Thursday, May 9, 2013

Gov. Patrick seeks to ban fee for e-filing taxes in Massachusetts

Erin Ailworth for the Boston Globe writes: Governor Deval Patrick has proposed legislation that would ban tax preparation software companies, such as the maker of TurboTax, from charging Massachusetts taxpayers a fee to file their state returns electronically.

Such fees have become an issue as tax officials try to encourage Massachusetts taxpayers to file through the Internet, which would not only speed refunds, but also save the state thousands of dollars spent processing paper returns. The state hasn’t calculated the difference in processing costs, but the Internal Revenue Service ­estimates it costs $3.50 to process a paper form, compared with 15 cents for the electronic versions.
But the effort to encourage online filing has been hindered by fees charged by tax software companies to file state returns electronically. While there is no additional fee to e-file federal tax documents, Intuit Inc., the California company that makes TurboTax, charges $19.99 per form to e-file state income taxes. Rival H&R Block charges $19.95, and TaxAct charges $7.95.
As a result, many taxpayers print out and mail forms that otherwise could be filed electronically. More than 351,000, or 11 percent, of roughly 3.1 million Massachusetts filers, had sent in paper returns as of Tuesday, according to the state Department of Revenue. Nearly 70 percent of those paper filers used software or the Internet to calculate their taxes, but printed and mailed the documents, probably to avoid a charge.
As part of supplemental budget legislation filed last week, Patrick proposed a ban on such fees, telling lawmakers in a letter that the prohibition would be a “consumer protection measure that will also encourage more electronic filing.” Patrick’s proposal, which has been referred to the House Ways and Means Committee, is modeled after a law that New York adopted several years ago.
Neither Intuit nor H&R Block responded to requests for comment on the pending legislation. TaxAct spokeswoman Jessi Dolmage declined to comment.
Massachusetts Department of Revenue Commissioner Amy Pitter said she is enthusiastic about the potential fee ban because it will remove what she said is “probably the biggest impediment” to getting paper filers to move online.
“New York opened the door,” Pitter said. “This is one of the top things that is irritating to taxpayers.”
State Senator Stephen M. Brewer, a Democrat from Barre who chairs the Senate Ways and Means Committee, said he’d like to see the issue considered separately from Patrick’s supplemental budget plan.
“On first blush it sounds like a common sense idea, but it does need full vetting,” he said, questioning what effects the ban might have.
For instance, he said, companies might just raise the price of the software if they can’t charge the filing fees. “Somewhere along the line,” he said, “would the cost of that software package have to go up?”
But the governor’s proposal cheered Beverly Finkelstein, a Milford retiree who used TurboTax to file her federal returns but mailed in her state taxes after she was asked to pay nearly $20 to file electronically.
“I just couldn’t get over that,” she said, noting that it had already cost her $39.99 to purchase the TurboTax software at Costco. Upon hearing that legislators would consider nixing the fee, she let out a “Yeehaw!”
“That’ll be wonderful if they do something,” she said. “Cutting edge.”
Posted on 6:34 AM | Categories:

Stern Advice: A tax strategy for all seasons

Linda Stern for Reuters writes: Just when you may have thought that federal tax policy was set - that January's "fiscal cliff" deal meant you could go about your financial life with multi-year certainty - Washington is again talking of comprehensive tax reform.

Both key congressional committee heads - Senate Finance chair Max Baucus, a Democrat, and Dave Camp, the Republican chair of the House Ways and Means Committee - have hinted that the impending debt-ceiling increase could be the tree upon which a new tax code hangs.

The reform they are envisioning would jettison many tax breaks and use that revenue to lower tax rates. But it's one thing to agree on a concept and another to shake hands on all the details. Virtually every line of tax code has its own constituency, a fact made evident in a 558-page summary of opinions on various tax code measures published Monday by the Joint Tax Committee ().

That means the smart money is still betting against personal income-tax reform. The more Congress talks about it, the more those constituencies will pony up political contributions, but it's not clear whether anyone except politicians will benefit.

Taxpayers, meanwhile, have to plan their finances so they are protected under the new rules and under a radically reformed system, in the unlikely case one emerges.

Here are some ways to make the most of the income-tax system, now and later.

