August 28, 2008
Acclipse sells software that does all the back office work for accounting practices – managing their own workflows as well as managing data from their clients. It is to this second part of the Acclipse offering that Xero will bring value.
Currently many solutions require manual data transfer between client side software and the practice software – naturally this is both inefficient and a potential source of error and omission – this partnership should provide for seamless, quick and accurate dataflow.
I have to say that I’m a little skeptical about Xero’s strategy of putting lots of effort into accountants. Xero’s expectation is that this will lead to high levels of adoption of their offering – due to their perception that accountants are in a position to recommend Xero to their clients. My perception – garnered through 15 or so years working in, on and for SMEs and doing a fair amount of advisory work with them, is that the biggest factors influencing the choice of accounting software for a SME are;
- what they can pirate
- what their mates recommend
As such I think there are better go-to-market strategies for accounting apps than spending time and effort on conservative, risk averse, technophobic and busy accountants. That said we are starting to see some traction gain for Xero – so their early stage strategy must be paying off.
Notwithstanding my views on partnering with accountants, this deal with Acclipse is a smart move for a number of reasons;
Two heads (and marketing budgets) are better than one. Acclipse is ambitious and obviously wants to spread beyond Australasia. Going into new markets with an integrated offering that supports both client side and accountant side needs is a much more attractive proposition. It’s also easier as they can both leverage off each others resources and connections.
The power of connectedness
There much bigger benefits to SaaS than just it’s online availability. It really starts to add some value when you use it as an aggregator of data from around the ecosystem. Things like benchmarking, industry dashboarding and the like are super valuable and super easy with SaaS products. The one hitch is that clients are likely to feel anxious about their accounting software also being the party who aggregates their data with their competitors. Which is where someone like Acclipse can come in – they can be the arms length, yet trusted, party who provides the mining service that feeds back into the client side information.
It’s obviously a strategy for growth – it gives Xero an entre into Australia (Acclipse are already there), gives Acclipse and entre into the UK (Xero are there but not really gaining much traction) and gives the both of them more clout everywhere else.