"We started by asking what an online farm looks like. The we developed a blueprint showing what Xero can do. We used our partnership model to find a good specialist farming software partner, Figured, to work with and added what it can do to the blueprint," he says.
Xero's Farming in the Cloud service launched a year ago at the 2014 National Fieldays. Richmond says since then Xero's rural accounting partners have seen an annual subscription growth rate of 120 per cent. "There are some 4000 rural entities using our platform. They're not just farms, we see agribusinesses, shearers and other contractors.
"We also seen more accounting partners move to Xero because of the strong rural solution and we've done some big deals with banks, including ASB, operating in the rural sector. Historically big companies didn't co-operate. That's changed, now they're discovering you can do more for their industries by forming partnerships."
One aspect of these partnerships means companies serving the rural sector, like PGG Wrightson and RD1 can integrate directly with a farmer's Xero account. A farm order appears in the books immediately.
Xero learnt early to concentrate on promoting its software to accountants and then to let them sell it on to their clients. This strategy proves to be even more important in the rural sector.
Richmond says a significant number of the work done in New Zealand is outsourced to accountants, more than in other sectors. "If you develop the tools that work for the accountant and let them be connected to their client, then they can educate their client around the tools and how to do more with them.
"Good accounting advisors and banks know that a farmer who is involved in pulling together their budget and monitoring it is going to have a far stronger business," he says.
There are some 4000 rural entities using our platform. They're not just farms, but also agribusinesses, shearers and other contractors.
Vodafone is one of Xero's key partners addressing the agricultural sector. The phone company is pushing broadband into rural New Zealand erecting cell towers and providing fixed wireless services as part of the government funded Rural Broadband Initiative (RBI). A good internet connection is essential for anyone wanting to use Xero's cloud computing software.
Richmond says Jeremy Anderson, the agribusiness sector manager at Vodafone New Zealand comes from a rural background, so he "gets" the industry, but he also sees where telecommunications fits into the picture.
"I've found him to be both pragmatic and progressive to deal with. He is also fast. Often when you're getting a partnership off the ground things don't move quickly. We've found in this market there's a real need and a want to partner." he says.
To date RBI uptake has been slow. That could change now the service is moving from using 3G mobile technology to the faster and longer-range 4G mobile based on the 700 MHz spectrum.
Something else has held RBI back. Richmond says when Xero was on a roadshow talking to rural accountants and bank managers about technology it quickly became clear they had little technical or other knowledge about the RBI services. He says the problem is a lack of awareness.
A year ago Xero surveyed 700 farmers at Fieldays on their attitudes towards rural broadband.
The company found only 9 per cent of farm owners were satisfied with their internet capacity while on the job and only 11 per cent of rural businesses were satisfied.
The same survey found 46 per cent of farmers hadn't even checked to see if they were in the RBI zone.
Richmond says as soon as farmers see something requiring broadband that they want to run on their farm, they go and look for a service.
He says this is why the Vodafone and Xero bundle makes sense: "Farmers can see the tools they can use and their benefits. We show them this is the way you can get the access and speed that you need. It's been a powerful sales tool for us."
One of the advantages Xero has reaching farmers is its pure cloud model.
Richmond says many of the company's rivals sell accounting software that is hybrid in nature, where a lot of data needs to be synched with the computer. That chews a lot of broadband, which is a precious commodity outside the main centres.
After one year of selling in New Zealand, Xero is already getting interest in its Farming in the Cloud package from overseas.
Farming software specialists in Australia and South Africa are preparing modules to work with the software. Richmond says similar plans are under way in the US where most farmers still use old fashioned spreadsheets for planning.
New Zealand farmers are not necessarily much better.
Richmond says the Xero survey found 48 per cent of farmers questioned said their business plan is in their head. Less than than half have a formal, written plan. In 2013 the Ministry of Primary Industries set a target of doubling New Zealand primary sector exports by 2025. This means lifting 2013's $32 billion of exports to $64 billion a year.
Richmond says that level of growth isn't going to happen without planning. To do that farmers need tools that go beyond financial accounting.
This is why Xero has partnered with Figured, a farm management software specialist.
"With Xero farmers get the financial information they need for compliance. The software takes direct bank feeds to help with tax and other compliance issues. Figured works in a similar way, but focuses on farm specifics. So it will take in milk price as a feed and update a farm's budget overnight. Farmers get real-time information," he says.
Real-time information gives farmers a better picture of where their business is heading.
Richmond says more accurate planning tools reduce a farmer's risk profile and that, in turn, gives banks more confidence when making lending decisions.
