Where are the cloud practice management vendors?

by admin on March 27, 2009

in Featured,General,Innovation

John Stokdyk of AccountingWeb poses exactly the right question about practice management solutions in an email blast:

There’s still a big gap in the market for a supplier who can cater for the less sophisticated (i.e. expensive) needs of sole practitioners and new start-ups. And how come none of the new Cloud generation has successfully stepped in to fill this gap? These, of course, are arguments that will rumble on for many years to come.

This is a curious state of affairs. Back in 1983 when I joined a firm of CA’s we were using Hartley Systems on a Wang 2200. We could format accounts and were at the then leading edge of accounts production. By the time I retired, we were on Finax, being pushed towards early Windows based accounts production systems. Tax software was still largely detached from the process and as for practice management? We built our own using Sapphire DataEase and did a certain amount of tinkering with the then Borland Paradox database. Sage was market leader as it is today but still firmly rooted in the accountant’s debit and credit world. You could argue that both end users and professionals were running pretty much side by side in terms of product and development with the professionals having a marginal edge.

Fast forward to 2009 and what do we see? Sage is still no. 1 in apps for business, but the landscape has radically changed for practice management systems. I don’t need to lay out the landscape. AccountingWeb has done an excellent job. But in raising the question, I wonder if John is missing some underlying market changes that have a direct impact.

The UK cloud/saas/on-demand computing environment splits neatly into two camps: those who are writing code for accountants and those who are addressing end users. Those who are addressing the end user community are seeing a much faster take up, largely because they are fulfilling a specific need in a way that end users find attractive.

Those who are developing for the accounting fraternity are having a harder time of it because the case for on-demand has yet to be well put or rather put in terms that make sense to accountants. Even so, some companies, like Xero, have achieved credible success through aggressive marketing on the back of well-funded businesses.

In contrast, practice management remains rooted in the Microsoft .NET world as the pillars of time and attendance, accounts production, client management and tax have become more complete. That means this class of application suite is firmly in the on-premise camp despite Microsoft’s protestations at having acquired cloud religion. So the difference today is that the end user communities, whether professionals or ‘real’ end users who happen to be using a service that does accounting have moved on. Does that matter? Absolutely.

Let’s say you want to streamline operations then you might think of outsourcing. You might think of remote workers rather than office based staff. Those scenarios suggest on-demand. Sure – you can get a secure VPN connection but that’s expensive, especially if you’re looking to scale up.

Ever since I started this blog I’ve said that accounts production and client management were two aspects that readily lend themselves to on-demand. On accounts production, Pearl [which recently became an AccMan  sponsor] has demonstrated to me a way that could be done. I need a more detailed view for which ‘watch this space.’ On the client management side, I used to think that a wiki was the answer. Today I think it is much more than that.

Open source services like MindTouch could readily fit into the professional landscape. At its heart, MindTouch is a wiki but it offers the developer a lot of freedom and an easy way to add in new functionality. But then SocialText has done a lot of work integrating different types of tool into its product set including SocialCalc, the online spreadsheet. That still leaves things like tax and time/attendance. Here, tax is almost virgin territory while Twinfield has been playing with partnerships designed to solve the second problem. The bottom line is that vendors are nibbling at the problem in much the way they were in 1993 but no-one has as yet come up with a solution.

John argues that it may be ‘years’ before we see anything substantial. I’m going to put my finger in the air and say yes – but no more than two years. The other week I spoke with Phill Robinson, newly minted CEO at IRIS. Phill is no stranger to the on-demand world having done a stint at Salesforce.com and prior to, the then Siebel Systems. I went straight at him with questions about when IRIS might have an on-demand strategy. While he would not provide a direct answer, the clear indication I got was that is pretty much top of mind.

While it is perfectly possible that a vendor could emerge out of left field, I’d put my money on IRIS not only coming out the traps first but with something with which they will have a credible marketing play. Marketing is Phill’s territory so it should be a no brainer for the company.

