Lots of SaaS accounting news at the moment – from Saasu, Xero and MYOB. Firstly Australian SaaS accounting vendor Saasu (more on them here) recently announced a change to its pricing. Already one of the most economically priced offerings in the marketplace (and I use those words purposely to differentiate form services that monetize in some other way), Saasu has upped the ante and is yet again dropping the pricing on it’s solutions. Xero’s not standing still either and announced its basic payroll service. Meantime MYOB has announced a delay to it’s long-awaited cloud accounting app. Lots of stuff to talk about in those three seemingly disconnected announcements so let’s dive right in.

In it’s announcement, Saasu has chosen the favorite word of my friends at Rackspace and are now articulating their desire to provide “fanatical” value to their customer. So what does this mean? Saasu recently introduced automatic bank feeds, a feature that many see as the first true “added value” offering that a cloud application can bring. I’ve been using automated bank feeds for a few years now and can confirm that they are indeed a game changer. Interestingly given the power of the feature, Saasu has chosen to provide bank feeds to customers as a free upgrade on all paid plans. So an “professional level” plan on Saasu, with full inventory,payroll, bank feeds and all the functionality that a small or medium business needs now costs $25 per month.

The release announcing this move is clearly aimed at local competitor Xero. In his blog post, Saasu founder Marc Lehman stated that;

We are often perplexed by online systems that charge more than much older software products.

That competitor that Marc is alluding to hasn’t stood still however. Arguably in answer to the competitive landscape that exists, Xero rolled out it’s own new feature, giving customers a basic payroll system for the same monthly fee they had previously been paying. This post isn’t the place to discuss the issues that Xero’s move causes – some would argue that the Xero payroll is some uncomfortable compromise between introducing true payroll and in the process annoying the ecosystem on the one hand, and keeping the status quo with no payroll functionality on the other. We need to look at the move however at a distance, and reflect on what it indicates about this new generation of software vendors.

To that point we have MYOB who have long talked of the cloud-enabled version of their accounting product being the development that will see them able to compete in the new world – where software is connected, is developed nimbly, and is charged via a subscription model. Interestingly enough, MYOB Corporate affairs GM Julian Smith said that;

The launch has been delayed because of feedback received from beta testers… This has forced an extension in development times and the company hasn’t finalised the release schedule. The code base for the AccountRight family is more than 10,000 A4 pages, so it’s highly complex

It’s an interesting comment and one which highlights the cultural differences between the new vendors on one hand, and the traditional vendors trying to change their model on the other. One could criticize the announcements of both Xero and Saasu – Payroll lite may be a bad move for Xero, not providing enough real functionality while at the same time dismaying their ecosystem partners. Meanwhile a pricing drop may be an unnecessary move from Saasu – if they can differentiate on the product itself, why bother trying to differentiate on price (especially when they’re already cheap compared to their competitors. Regardless of the criticisms of these two vendors however, the fact is that they’re happy to travel uncharted waters – we’re seeing a level of innovation in terms of business models and functional spec that is very much a case of experimentation – some things stick while other quickly get moved aside.

Meanwhile MYOB seems to be bringing a traditional development approach towards their product. They’ve had extensive beta testing which, one assumes, identified a huge number of product suggestions. Rather than simply get the product to market and iterate in the marketplace – MYOB appears to be looking for some perfect result and is reluctant to release prior to this result is achieved. Of course MYOB has much more to risk – it has a massive customer base that simply will not put up with MYOB “experimenting” on them – the tragedy of incumbency I guess.

This is far from a zero-sum game – all three of these vendors will likely do well in the future, it is however interesting to contrast and compare the relative approaches they all take.

Disclosue – both Xero and MYOB have been clients of Diversity Limited

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Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

5 Comments
  • Interesting point Ben regarding MYOB. Xero had the “luxury” of being a startup, and early users were happy to adopt knowing the product would get better over time.

    MYOB will have no such leeway, and any early adopters will be expecting a top notch product from day one. The interesting part will be how it is marketed when it does go live, and whether accounting firms already aligned with Xero are willing to split their online loyalties.

  • Great post Ben,
    “You are what you don’t automate” is something we believe in passionately at Saasu. Automated Bank Feeds is one example, our new iPhone app (free at the iTunes store) another.

    Yesterday our head of development Paul Glavich (follow him on Twitter: @glav ) gave me a sneak peak of what’s coming up, and we’re just getting started.

    Thanks for sharing your thoughts on this exciting space.

    Best to you,
    Tony Hollingsworth
    Chief Happiness Officer – Saasu

  • Hi Ben – an interesting dissection – I noted that you made no mention whatever of QuickBooks Online which has been in the market for some 15 months now and has all the features of the full Enterprise version

  • Loved your write-up Ben!

    I find it amusing that MYOB is measuring the complexity of its product by using a “number of A4 pages of code” metric.

    I’ve been using Saasu for the last 18 months and its great. I’ve also used Xero for a few months as well (for another company) and I found its interface and terminology a lot more confusing.

    To the everyday business operator, which is simpler to understand:

    Sales / Purchases (Saasu)
    or
    Accounts Receivable / Accounts Payable (Xero)
    ?

    I would vote for Sales/Purchases every time.

    I also agree with Paul: MYOB will be under a lot of pressure (mostly from its existing clientbase) to produce a top-notch product.

    MYOB has spent a lot of time writing desktop software (which typically had an annual release cycle), so lets hope they can transition to an iterative SaaS release cycle where its much easier to deploy new versions.

    James

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