this is that from a functionality perspective, it was way behind the other key players in the same space so it is really just playing catch up. All its aficionados go wild with delight when Xero releases functionality that has been present in other software for years– a bit like the relief you feel when you stop hitting your head against a brick wall. The integration of the Paycycle payroll into Xero in April was good as it replaced the very simplistic Payrun. I do find the integration into the accounts very clunky but Xero is working on improvements. Xero ended the year with a bang with it December release was huge and contained a host of long awaited features including individual payment terms, Outstanding statements, Remittance advice on individual payments and several other features. Xero’s effective marketing campaigns have seen the software achieve exponential growth year on year (and it may soon even make a profit) despite its lack of functionality. It still targets the smaller end of the small business market and the bank fees are a real plus for those businesses.

In comparison Saasu appears to have had a pretty quiet year. So much so that Marc Lehman released a statement in October outlining that the quietness was only skin deep and that Saasu has been involved in an extensive regrouping exercise to enable the software to continuously scale to meet the rapidly expanding customer base and the increase in data volumes. So, much of the development hasn’t been readily visible and to quote Mr Lehman – ‘90% of our activity has been below the surface’. There has however been a nice list of new features throughout the year including: 

  • Customer level Trading Terms.
  • Handling Bulk Statement Printing and Emailing.
  • Price tiers for Contacts.
  • To Do list for the dashboard.
  • Multi-currency and Outstanding Invoice statements.
  • Bank Account exception reports.

QuickBooks Hosted is another product that has been somewhat in the doldrums this year. For Reckon it was also a year of consolidation to stabilise the product. Reckon is still committed to bi-annual releases which puts it at odds with the other cloud applications and certainly the main 2012 release did not deliver much in the way of new functionality. Similar to MYOB the hosted product has no connectivity to other cloud applications which continues to restrict its usage  although live bank feeds via Reckon Bank Data have commenced with a limited number of banks. The product does have its own inbuilt  SBR – most other products use 3rd party software and unlike all other cloud applications, you get the full blown Enterprise version, you don’t pay for small/medium/large versions. So it is a good solid product with some limitations but with limited changes this year.

Apart from MYOB there have been a few newcomers this year:

  • CCH announced that it would be releasing its cloud accounting program called  iBizz in mid-December – right about now so something to review next year.
  • Intuit has released its QuickBooks Online software that has been tailored to the Australian marketplace. It is still very much in a soft release phase while designers scramble to enhance basic functionality but with roadshows planned for early 2013 we can expect to see more fanfares here.
  • Reckon is also developing some cloud only accounting software which is due for release early next year The initial release will be similar in functionality to Reckon’s existing CashBook Online product except it will have Customer invoicing, estimates and credit notes but no Payroll and no Inventory.
  • A colleague has alerted me to Reach Accounting software which at $14.95 per month is certainly the cheapest in Australia but until I road test next year, I can’t say  how much bang you will get for your buck – probably not a lot.

So – during 2012 we have seen new players and new functionality from existing players. There is every reason to expect that a lot more will happen in 2013 which is good news for businesses and so much more exciting for accountants than the old world of accounting ledgers totally contained within the room and filing cabinet. Go Cloud!

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