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Evolution of the Cloud Family

Visit the Xero website and you will be presented with a plethora of Add-on products in its Add-on Marketplace, likewise on the websites of Saasu, MYOB and QuickBooks Online. You can now integrate your cloud accounting software to virtually any other application that has some links to the data stored in the accounting software resulting in a consolidated and synchronised set of business data.

And possibly here in Australia, Xero was the catalyst for this for a couple of reasons. Firstly Xero was never as functionality-rich as the existing desktop incumbents – MYOB and Reckon Accounts and needed to supplement its solution with Add-ons to be a viable alternative. Secondly Xero’s focus on user experience has meant it has concentrated on delivering a product that is both easy to understand and use and does not require dedicated accounting professionals to manage the day-to-day accounting processes. So we are increasingly seeing business owners confidently interacting with the accounting software and then extrapolating that knowledge to requiring a single synchronised view of all business data. And thus the cloud accounting software ecosystem was born and continues to evolve.

In many ways the provision of this ecosystem is a best of breed approach because the accounting software does not need to try to provide all the bells and whistles required by a myriad of different business models, but rather enables a community of easy to use and easy to integrate additional and complementary solutions that target specific business requirements. The accounting software can remain lean and uncomplicated but at the same time enabling an integrated and holistic approach to the business system.

There are a couple of downsides though. Firstly these Add-ons can add significantly to the monthly subscription charge, but if the business has done its homework upfront and selected products that both meet requirements and can bring productivity and efficiency gains – there is a positive return on the investment with reduced time and effort, increased quality of data and prompt, complete and relevant reporting.

The other potential down side to using Add-ons is that the user interface will differ between products so extra training may be required for users to across multiple different products. However there is a certain similarity across browser-based products, which makes the learning process more intuitive.

And one of the hallmarks of these Add-ons is the ease with which they integrate to the accounting software. Occasionally a couple of extra accounts in the chart of accounts may be required and effort may be required to establish which system now ‘owns’ the data but generally the integration is painless and hassle-free.

So what types of applications are typically available as Add-ons to the accounting software? The main categories include:

  • CRM
  • E-Commerce
  • Point of Sale
  • Advanced Inventory
  • Advanced Payroll & HR
  • Bills/Expenses and Payments
  • Project/Job Costing/management
  • Debtor Tracking
  • Reporting
  • Point of Sale

The categories with the most solutions are CRM and E-Commerce along with automation of data entry; with E-Commerce being especially popular as so many small businesses have an online sales presence that needs synchronising to their accounting software.

And what do the various accounting software suppliers provide?

With Xero it is somewhat problematic to quote numbers of Add-on partners and products as more are being added each week almost. The website currently lists some 15 categories and 14 industries for Add-ons. There are well over one hundred partners and probably in excess of 200 products (some products appear in multiple categories making counting difficult). I would expect that the majority of businesses using Xero should be able to find a solution for their needs amongst this plethora of options.

MYOB has always had a large number of Add-on solution providers but in the desktop world integration was achieved using ODBC but with AccountRight Live, APIs are required and Add-on solutions providers have had to modify their original solutions to be able to work with AccountRight Live. Many but not all have made that switch and some solutions only work when AccountRight Live is used on the desktop not in the cloud. However MYOB’s Add-ons probably cover the widest range on the spectrum with some more esoteric applications such as Loyalty Rewards and Membership Management. The MYOB Add-ons are also fairly strong on the pure accounting aspects including Fixed Asset Management and Budgets.

MYOB Essentials has a much more limited number and range of Add-on products available– indicative of both the smaller customer base and reduced functionality. Interestingly there are solutions for Cashflow but not CRM or E-Commerce and just nine in total.

In the US, QuickBooks Online has a large ecosystem but in Australia it is a lot more limited, partly a reflection on the smaller numbers of Australian users and partly because some of the US Add-ons would need to be customised for the Australian market. However increasingly Australian software suppliers have recognised that it is worth their while to integrate to QuickBooks Online and the number of Add-on solutions is increasing rapidly. Intuit has just announced that both Big-Commerce and Shopify have been added to the E-Commerce Add-on solutions bringing to a total of nine in that category and 45 overall.

And for completeness, Saasu has around 60 Add-on products, with E-Commerce solutions again being the most popular.

The one software company that appears to be bucking the trend (or lagging behind its competitors) is Reckon. Despite having released its Hosted version of its desktop product more than 5 years ago, it has yet to make the APIs available despite the increasingly vocal frustrations of users and partners and Reckon One looks set to go down the same path at least in its initial years. This disadvantages their products as there are no options to supplement the core functionality.

Add-on solutions to augment cloud accounting software solutions are now commonplace. The sheer number of solutions means that most businesses should find one that supports their business model and requirements. The ease of integration reduces barriers to implementation and the similar user experience across browser-based software assists in product familiarisation. Synchronicity of business data gives a tremendous boost to business owners wanting to keep a finger firmly on the pulse of their operations. And for any business owner that thinks there has to be a product somewhere that will link to their cloud accounting software and assist in solving a business problem – the answer is – there almost certainly is and if it is not there today, it could well be there tomorrow.

As always it is important to recognise that these are tools that need to be used correctly to maximise results so time spent homeworking a potential solution is always time well spent.

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One comment on “Evolution of the Cloud Family

  1. Great article Margaret. You are spot on with many of your observations.

    What has been particularly pleasing for me is seeing the success of our brilliant Aussie and New Zealand Apps not only in ANZ but also in global markets since joining the intuit family. We take pride in our open ecosystem approach and the role intuit can play opening up a worldwide base closing on 1M customers and providing first class developer support. Many of our Local Apps now rank amongst the best globally on our Apps.com site and we cant wait to help Connect more ambitious partners with incredible solutions to Accountants/Bookkeepers and Small business.

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