Cloud accounting is so much superior to the previous shrink-wrapped alternative it is a joke. Nobody would ever go back to the (very limited) box. Moreover the cloud programs get better and better and the improvements are baked in every day. They don't fail to work (notwithstanding Xero’s minor technical problems yesterday).
The customer drag will be one-way forever. Shrink wrapped loses share and eventually shrinks away.
When I first saw Xero I thought that Intuit was ultimately doomed. Relative to Xero, and especially relative to where Xero would be, their product sucked.
I don't think that any more. Every accounting package has come out with a cloud option. Intuit's has turned on a dime. Their investor relations presentations and indeed much of the company is now is a clone of Xero.
No I am not joking. Intuit (a USD55 billion company) copied Xero (a USD4 billion company) and they did it to survive.
Intuit however did more than that. They came to Australia with a cloud-based product (Quick Books Online) and gave it away for $1 a month. This is an unambiguously loss making enterprise. When I asked them why they did it they straight out said "to learn to fight Xero on their home territory".
This is a stunning admission. Intuit is using its huge cash flow (well over a billion per annum) to give away product so they can fight a tiny company from New Zealand.
But it is the right thing to do too. Intuit has learnt how to survive, deserves to survive and will survive.
Ultimately I am not so sure about everybody else. Most of the competitors are weakened and the cloud apps simply steal customers from their non-cloud businesses. At best they can "do an Adobe" and convert much but not all of their customer base to a monthly subscription model. But I suspect that is optimistic. You see artificial intelligence (AI) is going to make a huge gift to the big players.
And that is easy to see by example. Suppose I make a $2000 payment to Dell. You are smart, you know what it is. It is a computer or a server or some other piece of capital equipment. And being a computer it is (for Australian tax purposes) depreciable over three years. I had to look that up.
So I enter it into my accounting package as depreciable over three years.
And go on.
But when 20 people have done that with an AI system the accounting software should recognise this and automatically categorise it correctly. And that just saved you looking up the depreciation schedule.
Xero's stated goal is to get to 99 percent automatic classification of receipts. I don't see any reason why this shouldn't be 99.9 percent. The pain of much of this business - and the whole profession of low-level bookkeeping - should disappear.
And those with the biggest data should win. They should win big. And it will be near-impossible to compete with them. I am sorry MYOB and Sage. You are destined for the scrapbooks of history
The customer drag will be one-way forever. Shrink wrapped loses share and eventually shrinks away.
When I first saw Xero I thought that Intuit was ultimately doomed. Relative to Xero, and especially relative to where Xero would be, their product sucked.
I don't think that any more. Every accounting package has come out with a cloud option. Intuit's has turned on a dime. Their investor relations presentations and indeed much of the company is now is a clone of Xero.
No I am not joking. Intuit (a USD55 billion company) copied Xero (a USD4 billion company) and they did it to survive.
Intuit however did more than that. They came to Australia with a cloud-based product (Quick Books Online) and gave it away for $1 a month. This is an unambiguously loss making enterprise. When I asked them why they did it they straight out said "to learn to fight Xero on their home territory".
This is a stunning admission. Intuit is using its huge cash flow (well over a billion per annum) to give away product so they can fight a tiny company from New Zealand.
But it is the right thing to do too. Intuit has learnt how to survive, deserves to survive and will survive.
Ultimately I am not so sure about everybody else. Most of the competitors are weakened and the cloud apps simply steal customers from their non-cloud businesses. At best they can "do an Adobe" and convert much but not all of their customer base to a monthly subscription model. But I suspect that is optimistic. You see artificial intelligence (AI) is going to make a huge gift to the big players.
And that is easy to see by example. Suppose I make a $2000 payment to Dell. You are smart, you know what it is. It is a computer or a server or some other piece of capital equipment. And being a computer it is (for Australian tax purposes) depreciable over three years. I had to look that up.
So I enter it into my accounting package as depreciable over three years.
And go on.
But when 20 people have done that with an AI system the accounting software should recognise this and automatically categorise it correctly. And that just saved you looking up the depreciation schedule.
Xero's stated goal is to get to 99 percent automatic classification of receipts. I don't see any reason why this shouldn't be 99.9 percent. The pain of much of this business - and the whole profession of low-level bookkeeping - should disappear.
And those with the biggest data should win. They should win big. And it will be near-impossible to compete with them. I am sorry MYOB and Sage. You are destined for the scrapbooks of history
Thanks For sharing, Its highly informative post. I really enjoyed it. Thankyou
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