Intuit Australia predicts storm clouds for MYOB but even darker clouds loom for both

ExactCPA provides accounting services centered on QuickBooks, Xero, and MYOB and we keep a close eye on developments therein.  Often what's taking place in Australia (MYOB) and New Zealand (Xero) is instructive of what lay ahead here in the U.S(QuickBooks).    With that in mind  Stan Beer for the Wall St. Journal writes Quickbooks users in Australia are being offered a seamless transition into the cloud by Intuit Australia which has taken over stewardship of the product recently. The result could present a sticky problem for local market leader MYOB.

According to MYOB, acquired by Bain Capital (co-founded by US Presidential candidate Mitt Romney) for $1.2 billion in 2011, it has 800,000 users of its flagship desktop small business accounting software AccountRight, most of whom the company intends to migrate into the cloud with its new product AccountRight Live.

The problem for MYOB, according to its competitors, such as chief rival Intuit, which owns Quickbooks, and upstarts such as NZ based Xero, is that AccountRight Live not really a cloud product at all but rather a clumsy hybrid solution that still ties users to a particular desktop PC.

The local boss of Intuit says MYOB does not have a real could transition solution for its desktop accounting software users - something that MYOB hotly contests - but merely a hybrid cloud product.

Nora Tucker, senior product manager for Quickbooks Online Australia, reinforces this view, telling iTWire: "MYOB's AccountRight Live is not really a cloud solution but rather a hybrid model, which forces its users to check in and check out. What we have is a true SaaS solution."

When confronted with the same message from upstart Kiwei accounting software provider Xero, which claims to be winning 100 new customers a day, MYOB corporate affairs manager Kristy Sheppard wrote to iTWire saying:

"Saying “MYOB has a clumsy hybrid model which still ties the software to a particular PC” is like saying the same thing about Microsoft Office 365, which Xero has publicly said it uses. One major reason MYOB cloud-enabled our flagship desktop product (AccountRight - used by 800,000 clients) was so clients could easily 'switch on' the cloud in the product they're already familiar with. There’s no need for training or to re-enter past financial data, they just turn on the cloud and continue working with the same interface. Users can seamlessly switch between working offline as well as online whenever they want.

"We’ve had a cloud accounting solution available since mid-2010. This is often conveniently… forgotten… by our competitors. Our popular browser-based solution, LiveAccounts, is an online-only product just like Xero and Saasu. Like these other products it’s ideal for start-ups and smaller operators with no or few staff. AccountRight Live is a feature-rich solution for business operators who want a more complete range of functionality."

According to Nora Tucker of Intuit Australia, Quickbooks Online has been designed for the ordinary small business user that knows little to nothing about accounting.

"We've designed it for the average Joe,' she says. "We've just finished a roadshow with accountants and bookkeepers all over Australia and got a very positive reception wherever we went."

However, there may be an even bigger problem for both MYOB and Intuit than the transition to the cloud.

According to recent stats (mainly coming from accounting software companies), there are about 2 million small businesses in Australia that are potential users of the sort of accounting software that MYOB, Intuit and others offer. We could probably wipe off 500,000 of those who will either never have an accounting software product or who will go out of business before they bother to get one.

MYOB has already publicly claimed 800,000 of them (see above) and, although the last public figures for Quickbooks date back to 2007, in which the company claimed 400,000 Australian users, it is reasonable to assume that there are still a similar number of Quickbooks users - and given that are a total of just 1.3 million Quickbooks Online users worldwide it's easy to understand why Australia is a priority market.

That being the case, there is not that much more room for MYOB to grow into, unless it grabs customers of Intuit. The problem is that MYOB incredibly still does not have a seamless migration product for its main competitor. exactly the same situation applies to Intuit.

Another thing to watch for with these new online accounting products is the features set.

If you speak with a qualified bookkeeper or accountant they will almost certainly tell you that an online accounting package is not worthwhile unless it includes a payroll component. Well just in case, anyone is in doubt Quickbooks Online does NOT include a payroll module in the monthly payments - you have to pay extra (about double the monthly cost) to get a supposedly integrated product from a third party called Web Payroll.

Samm business buyer beware before you jump into the online accounting software void.