Skip to content

Don’t turn your back on the future

Xero customer growth. Source: Xero Annual Meeting, July 2012

As you’d expect, we keep a pretty watchful eye on what our competitors are doing and saying in the market. We are bullish about the shift online based on trends we are seeing, the growth we are experiencing, and what we are hearing from our customers. Therefore, we were quite intrigued to read about the findings of MYOB’s latest SME survey in Australia. Their results pointed to a decline in the use of social media as well as the number of businesses paying bills or buying products online. Tim Reed, CEO of MYOB, was even quoted that he suspects many (businesses) are shying away from online activities as they focus on the health of their business.

No doubt there are ongoing concerns amongst Australian small businesses about a short term economic recovery, but I think it is dangerous to suggest to a small businesses owner that retreating from online is an acceptable response if indeed their business is experiencing health issues. Technology is a key business enabler and can actually help small businesses gain efficiencies, reach new customers, generate new revenue streams, etc, etc. Why turn your back on the one thing that can turn your business around?

As an example, many retailers are hanging tough and trying to compete with online entrants, but when research shows that cross-channel shoppers spend 3-4 times more than a single channel shopper, then you have to start looking at new ways of doing things. Online technology will deliver you those channels.

Cloud building momentum

Last week in Sydney about 300 of Australia’s most influential IT Executives and government policy makers gathered at the Four Seasons Hotel in The Rocks to discuss ways to drive uptake of the NBN and cloud computing. I was lucky enough to be asked to present and talk about what Xero is seeing in the small business market. I was joined by Steph Hinds at Growthwise who also provided a very upbeat view of the enormous economic and efficiency gains available to small business owners by embracing the cloud.

Kevin Bloch, CTO of Cisco kicked off proceedings outlining the incredible momentum we are seeing toward cloud and online. Based on Cisco’s own research, Kevin predicted that global IP traffic will increase 4-fold between now and 2016. In that time, mobile data growth will also grow 14-fold. Various other studies were referenced during the course of the day, including the recent IBM study on Australia’s Digital Future to 2050 which suggests that a 10% increase in broadband penetration would have a 1% positive impact on GDP. The study also contends that a doubling of high speed broadband would have a 0.3% positive impact. Clearly the researchers are pointing toward unstoppable momentum and new business models available to small businesses as they do more and more online. So the message should clearly be to embrace cloud, not resist it.

The growth we’re seeing

I’d also point to some of the trends that Xero is seeing from our customers. We announced 3 weeks ago that we now have over 100,000 paying business customers globally and that this number is over 26,000 in Australia, up 3-4 times where we were a year ago. On top of this more than half of our customers are using Xero Touch (iPhone App) to access their accounting data whilst on the road and are enjoying the new found freedom that was not available when they were office bound with an on-premise system. The cloud means that many small businesses can completely avoid the “walk into Harvey Norman and fork out hundreds of up-front dollars on on-premise software” experience and instead go straight to the simplicity and cost effectiveness of the cloud. This is evidenced in our numbers and the fact that 40% of new customers signing up to Xero directly are coming from having no accounting software. The cloud changes the economics of doing IT and makes automation of the business accessible and attractive to a whole new category of small business owners.

The appetite for new innovations is all driven by a market place of small business owners who want more. They live in a consumer world where cloud applications are simple to use and always available ­ Facebook, eBay, Skype, LinkedIn, Twitter, etc. As business owners they want this same freedom and given all the projections from the experts around uptake of online and mobile computing, that demand is only going to increase exponentially.

So in summary, if you are a small business owner with concerns about the health of your business, then retreat to the security of on-premise software at your peril, because your competitor is going online and getting ahead.

 

 

Read more about Business

 

19 comments

Doug Sleeter
16 August 2012 #

Great post. If someone wants to opt out of the cloud, they may as well stay in bed. All of the data is ALREADY in the cloud, so why not take advantage of that fact when doing accounting and business management?

Tara Walker
16 August 2012 #

Hi

An interesting article, but somewhat talking to the converted. But that’s the minority that have converted.

Using Steph Hinds at Growthwise as the example is case in point. Her business and approach is incredibly unique and far from indicative of the general accountancy market.

Even as a Xero accountant she is unique and not reflective of most Xero accountants. Not all of us have the desire, willingness or belief to follow Steph’s path.

Please speak to all of us and not dog whistle to the minority.

Thanks

Tara

Stephen Paul
16 August 2012 #

A very interesting article and thanks for updating us with your findings

In my business I find that Xero is helping me to increase my sales revenue and that the clients are finding the whole data entry process much more enjoyable

We are now seeing clients who were shown the software a year ago who decided to stay with your competitors asking about moving across to Xero just so that they don’t have to pay large upgrade and support fees as well as have access to their accounts no matter were they happen to be

Thanks again for the update and keep up the great work

Chris Ridd
16 August 2012 #

Thanks for the comment Tara however my intention with the post was to point to momentum with cloud that is occurring in small business, not the accounting industry specifically. Most of the evidence to back this is industry wide and based on Xero’s own customer momentum. There is only a single sentence mention of Steph Hinds, so her story was by no means the focus of the article. I do agree though that it is perhaps talking to the converted, so perhaps forward it to all your MYOB customers who read about their recent SME survey and who may have concluded that online is on the decline :-)

Richard Francis
16 August 2012 #

Fab post Chris. Perhaps indicative of MYOB’s more traditional eco-system that they are retreating into their shells just when this is the worst possible time to do so.

