Purely by chance I came across this thoughtful piece by Martin Kleppmann, proposing the idea of an open standard for the interchange of data between accoutning applications. He’s gone as far as to start outlining what he terms OAccounts might look like. Martin’s thesis is based on:
OAccounts uses the OASIS UBL open standard for representing invoice and payment data. This powerful standard is gradually getting adopted worldwide — for example, it is already mandatory in Denmark for any suppliers to the public sector to use it. It is well designed by people who understand the nuts and bolts of international commerce, and it really ought to be a format which all applications can understand.
I sense Martin is amplifying a single use case to make a point but heh – who wants to dampen enthusiasm?
It was interesting to see the way leaders of the saa/on-demand movement weighed in on Martin’s post, welcoming the idea but pointing out, as Rod Drury, CEO of Xero did that:
The SaaS industry loves standards. It’s not just for moving between systems but would allow others to do innovative extensions and would grow the SaaS ecosystem.
I think the lead will come from the SaaS vendors working together, but I think we all have a bit to do first. Probably a few years away when volumes will be significantly higher than they are today and a few of us have resources to put into this.
I disagree with Rod. Time and again, the software industry has shown itself incapable of finding standards on issues that make interoperability a reality. We’ve been talking about XBRL for years and only now is it showing signs of life. More important, as Mike O’Grady of AquilaTechnology points out:
Obviously, Sage will not be in too much of a hurry to provide an OAccounts facility
And neither will the other vendors who play in the accounting space. The work required to refactor databases alone constitutes a pain that many will choose to avoid as far as possible. Years ago, Exchequer and CODA used BASDA’s eBIZ-XML to create invoice connections between their applications. It was a great idea at the time but nobody bit. Nobody cared.
Twinfield expended considerable effort figuring out XBRL, something that is about to become mandated in at least some territories. Given the industry’s laxity in developing for XBRL which is non-competitive and relates to reporting, what chance OAccounts? Later today I will be talking about SOA in Infor/SAP environments – a very new development that is designed to solve the same problem Martin outlines. Given the big boys aren’t playing at all, what chance the as yet nascent saas industry? Seriously.
API’s certainly help in the development of other applications. Check what Freshbooks has been doing with partners like Basecamp, Outright and IAC-EZ. Check what Kashflow has done with MyCake.org and others. I said the other day that Kashflow could become a platform. But then equally it might plough its own path and add on the very features that others are developing. It wouldn’t be the first time that’s happened.
I can see some use cases for standards based integration. I can for instance see how it would be useful to integrate contractor systems to larger AP systems run by agencies or organizations that use large ERP systems. But that adds yet another layer of complexity to the landscape.
In the meantime, the vendor community races to develop services that are ever more complete in a direct bid to compete with the Sage’s of this world. They all know that in the UK, Sage is the elephant in the room while in the US it is Intuit. They have to convince a would be or existing Sage/Intuit user that their offering offers better value first before worrying about integrations to potential competitors.
Martin’s premise is that he wants his data to be portable. Why? He wanted to move from Sage to a saas product. History suggests customers switch applications once every 5-7 years. The incentive to develop against a standard therefore is low unless everyone agrees it is appropriate. Even where a switch is made today, it’s relatively easy to move the data from one app to another – up to a point. Most accounting software can at least spit out and import a CSV file.
But if you want a way to integrate any and all applications then you’re into a different ballgame altogether. Accounting in the full sense is a local style of product/service, not global. That alone creates problems if you are thinking of working across international boundaries. That’s one of the reasons that Sage has acquired so many companies around the world.
Even if you’re thinking of working in a single country then you inevitably stumble across the need to work with government mandated gateways that operate according to their own interpreatatino and requirements.
I see the point of having standards for the movement of data between services like Mint, PayPal and the accounting apps. But if the complete lack of standards there is an indication of how well/badly the industry as a whole is doing then I’m afraid we could have a very long wait. That’s not to say it won’t happen, just that politically, let alone practically, the industry is in for one heck of an uphill struggle.
The more likely scenario is that a TIBCO/IBM-esque standard could be developed where a thrid party acts as the glue provider. That’s exactly what Martin’s second diagram (see above) looks like.
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