- Max out your tax breaks. In general, a tax deduction is worth more now than later. That is especially true if tax rates get lowered in the future, even if your specific deduction is preserved. Direct as much of your money toward those items - health savings account contributions, retirement-plan savings, charitable donations, energy-efficient appliances - that will get you the break. Note that if you earn over $250,000 ($300,000 for joint filers), your deductions will be limited, so learn how they work beforehand.

- Keep your retirement savings tax-diversified. Even if you have a tax-deferred 401(k) account, put money into a Roth Individual Retirement Account if you qualify. (You have to make under $112,000 as a single filer and under $178,000 as a couple filing jointly to contribute to a Roth.) If you make too much, you can still pay into a traditional but nondeductible IRA and then transfer the money to a Roth later. That will give you some flexibility to manage your tax hit when you get to the withdrawal stage of retirement.

- Make a multi-year charitable donation. If you normally give a set amount of money, consider doubling or tripling it this year and putting it into a donor-advised charitable fund. That will give you the donation this year but allow you to dole out the money over a few years. You can set up such a fund through through one of the major investment companies like Fidelity Investments, Charles Schwab Corp, T. Rowe Price Group Inc or Vanguard. (Most community foundations - nonprofits designed to steer charitable contributions to local organizations - also will set up personal charitable funds.)

- Be careful about your investments. Several categories of investments have long benefited from special tax breaks. That includes municipal bonds, which pay interest not subject to federal taxes,life insurance policies and annuities that allow tax deferral until the money in them is used, and good old-fashioned stocks and other securities that are subject to preferential tax treatment on their gains.

All of those breaks are on the table, though their backers have been able to protect them in one round of tax revisions after another. It may make sense to sell winning stocks and take capital gains when you can, instead of carrying those gains year after year - they may be subject to higher tax rates in the future. Be more judicious about buying annuities, permanent life insurance policies and other insurance products that charge high fees and might not be good investments without their tax benefits. That tax deferral could disappear or become worth less (if rates fall), so if you are using insurance as an investment, make sure it performs well and has low fees.

You can stick with muni bonds for now if you are in a high tax bracket and they make sense. But watch Washington carefully to make sure all the talk doesn't turn into fast tax reform action. If it does, be prepared to switch out of munis and other tax-protected investments and into other taxable choices.
Posted on 6:33 AM | Categories:

Dividing an Individual Retirement Account into Distinct Sub-IRAs / Internal Revenue Service answers four questions

Dawn S. Markowitz for Wealth Management Co. writes: Two-and-a-half years ago, a decedent died, owning an individual retirement account.  At the time of her death, the decedent had reached her required beginning date for distributions.  She didn’t name a beneficiary of her IRA at the time of her death, and as such, her estate became the IRA’s sole beneficiary.  The decedent left a will in which she named the administrator of her estate and three individuals as her beneficiaries.  None of the four individuals was a surviving spouse of the decedent.
The administrator wanted to divide the IRA into four equal shares through four trustee-to-trustee transfers, thereby creating four inherited sub-IRAs.  Required minimum distributions (RMDs) would be made from the IRA up until the administrator created the four sub-IRAs; after that time, each sub-IRA would make distributions pursuant to the RMD rules of Internal Revenue Code Section 401(a)(9), based on the decedent’s remaining life expectancy.

Four Requests, Four Answers
The administrator requested rulings on four issues.  In Private Letter Ruling 201318033 (Feb. 7, 2013), the Internal Revenue Service answered as follows:

1.  Can each beneficiary’s interest be segregated and held in a separate, inherited sub-IRA to determine the RMD under IRC Section 401(a)(9)?
Answer:  Yes.  Treasury Regulations Section 1.401(a)(9)-8, Q&A-2(a)(2) provides that the interests of distinct beneficiaries can be divided into separate, segregated accounts, as long as all post-death investment gains and losses from the period prior to establishing such separate accounts are allocated on a pro-rata basis in a reasonable and consistent manner.  

