How many number 1's are there?

by admin on March 13, 2009

in Cloud Computing/SaaS,General

e-conomic has just announced its results. It starts:

13th March 2009: e-conomic, the leading European provider of online accounting, announces today its 2008 financial results, revealing revenues in excess of £3.8million for the year to the end of December.

Yesterday I talked about WinWeb but without claiming no.1 status:

Stefan Topfer claims revenue of £5 million.

I see that Twinfield says:

Twinfield the no. 1 in online accounting…

using customer metrics and having recorded turnover in 2007 of €3.6 million which at today’s exchange rate is about £3.3 million UPDATE: €4.5 million or £4.15 million in 2008.

Kashflow has allowed claims that:

The UK’s leading online accounting software with 15,000 small business accounts.

[My emphasis added throughout.]

Anyone with an ounce of sense will know that these claims cannot all be right. But then they might be. It all comes down to definition. The problem, and it’s an age old issue among software vendors, is that everyone wants to define the market to suit their marketing position. So what if it’s egregious?

There is a genuine difficulty because saas/on-demand is a different style of application that is leading us down all sorts of business model rat holes. I’ve argued that ‘free’ is suicidal without Plan B but that Plan B has gotten WinWeb into a good position. On the other hand, numbers matter. The question now comes, how are we going to define the market? Is it a revenue game or a customer number game?

Putting on an investment analyst’s hat doesn’t help because some think that land grab and then monetize is the way to go – as WinWeb proves. On the other hand, there is no denying the power of revenue. I’m starting to think that what we need are three measures.

First is the money and on this brief showing then WinWeb is clearly out front. We’ve yet to see Xero‘s numbers for 2008-9 and that could change the runners and riders’ position yet again.  The second is number of registered users – but then I would refine that to include those who have logged in at least once in the last 2 months. Taken at face value, that also puts WinWeb out front but then I could equally point to FreshBooks with their 700,000. Third then is territory. Despite the fact the earth is flat, some vendors are territory specific.

What’s painfully obvious to me is that this market needs better definition and also a more coherent approach to reporting and position assessment. While I have a LOT of market data, I would not claim the data set is perfect by any means. Whichever way I end up parsing it someone somewhere will say ‘ah but.’ And that’s fair enough because even now I’d argue the variety of business models out there makes for a complexity that can readily lead to confusion. And all of that before we consider the relative market segments in which each vendor plays.

Even so, over the coming months, this is something I want to clarify. The market needs it and so do customers who are trying to make an informed decision about where to place their bets.

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Emily Coltman March 13, 2009 at 9:28 pm

Ah but… :-)

My defining point would be not how many customers the product has, but how many of its customers are HAPPY customers.

And I don't just mean customers who stick with the product because changing it would be a pain in the neck. I mean customers who wouldn't change if you paid them to do it.

The product that had the highest proportion of happy customers would win my vote for the leading provider.


Dennis Howlett March 13, 2009 at 9:40 pm

It's a good idea M but is a subjective measure that's horribly difficult to justify in an objective manner. AWeb attempts this with its Satisfaction Awards but in truth they're an 'everyone's a winner' type of thing.

We all know that Sage has a rotten public reputation but that is only from those who complain. As the elephant in the room, I would be surprised if it was any other way. SAP has the same issue despite it runs much of the Global 2000.

We also know that plenty of businesses switch – but they switch in many directions and for different reasons.

The reality is that switching is something people don't do unless they're REALLY fed up or need something the incumbent cannot provide.

Right now, the kinds of measure I am suggesting are tough enough but they are measures upon which the industry can achieve some agreement. Like it or not, the industry needs to play the game as well, hopefully recognizing that any attempt at objective review has market value to all.

David Terrar March 14, 2009 at 3:06 am

@Dennis – I think getting clarity on this is definitely a good thing for the industry. Twinfield use the number 1 in online accounting thing because they don't believe anyone in Europe has a bigger online accounting customer base. I'll try and get definitive numbers for you, but Twinfield is used by approximately 60,000 companies to run their books, they have 30,000 subscribers, and around 700 practices using the product. By the way, the larger number of companies than individual users is because there are a lot of practices with "internal" Twinfield users doing bureaux style "shoebox" accounting where the end user company doesn't actually touch the system, they only get reports.

David Terrar March 15, 2009 at 3:12 am

And just to add – Twinfield's revenue in 2008 was 4.5 million euro, so defintely larger than e-conomic.

Dennis Howlett March 15, 2009 at 11:11 pm

Updated the data – thanks

Emily Coltman March 15, 2009 at 8:13 pm

Agreed – it's very difficult to make an assessment based on a subjective measure like customer happiness.

Perhaps statistics based on how many customers do the free trial and then pay? How many customers stop using the product? How many customer complaints per 1,000 customers?


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