New player enters online accounting

Grant Hewson. Photo / Supplied

Another local software company is following listed newcomer Xero's move into the growing online accounting space.

Ellerslie-based company Accomplish has sold about 25,000 copies of its CashManager accounting package to small and medium businesses across New Zealand and Australia since the software was first developed in the early 1990s.

Today Accomplish is launching CashManager Online, a software-as-a-service (SAAS) version of the software users will access through a web browser rather than by running a program loaded on to their PC or laptop.

The SAAS approach to accounting software has been popularised by Wellington-based Xero, which has built up a customer base of more than 7500 small business users since launching its online-only product in July 2006.

Both here and overseas the SAAS approach has become an increasingly popular way to deliver a range of business tasks and services as broadband connectivity has become faster and more reliable.

Accomplish general manager Grant Hewson said he expected about 5 to 10 per cent of CashManager users would switch from the traditional stand-alone version installed on their computers to the new online version. But he said "the jury is still out" on whether the SAAS approach to business software had a long-term future.

"As Xero has raised the profile - very impressively I must say - in this space regarding online accounting, there is clearly some benefit to us if we can offer CashManager both online and as a stand-alone product," Hewson said.

"There are certainly advantages offered by the online model but right now, as technology stands, I think there are enough drawbacks or considerations to say that the jury is still out. And for many of our clients, at present there's simply no compelling reason to have an online accounting product."

Some of the advantages of SAAS software are that users who travel frequently can access it from any internet-connected computer, software residing on a PC does not need to be updated when updates are made to the program, and data backups are not required because the software vendor stores all information entered by users.

The online storage element of SAAS is seen by some business IT users as one of its biggest strengths, and by others as a major pitfall.

"Data is securely backed up as part of our online service but many people still feel very uncomfortable about putting their sensitive financial data somewhere out there in the ether," said Hewson.

"Probably, for the vast majority of businesses, their data is actually far more secure in that [online] environment than on their PC, but that's something the market's going to have to get used to over a period of time."

Another issue that divides IT users is pricing. SAAS vendors typically charge users a monthly fee, whereas standalone software is usually sold for a one-off price.

SAAS software has appeal to businesses wanting to avoid incurring the initial high capital cost of buying new software, but over time they will pay more for the service.

Accomplish is charging $45 (plus GST) per month for users running accounting information for a single company through its new SAAS product, undercutting Xero's $49 charge.

Accomplish charges between $466 and $1106 (plus GST) for the various versions of its traditional stand-alone software.

"Our advantages over Xero include that CashManager is simpler to use, and we have 20 years' experience [in developing accounting software].

"We have existing relationships with thousands of accountants and the ability to offer both versions. They have the advantage over us in that they have deeper pockets," Hewson said.

Xero is yet to turn a profit but recently raised more than $29 million through a new share placement in its bid to tackle the global market for SAAS accounting software.

Chief executive Rod Drury said he expects the business to become profitable once it has between 15,000 and 30,000 subscribers.

DOING BOOKS ONLINE

PROS
* No up-front capital cost of buying software.
* Automatic updates.
* Available anywhere.
* Data automatically stored and backed-up off-site.

CONS
* Reliant on broadband access.
* More expensive long-term.
* Sensitive financial data stored outside the business.