2.  Does each sub-IRA, created through trustee-to-trustee transfers and titled “Decedent [E] deceased IRA f/b/o [a specified beneficiary],” constitute an inherited IRA under IRC Section 408(d)(3)?
Answer:  Yes.  Each sub-IRA constitutes a distinct beneficiary interest in the IRA.  Each sub-IRA is being maintained for the benefit of each beneficiary, who acquired the sub-IRA by reason of the decedent’s death.  Under IRC Section 408(d)(3)(C)(ii), therefore, each sub-IRA is an inherited IRA.

3.  Can each RMD be met by distributing amounts equally from each sub-IRA, using the decedent’s remaining life expectancy as determined by her age as of her birthday in the year of her death, reduced by one for each subsequent year in accordance with Treasury Regulations Section 1.401(a)(9)-5, Q&A-5?
Answer:  Yes.  If an IRA participant dies without naming a designated beneficiary after her required beginning date, the applicable distribution period to calculate RMDs after the calendar year of a participant’s death is her remaining life expectancy, using her age as of her birthday in the calendar year of her death (Treas. Regs. Section 1.401(a)(9)-5, Q&A-5(a)).  Under Treas. Regs. Section 1.401(a)(9)-5, Q&A-5(c)), in subsequent calendar years, the distribution period is reduced by one for each calendar year that elapses, after the calendar year of the participant's death.

4.  Will the transfer of each beneficiary’s one-fourth interest in the IRA to each beneficiary’s sub-IRA constitute a distribution under IRC Section 408(d)(1) or constitute an attempted rollover from the IRA to each sub-IRA?
Answer:  No.  Revenue Ruling 78-406, 1978-2 C.B. 157, provides that a direct transfer of funds from one IRA trustee to another doesn’t result in a payment or distribution of the funds for purposes of Section 408(d)(1), regardless of whether a bank trustee initiates the transfer or the participant directs it.  Rev. Rul. 78-406 also states that a transfer from one IRA bank trustee to another, even if directed by a participant, isn’t a rollover contribution to the recipient IRA because the funds aren’t within the participant’s direct control and use.
Posted on 6:33 AM | Categories:

How cloud services stack up for entrepreneurs / Freshbooks, Salesforce.com, Desk.com:, Jitbit, Tier1CRM:, Yammer:, Chatter:, Office 365

