Keeping our eyes on the prize

On Monday morning our server went down. We were offline for most of the morning. These are the times you can see with clarity what the goal is and why it’s so appealing.

I’m not going to say that I haven’t experienced moments of doubt with what we’re doing. Even blind panic has shown its face on more than one occasion. But what’s interesting about this journey so far is that like many things in life, the agony and the ecstasy are inextricably connected. We’ve had a few frustrations. But it’s precisely because the goal is so enticing that we have had times where we feel challenged. A life without servers!

There was an interesting article posted this week by Sholto Macpherson at cloud-computing advice site Box Free IT. You probably need to read it if you want to make any sense of the rest of this post. Reading between the lines, you can see that there is some concern amongst the incumbents at Xero’s success in changing the landscape. But ultimately what stands out the most to me is that I’m just not sure that the major players really get it.

“I came because I didn’t know any better, but I stayed because it would cost too much to change. Call me a fan!”

I’m not convinced that accountants stick with what they know because they are loyal. Don’t get me wrong – I think they would if it were that simple. But I don’t think that ‘pedigree’ is the reason accounting firms stay with a software vendor. Buying an enterprise level accounting solution isn’t like going to your favourite supermarket. It’s not a matter of going back to someone you trust each time because they’ve been around for a while, or they smiled at you as they sliced your ham. In fact, the barriers to changing software are so great that it would really be impossible to know what a customer thought of your product if return business were your only gauge. We can testify to sticking with something we really didn’t like, enduring exorbitant price rises year on year whilst getting almost no product development in return, simply because the thought of changing was too overwhelming. And even if we could get through it and were willing to wear the cost, we couldn’t be confident of seeing any real improvement at the end of the process anyway. Does that make us loyal?

It reminds me of Channel 9’s response to criticism of their Olympics coverage. Citing the ratings numbers as evidence of a successful package really tells you nothing of the quality of the broadcast. Unless your viewers have a pay TV alternative, where else do they have to go? If they love the Olympics, they’re going to tune in even if Eddie McGuire and James Brayshaw call every event! Does having no other viable option mean that your customers are happy?

This is entirely anecdotal, but based purely on my discussions with accountants over many years, I can’t remember meeting anyone who’s gushing about how fabulous their systems are. I can’t recall ever being regaled by tales of how software has completely transformed the way a practice operates. Instead, most accountants will tolerate anything if it means getting the job done each year. And the price they pay for this grudging forbearance is significant. For us, it was just under $20,000 a year in maintenance.

So this is the point. Why did it take something like Xero for us to make the switch? It wasn’t because we could replicate the features we had in our existing suite of software, but rather because we couldn’t. Why take the risk for something that basically does what we’ve always done, with perhaps some prettier user interface features and fancier reports? And at a significant cost in both software and hardware? Xero brings a completely new paradigm for running a practice, and the price makes it worth the risk. Especially when you know that others have already successfully implemented it.

When we’re done, it won’t matter if our server goes down. Will we even be using it for anything other than some storage of old data? Even if our internet connection drops out, we now have two services with two different ISPs (one ADSL, one wireless) so we’d just switch connections and carry on.

It’s true, as Sage managing director Alan Osrin said, that “Cloud programs such as Xero’s WorkflowMax Practice Manager…would take a long time to match the features of the server-based incumbents“. We’re wrestling with that to some extent right now. But is that the goal? We don’t want software that will match the traditional way of doing things. We want something completely new. Otherwise why change?

Don’t even think about it…

Server-based, enterprise level software solutions ultimately represent the same way of skinning the cat. We chose Xero not because it replicates but because it innovates. We can already see so much potential for positive change. There are ways of doing things that we hadn’t even considered possible.

If you’ve been following this journey, you’d know that we’re not here to tell you that it’s all beer and skittles. We’ve already discussed some of the hurdles we’ve had to get over so far and we expect there will be more to come. It happens with any new system, and even more so with one that requires a transformation in thinking. There are still some things that we think Xero need to take note of if they want to capture a big slice of the market (my next post will be a review of Xero so far – the pros and the cons). And Clive Rabie of Reckon is right on one thing at least – Xero needs tax, and sooner rather than later!

But this isn’t about finding another master to shackle ourselves to for the next decade. We don’t want a system that does what we’ve always done in a prettier way. This is a flight to freedom! If you want to make it to the Promised Land, you sometimes have to spend a bit of time in the wilderness. Uncertainty and change are scary, but we think the prize will be worth the effort.

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3 thoughts on “Keeping our eyes on the prize

  1. interesting article – I do think Xero promotes strongly to accountants who in turn recommend to their clients regardless of whether it is a good fit for their business models. Xero is more expensive than Saasu for a user – no big deal for accountants as they don’t pay. Apparently Xero is redoing the GST tax codes so they can comply and be clear. It is just as traumatic to switch from one cloud vendor to another as it was from one desktop to another.

  2. There’s no question that’s the model, for sure Margaret. I think there’s going to be a difference though in the way the second wave of Xero firms approach the product. The first wave of early adopters seem to have more of the ‘groupie’ mentality, where they will love anything and everything that is served up by Xero, even if they have to force themselves to. And they’ll wear the t-shirt to prove it! All you have to do is search #xerocon in Twitter to see exactly what I mean. They’ll adapt their systems to fit the Xero model and potentially shoehorn all of their clients into Xero just for the bragging rights.

    As I’ve said earlier, I believe the next wave of accountants will potentially be much bigger for Xero, but will also be more discerning and more demanding. There will be some things they won’t be willing to accept just because that’s ‘the Xero way’. And they certainly won’t be looking to jam a square peg into a round hole when it comes to their clients. It’s a potentially far more lucrative group for Xero, but it’s also going to take more work.

    We do think Xero is great for many businesses and because of the way the whole client-accountant-vendor ecosystem works there are huge advantages for many clients in using Xero, not least of which is that it’s just really easy to use. But we’re not about to force it on anyone just to get our Xero numbers up, and certainly wouldn’t recommend it where it isn’t a good fit. Client-side, we plan to keep working with all the SME offerings (MYOB, QuickBooks et al) while at the same time recommending Xero where the client will benefit from it and there is an advantage in switching. And with the collaboration benefits and so on, there certainly can be huge gains. It’s hard to look at it purely from a monthly fee point of view because, for example, the savings for the client in accounting fees and bookkeeping may easily outweigh the monthly cost of the software.

    Our goal is for the client and us to benefit. In fact, cost wasn’t a consideration in changing for us at all, initially. We wanted the best, most modern solution – regardless. You’re right about the trauma of switching, but where the cost comes into play is that while the switch itself is traumatic in any case, it’s not costing us tens of thousands of dollars in hardware and maintenance to do it.

  3. Pingback: Two things we love about Xero | Approaching Xero

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