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Day of reckoning coming for cloud accounts Featured

The desktop small business accounting marketing is shrinking and Pete Sanders, General Manager, Business Division, at Reckon, knows it. However, the boss of Australia’s largest locally owned small business accounting software company is preparing to take the iconic Quickbooks desktop product into the cloud with a new name, in competition with Intuit, the company that spawned the brand.

 As is to be expected with different tax and employment regimes, accounting software is very country specific, so when Reckon founder Greg Wilkinson knocked on Intuit’s door 25 years ago, the company devoted a significant amount of resources to localise the Quickbooks and Quicken products for the Australian market.

Today, Reckon’s recently renamed Quickbooks (Reckon Accounts), with an estimated 35-40% market share of small business desktops, vies for leadership of the shrinking desktop market with MYOB, another localised product that is now under foreign ownership.

Meanwhile, a plethora of overseas-owned competitors, including Intuit, Xero (NZ), and MYOB are racing Reckon to introduce their cloud based accounting products onto the Australian market.

Intuit appears to be in such a hurry to leverage its brand into the Australian cloud space that its small business accounting system doesn’t even have an integrated payroll product, relying instead on a third party product.

MYOB also appears to be in a rush to transform itself into a cloud services accounting supplier, so much so that its critics say that its claimed cloud offering AccountRight Live is no more than a hybrid online-desktop solution.

Xero, with no desktop baggage, appears to be doing very well in signing up new clients for its cloud offering (and it does have integrated payroll) but, unlike Intuit and Reckon, it has no clear migration path for legacy Quickbooks customers.

“The new cloud players are doing very well at signing up start-up businesses,” says Pete Sanders.

“But, our traditional businesses are holding strong.”

With between 1.5 million and 1.7 million small business customers in Australia, plus several hundred thousand more in New Zealand, there are plenty of clients to go around.

However, with retailers doing it tough and the naturally high attrition rate of new ventures, it would be hard to argue that the best clients to have for small business accounting software are those that have established themselves.

MYOB, with a solid legacy customer base, is not likely to lose clients with years of desktop accounting records that can’t be easily migrated elsewhere. The same holds true of Reckon, although Intuit may try to argue otherwise.

Thus, Reckon appears to be more measured in its cloud strategy, preparing to take its soon to be released cloud offering Reckon One on a road show to accountants, bookkeepers, consultants and small businesses in mid-May.

However, Pete Sanders openly admits that the upgrade path for Reckon desktop users will not be seamless from day one.

“We expect data conversion to be available within three months of the launch in July,” he says.

“Meanwhile if our desktop customers really want to go online immediately, they can go to Reckon Accounts Hosted if they wish. We’re unique in that we will have a desktop, hosted and a true cloud solution.”

With the small business accounting software marketing appearing to become increasingly fragmented with the onset of cloud players, it is perhaps fortunate that Reckon is not a one-trick pony.

Of the ASX listed company’s $100 million revenue last year, $60 million was generated by non-accounting software products, such as APS (practice management), Reckon Docs (document management), Linden House, and NQBillback (cost recovery).

Nonetheless, the market is watching with great interest to see whether Reckon’s parting of the ways with Intuit and its move into the cloud will see off the US interloper, shore up its existing business and leave it to concentrate on battling traditional rival MYOB and promising newcomer Xero.

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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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