Lynn Greimer for the Globe & Mail writes For entrepreneurs, the future is in the cloud. It offers infrastructure they can’t afford on their own, and it can be equal to enterprise-class services at small business prices. In a recent global Microsoft survey, (http://www.microsoft.com/en-us/news/presskits/telecom/docs/SMBCloud.pdf) half of small and medium businesses estimated their usage of it will double within five years.
Why? Because small businesses don’t have the entrenched infrastructure that burdens larger organizations, nor do they have the entrenched mindset that everything needs to be on-site, says Dell cloud evangelist Michael Elliott.
Of course, concerns remain over privacy and security, and over the robustness (or lack thereof) attached to consumer-grade services. Cloud providers have responded with affordable business-class apps, with free trials available. Here’s a look at a few:
Freshbooks: Toronto-based FreshBooks (www.freshbooks.com) offers invoicing, expense tracking, time tracking and accounting reporting such as profit and loss statements and taxes. It accepts payments through a dozen gateways, from credit cards to PayPal. Add-ons from partners ramp up its functionality and include hooks into Salesforce.com and other customer relationship management (CRM) platforms, customer support, expense apps, export to accounting packages such as Sage Peachtree, and more. Free 30-day trial of both the desktop and mobile apps are available, as well as paid accounts ranging from $19.95 to $39.95 a month. A single user managing up to three accounts is always free.
Salesforce.com: One of the granddaddies of cloud services, Salesforce.com (www.salesforce.com) offers basic contact management, task and event tracking, e-mail integration through Outlook or Gmail, Google Apps, mobile access, a content library and customizable reports for $5 per user per month for up to five users, all the way up to a $250 a month per user for the unlimited CRM package.
Desk.com: Small operations often track customer support, both internal and external, on a spreadsheet if at all – a messy and not terribly reliable way to go about it. Cloud apps come to the rescue here, too. Desk.com is a “lite” socially oriented service desk for small business. For $59 per user per month it offers an agent console, multi-channel case management, Facebook and Twitter integration, live chat, self-service portal, a knowledge base and mobile application, among other features. A free 30-day trial is available.
Jitbit: Another small business-focused, cloud-based service desk, Jitbit (www.jitbit.com) costs $29 a month for the basic plan, which handles unlimited users and agents and 500 MB of storage. It provides trouble ticketing, a knowledge base, asset management and reporting. Up the ante to $48.85 a month for more storage and an SSL connection. The company also offers bundles including their help desk plus hosted CRM. A free two-month free trial is available.
Tier1CRM: The financial services industry is served by Tier1CRM (www.tier1crm.com). Built on the Salesforce.com platform, its products are individually priced and are available on the Salesforce.com AppExchange (www.appexchange.com).
Yammer: Small business communications and collaboration often happen over consumer forums, with the risk that the wrong people may see the correspondence. Yammer (www.yammer.com) is a free business-grade equivalent that allows functionality while protecting the business. Acquired by Microsoft earlier this year, it offers corporate social networking and collaboration via the Web, smartphone, desktop or SharePoint (paid version only), and can be embedded in company-developed apps. A Yammer site is restricted to a company’s employees. It can be customized and branded, and it offers all of the security and reporting functions one could expect from an in-house system, without needing the resources. It has a basic free version, plus two paid levels with additional features for $5 and $15 per user per month, respectively.
Chatter: From the folks at Salesforce.com, Chatter (www.chatter.com) is also free to everyone in a company and provides a collaboration platform with both public and private messaging among employees. Like Yammer, it is restricted to a company’s employees, defined as anyone whose e-mail address is in the same domain. It is also integrated with many Salesforce.com products.
Office 365: Finally, you can find general productivity suites online as well. Microsoft offers its Office products in the cloud as Office 365 (http://www.microsoft.com/en-us/office365/compare-plans.aspx), for $6 per user per month and up. The basic plan, for companies of up to 50 users, gives you cloud-based e-mail, Word, Excel, PowerPoint and OneNote, shared calendars, anti-malware protection and more. The $8-per-user-per-month plan, which lacks the 50-user cap, adds Active Directory synchronization, a SharePoint intranet, IT-level phone support and additional security options. The top-level plan, at $20 per user per month, provides everything in the lower levels plus a subscription to the desktop version of Office Professional Plus for up to five devices per user, e-mail archiving and unlimited mail storage and hosted voice mail. Free trials are available for the top and bottom levels.
Posted on 6:33 AM | Categories:

Cloud accounting pitches for the mid-market

John Stokdyk for AccountingWeb writes: During the past few years AccountingWEB focused closely on web-based bookkeeping applications for small businesses. There’s no shame in this, as this sector is where all the action has been for most of our members. As the cloud computing revolution took off, KashFlow, FreeAgent and Xero attracting tens of thousands of UK users into online accounting.
The market for mid-range and enterprise accounting applications was slower to react, mainly because sales cycles are longer; organisations with big investments in existing programs are more reluctant to rip out and replace their accounting systems.
David Carter, who has tested many accounts packages for us in the past, recently turned his attention to mid-range cloud accounting with a review of Aqilla. In his view, cloud accounting won’t take hold in the middle market until it can match the functionality of existing client/server programs.
“We badly need some serious, industrial-strength, cloud-based accounts packages that match the established vendors feature for feature.  The established vendors are themselves obviously giving out cloud-based versions, but software written in a previous generation rarely works well in a new one it wasn’t designed for,” he concluded. 
Market overview
According to Carter, the applications that have the best chance of success will come from previously unknown companies that write their packages for the cloud from scratch.  But they will need some pedigree in accounting to be successful in such a specialist sector.
The three main cloud players courting mid-size organisations in the UK all fit Carter’s profile: Aqilla and FinancialForce.com both have links back to established UK accounting applications (SunSystems and CODA respectively), while NetSuite was part-funded by Oracle founder Larry Ellison and has been pioneering web-based ERP for more than a decade.
SAP Business ByDesign deserves a mention too. While it draws on the heritage of its bigger on-premise sibling MySAP, it also struggles to shake off an association with the expense and disruption of protracted business process re-engineering projects.
Sage cannot be discounted either. As well as the rudimentary Sage One system for small businesses, the country’s accounting software market leader is adapting Sage 200 for Microsoft’s Azure cloud platform.
By common consensus, companies outgrowing Sage and QuickBooks remain the main sales pipeline for mid-market developers as a whole, with additional opportunities for cloud developers coming from “in-fill” applications to sit alongside and plug gaps in existing finance systems.
Most developers would add that the UK mid-market has lagged behind other countries in embracing cloud accounting, but this is changing.
Jeremy Roche, CEO at CODA/Salesforce.com joint venture FinancialForce.com commented: “I had a theory the UK was three years behind the US, but I would revise that now to 12-18 months.”
Faster growing businesses serving new markets have led the way, he added, “But we’re certainly starting to see traditional ones coming through. SMEs started first, but now mid-size and enterprise companies are starting to take advantage of it.”
Aqilla’s Hugh Scantlebury agrees: “Virtually every shortlist has at least one Cloud offering and in some cases, exclusively so. There's a fair way to go, especially given the longer replacement cycles of the mid-market… but things are beginning to really change - for the better!”
If you are considering options for sophisticated cloud accounting tools, here is a brief overview of what you can expect from the leading vendors.
AQILLA
Aqilla sales invoice view
Functionality: Unified nominal ledger, with built in budgeting & forecasting, project costing, timesheets & expenses; and purchase-to-pay facilities.
Target market: Mid-market, service-based organisations, with partners specialising in industries such as hospitality, technology, financial services, social housing and not-for-profit
UK users: c200 companies (1,000 users)
Pricing: Subscription-based licence - £50/month for “Pro” users; £10/month/user for occasional users, plus £100 set-up fee per company, and a number of consultancy days will be required for initial configuration.

