FreshBooks has indicated the way of the future. Create a solution for a niche market based on experience and get it out there. Now comes the fun bit. Zoli says that saas may never be the same again following introducton of FBs benchmarking service. This is something I anticipated a while back as a game changer. But that’s just the start.
Imagine that you can appeal to a niche market and build an accounting application that works just for them. Imagine that the app would go all the way through to providing the client with information about their financial standing and a good indication of their tax liabilities. Let’s also say that application was built around the idea of community.
Now flip that on its head.
Let’s also assume that at the back end there was an accounting system that works for the practitioner. Now we have some interesting possibilities:
By engaging with the niche community, the practitioner can demonstrate domain expertise. That makes the practitioner a person people can trust and to whim they will flock. I already have some examples but this from my old firm works just as well:
We industrialized part of the business by turning our farming unit into a production line. Since farming had (has?) weird rules about herd livestock valuations, we created a special way of presenting that so HMRC could reconcile the figures. They liked that idea which we were able to agree with all of our local districts. It was the most profitable part of the business with the lowest investigation rate and the highest retention rate by a country mile.
That would be hard to replicate today because local HMRC folk are an endangered species. But what if I could get HMRCs attention. They say they’re listening don’t they? It shouldn’t be that hard. So why not work with them as well to make sure that the technical bones work properly?
In working this way, the niche developer, the client, HMRC AND the practitioner come together via the community. That’s the platform practitioners should be thinking about building. Some practitioners already have a crude way of putting this together. I have a much better way of automating much of the processes that sit inside each of those activities.
The general application providers will say they can do this through their domain expertise bolt on additions. No they can’t. They can’t because it is not the application that matters but the community which is coordinating the management of individual issues and needs. This is a lot more than a few smart links. This is about the exchange of ideas inside the entire financial value chain.
Assuming this idea makes sense then does it have realistic chances of monetization. Of course it does. In the UK (and depending on whose numbers you believe), there are upwards of 3.2 million small businesses. Of those, I estimate that no more than 400K have a recognisable accounting system and the vast majority will be Sage or Intuit users. They don’t own the domain expertise to reach niches. Except for the profession. But…there are niches all over the place crying out to be served in a simple no-nonsense manner. I know one that’s worth at least £12 million pa. Not to be sneezed at. Multiply that a few times and you’ve got a very serious business. If parts of the profession finds itself under threat from this new form of industrialization then the brand players are in real trouble. That’s because the niche player just blew away the professional’s 100+ year old MO and the software that goes with it.
Disruptive innovation is very simple when you see it. Meaningless when you don’t.
Endnote: This idea has other effects which I’ll come to later.
Technorati Tags: collaboration, communications, HMRC, innovation