It is fair to say that today’s media and vendor communities are doing little more than riding on the back of fashion statements coming out of Silicon Valley. Everything there has a cloudy tinge. Even Sift Media, AccountingWeb’s owners have got cloud religion with Business Cloud 9. It is a hot topic with all the debate that goes with new technologies. Take most of it for what it is – competing vendors engaged in mutual navel gazing rather than addressing real world concerns.

I don’t think any of that need have relevance to professionals. On-demand/cloud, call it what you will should be about getting things done in the most cost effective manner whle improving relationships with clients. If vendors address those issues then everything else melts away.

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Charles Verrier March 27, 2009 at 3:17 pm

Hi Dennis…..(Finax and Dataease – that takes me back!)

thing is…if had to pick which product to create as a cloud offering, I'm not sure I'd have picked Practice Management.

Where SaaS really scores from my perspective is in the updates/upgrades side of things – I use FreeAgent, and in the past, when I've reported an issue, it's sometimes been fixed and deployed within 24 hours. Not always, of course, but if its been a problem, they've always been really responsive in ways a traditional software supplier is just not set up to do. ("Can you back up your data and send it in to us? – we'll look at it when we get a chance over the next few days").

Data security is good too, but any good IT department should have that covered – it's not a unique feature of SaaS.

Remote access is also one aspect often mentioned – but I don't think many firms will be brought to their knees if an audit team can't do their timesheets over the Internet from a client's offices – nobody bills THAT fast! I never log into my FreeAgent system from remote locations – there just isn't the need.

Practice Management is about lots of data – WIP and Fees ledgers, internal reporting, marketing and mailshot functions, a bit of staff scheduling if you're lucky – so a PM app would also need to support LOTS of data – an extra cost for the software house.

If it were me – I'd focus on compliance – specifically Personal Tax.

1. Relatively low volumes of data per job – good for my costs
2. HIGH demand for timely updates and fixes on a regular basis
3. Not much need for printing or data-import/export – a plus for SaaS
4. Centralised integration with HMRC using high-quality data lines – plenty of economies of scale to be had there – especially for things like batch submission of returns when the HMRC systems are at low utilisation (2am – even in late January, for example)

And, of course, LOTS of different ways to sell the system – as a 'professional' offering to practices, as a direct B2C alternative to the somewhat clumsy HMRC SA on-line system, even as a hosted resource for bigger firms to OEM to their own clients.

Accounts Prep – sure, but all that mucking about with importing TBs from 3rd-party bookeeping systems – yuk! Practices also tend to very particular about they way they like their accounts to look, so you'd need to do a lot of work to provide for customisaion. Of course if you could get really good IFRS output and XBRL submission sorted, then that might be a real winner.

Dennis Howlett March 27, 2009 at 8:17 pm

@charles – as an on-demand fanboy I would at least make the case so what you say is certainly germaine. I do think the collaborative element has huge value and especially in the area of availability of knowledge.

I wonder though whether you are thinking a little too much about the status quo where I am envisioning changing business models.

The imports are definitely an issue but if we're starting with XML then it's a step forward from grungy CSV files. Formatting as we know is not so much about account mapping but on presentation. Even so, the challenge is not inconsiderable. Having said that, I believe some on-demand vendors are addressing the issue at the hig level ie Viz/IRIS/Digita/Sage etc

Brian Tankersley April 3, 2009 at 5:22 pm

We have some offerings in the US which might translate over for UK firms, including BigTime from Edison's Attic and Practice CS from ThomsonReuters.

BigTime from Edison's Attic is targeted at medium to large sized firms, but could easily be used for small firms. See http://www.edisonsattic.com.

ThomsonReuters also offers their Practice CS as part of their hosted Virtual Office CS offering. While it's not a true SaaS offering (it's hosted on Citrix by Thomson at their data bunker), it's still a compelling offering. (http://cs.thomsonreuters.com)

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