True to the mid-market cloud insurgency model suggested by Jeremy Roche, Aqilla describes itself as an accounting “platform” that can grow with users’ needs by linking into customer management, business intelligence and other back-end systems. One of the system’s latest enhancements is an Excel add-in to provide more flexible end-user analysis and reporting.
Aqilla is typically overseen by a dedicated finance director or controller in a service-based organisation turning over £5m-£250m, and competes mainly against NetSuite and FinancailForce.com, plus established client/server products such as SunSystems, Microsoft Dynamics, Access and even Sage Line 50.
In his software lab test Carter noted that Aqilla is a unified ledger system, combining sales and purchase ledgers within the overall nominal ledger, which also supports automated order-to-payment processes for both sales and purchasing, plus project costing, budgeting/forecasting, timesheets, expenses and cash.
The system offers what Carter calls the “multis” that mid-range and international organisations demand: multi-currency; multi-company, multi-language, multiple budgets, multiple tax regimes and so on.
While many of Aqilla’s 200 or so early adopters were specifically attracted by the cloud concept, the company, like FinancialForce.com, has started receiving enquiries from more mainstream organisations such as the Ministry of Justice.
Carter judged Aqilla to be an “industrial-strength” set of financials that matches the products of the established mid-range vendors. “While Aqilla may be relatively unknown now, in 10 years it will be one of the major players in the mid-range marketplace,” he wrote.
FINANCIALFORCE.COM
FinancialForce.com dashboard
Functionality: A single ledger system (like its forerunner, CODA) that handles all the nominal, sales order and billing ledgers, plus as many additional project and product ledgers as you like.
Target markets: Salesforce.com users and other sales-led service-based organisations, particularly for professional services automation (PSA) encompassing project management and accounting, including resources and expenses. Also sophisticated media billing applications.
UK users: Undisclosed; two-thirds of customers are US-based
Pricing: On application - depends on size of installation.

