The other day I saw a great post about some of the myths regarding the cloud. While all of these myths relate perfectly to Xero, I think there is still a fundamental question about what makes an accounting solution cloud-based. I don’t think it’s enough anymore to just be online – online is only part of the story.
It’s very easy to get online nowadays. If you have an existing desktop accounting product, then the easiest solution is to host that product using technologies such as Citrix or Terminal Services and for secure access use a VPN. This will get your desktop application online and available almost anywhere, anytime. There’s even a Citrix app for the iPad!
The next approach moves you closer to what I consider the cloud. Most desktop accounting systems utilize some form of database. By pushing the database into the cloud, but retaining the front-end on the desktop, you can get to that next utopia of the cloud, where multiple users can access the same data at the same time from anywhere. Ironically this doesn’t give you online anytime/anywhere access – you still need to host the desktop product behind some kind of Citrix system to get that – but at least the data is in the cloud.
This is the approach that MYOB has been undertaking for the last couple of years with their AccountRight in the Cloud product. By utilizing the Microsoft Azure platform and the Microsoft Sync Framework, they’re developing a solution that will enable a local database to connect to a cloud database, keeping the data in the cloud as up-to-date as possible for other users to connect too. This enables them to keep their existing desktop product going (and to protect their existing installed market).
I’ve seen some presentations on their approach and from a architectural standpoint it’s extremely impressive. But conceptually it’s completely broken.
We see the first stage of the cloud is definitely the “going online” strategy. This should get you multi-user, anywhere, anytime. With our focus on accounting we call this the Single Ledger – removing the friction that currently exists by connecting business owners with their financial advisors.
The next stage is to leverage being connected. We did this from day 1 with our bank feed connections to bank accounts. Recently we announced support for over 5000 bank feeds worldwide. This is a complete business process shift for small business owners – allowing them to do a little bit of work every day to keep their data up-to-date. We’re also able to grab data from XE.com to provide real-time multi-currency solutions – a high value feature missing from desktop systems due to the inherent nature of needing to be connected to an expensive, external data source.
At this point we start to see the MYOB approach completely break down. Instead of just pushing the database up into the cloud, we utilize a fully relational multi-tenanted data model. The benefits to this are immediate and huge:
- we have a version-less modern web user interface (constantly updated to improve features and to release new ones) and a slick mobile interface
- we can enable electronic data interchange through the use of our public API or by connecting existing Xero customers to each other enabling Xero-2-Xero transactions (no touch EDI all contained within the Xero ecosystem)
- we can allow you to access multiple organizations with the same login
- we can build customer portals so that our customers can connect to their customers
- we can enable bill payments
I think the API is the big one – it’s not enough to be able to fetch data (bank feeds and currency feeds) but for data to be fetched – for your accounting product to be programmable from the web. We can see this with the amazing software partners we have – best of breed applications working together as tightly integrated suites with Xero becoming the programmable accounting engine.
And then there’s the next phase. Building value into the platform and empowering our customers. We’ve seen this most recently with the announcement of reporting packs in the latest Xero update. By utilizing reporting codes accounting practices can leverage the power of the single ledger across the entire practice – enabling financial advisors to connect to sets of clients all at once. The reporting codes abstraction is completely enabled by our multi-tenanted data model. From there we can build benchmarking across the whole database – as we build critical mass we can answer very important questions such as “how successful is my business?”. The aggregation of the data is powerful – and completely missing from MYOB’s approach.
With that power comes great responsibility which is why we believe that if you write business software that’s truly in the cloud then you’re no longer a software business – you’re the custodians of data, with all the trust that comes with that.
What I’m not trying to do here is redefine or even define the cloud. The cloud is many things – but one thing is for sure, being online is not enough.