Monday, February 9, 2015

Australia: MYOB counts on innovation to fend off Xero

Beverley Head for The Age writes: Price is out and innovation's in when it comes to the accounting software wars.

There's been a shift in the competitive landscape for accounting software, according to MYOB Chief Executive Tim Reed: "It was more about price competition, now it's more about innovation."
Reed, speaking at the start of a 46-venue MYOB roadshow now touring Australia and New Zealand, said the rate of innovation in the sector was faster than he had ever seen.
"Innovation is driving competition and competition is driving innovation," he said, a fortnight out from the release of the company's full financial year results, which are expected to turn in revenues of around $280 million.
MYOB's own innovation track record has been patchy. It once attempted to charge software developers to use its APIs and it was slow to embrace the cloud – leaving the door open for New Zealand-based Xero to establish a commanding beach-head in that market.
MYOB and Xero remain the fiercest competitors in accounting software, regularly accusing each other of inflating their user numbers, a particularly twitchy issue in the lead up to an anticipated re-listing of MYOB.
Reed said that more than 1.2 million businesses were run with MYOB, and that the company had more than 500,000 paying clients, including 116,000 cloud users.
Managing director of Xero Australia Chris Ridd said the company was signing up new customers at a rate of 300 small businesses a day, with 35 per cent coming from MYOB's installed base. He said that in the last official release, at the end of September, Xero had 158,000 paying customers in Australia but this number was fast approaching 200,000 – around half of the 400,000 organisations that use the platform worldwide.
Over the next few weeks Xero and MYOB are going head to head, taking their message to the masses with some 15,000 accountants and business owners signed up to attend sessions.
MYOB has 9000 registered for its 46 roadshow destinations,while Xero says 6000 people have signed up for its 20-venue event, Xero Evolve.
MYOB will use the roadshow to highlight deals with the Commonwealth Bank and Westpac that allow people to sign up for automated bankfeeds online (NAB and ANZ will follow later this year, said Reed) and a tool for accountants to send documents to clients' smartphones so they will be able to digitally sign them in an ATO-compliant manner.
MYOB also extended the rollout of its Smart Bills function, which captures data from invoice PDFs (or photos of invoices) and inputs that directly into the accounting platform. Other accounting systems mainly rely on third-party add-ons for invoice-data capture.
Last month the company also announced its push into the larger enterprise ERP market with the release of the cloud-based MYOB Advanced system.
While Reed claims innovation is driving competition in the sector, there is still a wide variation in price for online services among the four major players – MYOB, Xero, Reckon and Intuit  – as they jostle for market share and customer loyalty.
While there is regular churn among their customer bases, one of the biggest rivals remains the combination of shoebox and spreadsheet, which is still popular among many small businesses.
Attempting to wean businesses off that approach, most vendors offer a free trial of their cloud accounting systems and relatively inexpensive monthly fees for the starter-level solutions.
Cheapest is Intuit's entry level Quickbooks Online software for $12 per user per month for a year. It's cheap – but still a significant hike on last year's pricing of $4.99 a month when the company was trying to seed local demand and wooed more than 7000 users onto the system.
Reckon's cloud platform is modular – the basic core costs $5 per user a month, and then there are a further four blocks for fuller functionality which cost $3 each per month, so a fully functioned service would cost $17 a month.
The starter level of Xero's online accounting software costs $20 a month, while MYOB Essentials starts at $29 a month.
Bain Capital's four-year $100 million R&D injection into MYOB was originally planned to last until 2016.