Formed in 2009 as a joint venture between CODA and SalesForce.com, FinancialForce.com draws a lot of business from the Salesforce.com community, “but not to the exclusion of other systems”, said CEO Jeremy Roche. Salesforce.com users have already got a foot in the cloud and have derived enough benefits to continue in that direction, he continues.
Good billing tools have been a hook for many sales, as it produces a great return on investment. “Everyone has to bill,” says Roche. “If you can get accounts receivable smartened up, everything benefits.”
Plugging into the Salesforce.com platform and development tools also speeded up the application’s evolution. The forms and objects defining contacts, sales and invoices are already there, so FinancialForce.com programmers can simply call them in to use elsewhere in the program. This has proved to be particularly important in developing FinancialForce.com’s PSA suite.
“The services market is booming - with growth doubling each year,” says Roche. “PSA solutions are quite old, so it’s an exciting market that’s ripe for disruption. Professional services is about automating and collaborating between remote teams. We’ve designed an application with that right at the heart of it.” Cloud technology allows the developer to extend FinancialForce.com internally and externally, for example with a Facebook-like Project Wall where users can share information and collaborate with their customers and subcontractors on a project.
NETSUITE
NetSuite
Functionality: Full ERP suite, including stock/distribution, ecommerce, CRM, human capital management, and financial reporting & analytics.
Target market: “Two-tier” strategy, with Unified ERP suite catering for 200-500-employee mid-market organisations; and OneWorld version designed for subsidiaries of larger global groups; key markets include high-tech sector, PSA, retail and specialist industries served by implementation partners.
UK users: 16,000 companies worldwide; UK figures not disclosed separately
Pricing: On application
Now in its 15th year, NetSuite is a grown-up cloud enterprise resource planning (ERP) system catering for a wide range of vertical sectors including retail and stock/distribution industries, professional services and e-commerce. Craig Sullivan, NetSuite vice president of international products, commented that the cloud system is now begin taken seriously by “some of the largest enterprises in the world”, who wouldn’t have done so 3-4 years ago.
“When a business looks at run entirety of its systems, a cloud solution becomes even more relevant because it instantly connects people in multiple locations and addresses workflows across departments,” he said.
Though it has been partially discredited by the grand projects that have swallowed up vast sums in software licences and consultancy during the past 20 years, the ERP model does allow users to manage transactions, processes, customers and suppliers on a common platform that can deliver new levels of efficiency and service. For example, after implementing NetSuite, a Leeds-based nail care distributor Sweet Squared said its sales people could see whether they had stock in the warehouse when a customer placed a phone.
While sensing an opportunity to recruit UK companies growing out of Sage 50 Accounts, NetSuite CEO Zach Nelson claimed the company was enjoying success at the upper end, where it frequently takes on the giants of integrated ERP, Oracle and SAP.
SAP BUSINESS BYDESIGN
SAP Business ByDesign
Functionality: A comprehensive menu to choose of 50 or so business processes, including: financials; order processing; procurement; CRM; manufacturing; service support; project management; HR; eLearning; workflow; and reporting/analytics. All the “multis” are supported: companies, currencies, languages and GAAP. Support is available to access data on most mobile operating systems for no extra cost.
Target markets: Services-based industries, along with discrete manufacturing, where UK organisations have outsourced production to foreign suppliers. Also UK subsidiaries of existing multinational SAP users; Business ByDesign shares common data structures with MySAP making consolidations and system upgrades easier.
UK users:
Pricing: From £7 a month per user for “self service” data entry licences, £16/user/month for basic project module; up to £97/user/month for enterprise-level financials. Fifteen users are the minimum installation requirement, but five of those users are covered by the base fee of €1000 a month.
The German ERP pioneer has not sat back idly as cloud challengers like NetSuite started targeting its core markets. It jumped aboard the cloud bandwagon in 2007 and has been enjoying some success with its Business ByDesign (BYD) suite. Strong 2013 Q1 results were driven significantly by organisations switching to the cloud, according to SAP co-CEO Bill McDermott.
“It is clear that many application categories are increasingly transitioning to the cloud, and SAP is in the forefront of this transition,” he said. “We see continued very strong growth in the Cloud, with a 385% year-over-year increase in cloud subscription and support revenue and a 95% increase in deferred Cloud subscription and support revenue.”
Business ByDesign benefits greatly from the parent group’s mature functionality and has a readymade market as a business management platform for medium-size organisations and national subsidiaries of larger international groups.
The underlying reporting and analysis framework in Business ByDesign is very strong, allowing users to add custom fields and report against them in real time. Excel integration allows users to create spreadsheet reports and save them to BYD, so every time they open their Excel view, the data is refreshed by the BYD server.
The CRM/Opportunities module stores all contact information and activity and can track them against marketing campaigns. The contacts database and appointment diary also synch with Outlook via a plug-in, and emails from clients can be attached to their record within the system.
While some of SAP’s rivals talk about gaining footholds within their customers from departmental and “line of business” sales, SAP claimed a number ofsuccesses in early 2013 on the back of finance-driven sales.
Coming soon: Sage 200
Sage’s great strength is the huge pool of businesses and accountants who picked up their grounding with Sage 50 Accounts and its predecessors. The company has an upgrade path available for users who outgrow the desktop application, but these are the valuable, fast-growing customers who are being targeted by the mid-market cloud developers discussed here.
How is Sage fighting back?
In May 2012, Sage announced that it would use Microsoft’s Windows Azure cloud platform to develop certain small to medium business ERP solutions, starting in the UK with Sage 200. This is a mid-range accounting and ERP package suitable for up to 50 users that can call on a network of specialist resellers serving specific industries. Modules include: financials; CRM; manufacturing with bill of materials; supply chain; analysis and reporting; wholesale/retail; project accounting; and web timesheets & expenses.
As one AccountingWEB member reported, the system was undergoing testing with pilot users in April 2013. Sage 200 is not commercially available in the cloud yet, but an announcement is expected very soon.
However Angela Eager of TechMarketView told BusinessCloud9.com at the time of the Azure announcement: “Sage’s commitment to the cloud still looks half-hearted and it lacks a coherent strategy. If it developed its international ERP X3 suite for Azure, that would be a statement of intent and drive more competition against the like of NetSuite.”
Alternative approaches
If you’re a user (or supplier) who has a cloud financials/ERP program you think should be listed here, let us know by commenting below. But the five products mentioned here were the ones that cropped up repeatedly as the ones to watch. This demonstrates that the mid-market is more rarified than the small business sector, where there are scores of accounting programs to choose from.
Cloud purists spend a lot of time emphasising the superiority of browser-driven applications over hosted solutions, where a traditional client-server program is delivered via a web-browser.
In spite of the insults, most of the existing mid-market suppliers, including Sage, are in a position to offer hosted versions of the products, often through specialist service providers.
Business may not get the technological convenience of a true cloud application, but they can benefit from the subscription-based payment model, and avoid the need to retrain all their staff members. For many business, how a program is engineered doesn’t really matter if it delivers the functionality they want within their budget.
COMMENTS (Visit AccountingWeb to include your comment)
Comments

