Around three years ago, before some “heated” discussions made communication between us a little strained, I spent a fair amount of time talking with Xero CEO Rod Drury around the Cloud/SaaS market generally. Those conversations started well before the Xero IPO when he was still shopping little more than a concept around the place, and I was a humble early stage blogger.
Much of those early conversations (the content of which I’m not going to divulge since they were private) centered around the opportunity for Xero and how they could really capture a significant customer base. My perspective was always that their was a massive opportunity to convert customers using existing solutions (at the time, before global expansion, I was primarily referring to MYOB).
Drury on the other hand seemed to be mainly focused on those prospects who didn’t use existing systems – the companies that were using paper based or perhaps excel-based accounting methodologies. I was always of the opinion that given the funding that Xero has attracted, this pool of “new entrants” wasn’t enough and that they’d have to actively start converting MYOB customers.
The major impediment to this of course is the immense pain that organizations have to go through to move from an existing system – both in terms of workflow but also basic data migration. Which is where an interesting post from Xero comes in. Andrew Tokely, who heads up the development team at Xero, wrote to the world at large soliciting approaches from people looking to help build conversion tools from MYOB, Sage or other accounting systems. Something that, in my opinion at least, is mind numbingly obvious.
As I advised Drury back in November 2008;
[the way forward is to start] offering the practices a free conversion tool that they can then implement for their customers as a value-add and the like
To help people get here, Xero has announced a draft XML format that gives people a starting point from which to wrangle the spaghetti that is cross system migration.
Of course this isn’t an example of Xero being philanthropic. By creating this standard, they have opened the doors to third parties to invest the time and resource to create tools that will increase Xero’s own customer count – it’s the sort of move that a organization with 50000 paying customers can pull off.
Data migration is a complete no brainer – and with this announcement I’d expect Xero to gain a nice slice of recurring customers.