FinancialForce Update

I spoke the other day with Jeremy Roche, MD of FinancialForce the accounting application built on top of force.com. Readers will recall that about a year ago Coda2Go, as FinancialForce was called then, was partially acquired by salesforce.com – I wanted to catch up with Roche and see how things were going for them.

I especially wanted to discuss with Roche the competitive landscape. I’ve had fairly extensive discussions with NetSuite, Intacct and Acumatica in the past year or so – these three companies are the on-demand competitors serving the mid-market customers that FinancialForce are also targeting – interestingly, when I’ve questioned those vendors about FinancialForce they’ve tended to be fairly dismissive – mentioning each other or the on-premise vendors as competitors but rarely considering FinancialForce a competitor.

With the moves, especially from NetSuite, to move further up the food chain into ever bigger organizations, I quizzed Roche on where the sweet spot lies for FinancialForce. He indicated that they’ve got startup customers right through to 20000 customer organizations using their product – the sweet spot however would appear to be in the 30-500 range. Any smaller ands they’re up against the myriad cheaper SMB options and at the top end they start running into issues around functionality. As an example, NetSuite is pushing hard on their ability to perform large consolidations for complex businesses with multiple tiers of subsidiaries, FinancialForce is able to perform “aggregations” but not fully compliant consolidations. Instead they’ve been pushing the ability to use their product for business units and then push out balances to larger enterprise systems such as JD Edwards and SAP etc.

In terms of geographic spread – Roche was keen o point out that they’re focusing heavily on North America and the Commonwealth countries – they’re currently serving customers in around 20 countries from a staffing level of around 50 in the US and the UK, Roche rightly pointed out that the chances of broadening their geographical spread with that head count, and given the timezones, would be problematic. Interestingly enough this is in contrast to Acumatica, an even lower headcount operation who is going broad via a partner channel. They’ve just inked a deal with South Africa’s Computer Initiatives to sell their product, happy to give up margin in order to broaden their geographical spread and customer numbers.

Anyway – back to FinancialForce. Of their existing customer count, around half are US based with the rest split evenly between the UK and the rest of the world.

In terms of product development, Roche indicated that there are three main focuses for the company:

1. Increasing the depth of accounting functionality in the product. The consolidation issue I raised above is one example of functionality that will be needed for FinancialForce to grow into bigger customers
2. Providing vertical extensions to the application, utilizing he force.com platform FinancialForce will look at creating specific functions for particular industry verticals
3. Expanding the FinancialForce footprint beyond accounting and billing – this very much speaks to things like a professional services automation play to rival that of the OpenAir and NetSuite combination – given the close ties to salesforce, and the flexibility of force.com, this should be  no-brainer for the company