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Why is Sage included ....

JC PM |  | Permalink
Good article - but afraid I have to question one aspect
Surely the review should be about existing mid-market products and not wanabe products not yet delivered
'.. the country’s accounting software market leader is adapting Sage 200 for Microsoft’s Azure cloud platform ..'
Whilst one could be wrong, the implication of this comment is that no product yet exists in a completed form. If 'current vapourware' is our criteria then there are a whole host of other products which could potentially fit the bill
It is massively disappointing that Sage initially refused to engage in this medium for many (10 years) when they could have greatly infleunced the initial take-up. Instead they ran legacy software rather than innovate and move forward
And now they manage to get massive pubicity for SageOne and Sage 200 despite being way behind the curve in every aspect of technology except 'marketing' - an area where they excel
Also, how come their first disasterous offering SAGELIVE seems to have been air-brushed out of every subsequent Sage article

John Stokdyk's picture
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Oh come on, JC...

John Stokdyk PM |  | Permalink
For once you could take off the red mists of Sage specs and look at the context of the article.
It's all about mid-market applications, where even the rival vendors acknowledge that Sage 50 Accounts (determinedly desktop, unless you opt for a hosted version) is a serious player in the market. All of the other companies in this market know that and are specifically targeting companies that are outgrowing Sage 50.
Due to the epic length of the piece, I chopped out an interesting quote from NetSuite'sZach Nelson on the loyalty of UK users for Sage, "whatever the reason". He continued: "Obviously, it's a local company, particularly in the UK, and there's some loyalty to the product line. But I think that's starting to fade now as Sage has been unable to deliver anything cloud-based, particularly on the ERP side.  So seeing what happened in the last quarter there, I'm very excited about the Sage replacement cycle that's about to happen in that area."
With that in mind, Sage has obviously got to protect its mid-market sales pipeline, and the Sage 200 cloud version is their response. It's at a fairly advanced stage of user testing and I am still waiting to get more detail from the company about it.
Rather than giving "valuable publicity" to any particular vendor, the piece is designed to give someone looking at their options an overview of who they might realistically talk to. In terms of cloud maturity, industry penetration etc, I think the article makes it fairly obvious how Sage compares to NetSuite, SAP or the other two accounting-focused cloud systems.

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Are OpenERP and OpenBravo

AlanBourke PM |  | Permalink
... not contenders in this space?

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Title of article ...

JC PM |  | Permalink
@John Stokdyk
'.. Cloud accounting pitches for the mid-market ..'
'Red Mist' or fact? - Does Sage 200 currently operate in the Cloud or is it in development?
If not, then how many other software houses in the mid-market sector also don't operate in the Cloud, but have future expectations; so why single out a company without an existing offering for comparison against current players?
There was a very interesting article in the Times (05 May), titled 'Sage battles barbarians at the gates' -http://www.thesundaytimes.co.uk/sto/business/Companies/article1254711.ece - indicating Sage being ripe for private equity takeover with a market value of £4bn
Quote - '.. Meanwhile, chief executive Guy Berruyer is doing his best to keep the barbarians from the gate by remaking Sage from a utility-style income stock to an exciting techie one ..'
'.. Sage has been slow to embrace the web revolution ..' - which would seem to back up my statements
So clearly Sage is generally recognised as having failed to initially engage with SaaS and also is not really a technically based organisation in the first place. Their forte is marketing and acquiring others products, which is more to do with buying market share than anything else - hence 6m users and staggeringly healthy results
Also bear in mind the much vaunted maxim of never taking the first release of anything - so Sage 200 v2 could well be some way down the line as a mature product. Again this reinforces the original post about why they were included, when a 'stable' product could well be 6-9 months away and yet is being compared with existing available products
The article makes assumptions on '.. how Sage compares to NetSuite, SAP or the other two accounting-focused cloud systems ..' which have to be based on what one is being fed by Sage, rather than practical hands on experience
and we all know that Sage is unsurpassed with their marketing - even when they released SageLive!

bencooper's picture
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I agree with JC

bencooper PM |  | Permalink
We work with clients to help them select the new ERP/CRM and Accounting systems for their business. Last year we carried out our first search and selection project whereby the client demanded Cloud only solutions in the long list. Previously we had always recommended our clients have at least 1 cloud offering in the long list becuase this is the way the market is headed. Most of our clients are in the traditional mid market space and as this and previous articles alude to, the market has been slow to respond and provide a cloud offering that TRULY rivals the traditional on premise options.
In carrying out a cloud only search we realised just how few options there are, but we were also amazed at how the old guard were dressing their systems up as cloud, when clearly they are not.
Sage, IRIS, Coda and SAP B1 all claimed to offer hybrid Cloud solutions but when you scratch the surface you find it to be a privately hosted traditional system, financed over 3 years - or - a series of web apps that connect to the on premise software. This is not true Cloud as the systems lack the agility that a truly web developed system offers.
Sarah Palin had a good phrase for this. "If you put lipstick on a pig, it is still a pig". - Not saying the old gaurd are pigs - but you get the point.
I fully accept that recoding Sage 200, SAP B1 or IRIS Exchequer (or similar) to a cloud footing is like turning a tanker on a tuppence, but surely pretending to be Cloud is harmful to the good name they have built up over many years? Rather than developing web enabled add ons and apps, I would really like to see some of the traditional on premise authors focussing on recreating their entire systems in a true Cloud environment, as the one thing the mid market Cloud lacks at the moment is competition and the full range of functionality users had come to enjoy with good old fashioned software.

nigel's picture
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Still a moving target

nigel PM |  | Permalink
It's interesting to see this mid-market attracting some serious cloud players. A recent newcomer not mentioned here is Xledger (http://xledger.co.uk/), which came from the founders of Agresso, so people who know this market pretty well. I say recent - they have been developing it since 2000, well established in Norway but now making inroads in the UK. I suspect they won't be the last new arrival in this end of market though.
Any bets on when Microsoft will pile in with fully cloud-based ERP?
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