There is just so much evidence that online and mobile business activity is going through the roof – why not be part of it? My business clients are transacting online, communicating via Skype with international clients, accounting online with Xero, selling in multiple markets, travelling…because they can – and need to – in the market of today.

And Tara – there are plenty of accountants out there who, like Steph, are embracing technology and the future. Those that don’t are fast being left behind.

Tara Walker
16 August 2012 #

Richard, maybe I’ve got it wrong, but for me the florists, farmers, tradies that are my clients don’t really need to communicate via skype, sell in multiple markets etc. Sure they want to have up to date info with dashboards etc, but for the rest of it like twitter, it’s a bridge too far.

I’m not surprised that you’re backing Steph given the number of replies on the Xero blogs that you both do in tandem. All I’m saying is maybe it’s not really reflective of the Xero accountant.

And of course you’re not really an independant commentator given part of your business has recently been bought by Xero.

Gillian Rossouw
16 August 2012 #

Chris excellent post and indeed Xero’s growth clearly shows the shift from “on premise” accounting. I am receiving more and more enquiries from “tradies” who are tech savy and smart business owners, they know that to survive need to move with the times and who are not only arming their staff with the tools of their trade but who have gone that extra mile and provide staff with iPads/Tablets to improve productivity and cash flow.

Michael Porter
17 August 2012 #

Tara – I wonder if you’ve considered the full suite of benefits technology can bring to a farmer / florist / tradie. They might not need Skype, but take your example – the humble florist – could they gain time savings from an integrated point of sale addon – and integrated online delivery and ordering system or increase sales from optimising their website search rating or achieve cost saving from outsourcing their bookkeeping to a cost effective remote bookkeeping service or gain peace of mind and security from keeping an eye on their business when they’re on holiday and can just log in wherever they’re based in the world and check daily sales volumes and debtor / creditor positions… the point is that once you begin to understand the technology eco system and how to apply it to these businesses – it relates to virtually all businesses. Isn’t that the point? Those accountants that embrace this world can differentiate themselves from the pack. I’m not sure that Chris is ‘whistling’ to the minority, i’d suggest that it’s a process of education of how an ecosystem of cloud based integrated applications can provide a cost effective ERP system for businesses that didn’t have access to this technology previously.

Richard Francis
17 August 2012 #

Hi Tara. I was commenting as someone who continues to own and operate a CA/advisory practice and who has been in the game for 20 years. The fact that Xero bought one of my apps a month ago has not eliminated my ability to have independent thought :)

In fact, I went 100% Xero 3-4 years ago with my practice but my real point was that online/mobile is the future, and we need to be prepared for it. Xero is just one piece of that.

And we should help ourselves and our clients by being as up-to-date as possible with the tools and their capability. Steph – yes, a friend – is just one of many now in this space. My own firm has no server, advises on Capsule/WorkflowMax etc, and has a distributed workforce.

These things are fast becoming the norm. I hope you make the leap too :)

Cheers

Michael Carter
17 August 2012 #

There’s no doubt that Growthwise are Innovators and Early Adopters regarding technology, but what they are doing (using an eco-system of cloud apps for sharing data, eliminating low-value manual tasks etc.) will be considered commonplace within a few years.

Tara, be careful not to confuse social media with cloud (based on your “the rest of it like twitter, it’s a bridge too far” comment). They overlap, but the cloud is so much more than social media. The cloud is an enabler for totally reinventing business models and business processes. The world of business is changing permanently. Those who don’t change with it, will not compete. They might not feel like that now, but in a few years when “the cloud is obvious”, they will *wish* they shifted their thinking, their service delivery models, their IT infrastructure and business processes to being cloud-based. Then they will be playing catch up, it may be too late for them because it will take them a couple of years at least, to transform how they do things.

I love the Arthur Schopenhauer quote, “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”

Tara, your point about a mention of Growthwise being “not really reflective of the Xero accountant” is accurate. It’s not. It would be fair to say that any firm using Xero is already more progressive than the typical accounting (or bookkeeping) firm. But even within the Xero community there is a bell curve: Some are accepting the cloud as self-evident and some are still opposing it by, in effect, sitting on the fence with it.

Having worked closely with Growthwise I know they’ve been in the “self-evident” phase re the cloud for many years now. Most firms are still trying to catch up.

The ‘embrace the cloud or be left behind’ mantra, I believe, applies to all businesses, be they florists, farmers, tradies or even the local lawn mower man.

Chris
17 August 2012 #

I’m a big supporter of cloud-based solutions, and consider myself tech-savvy and an early adopter with most technologies. Having said all that, amI the only one who feels like the community around cloud computing can get a little religious at times? Sometimes it pays to take a few steps back and maintain perspective on the world around you.

Its OK Tara…you can continue to not advise your tradies and florists about the full benefits of the cloud….eventually they will speak to their colleagues (who are probably clients of firms like Growthwise) about how the cloud has changed their business and they will come to you and say “why didn’t you tell me about this”…and then leave you for firms like Growthwise who do educate their clients about the cloud and its benefits and help them adopt it if is seen as a good thing for them.

The game is changing…the cloud will become commonplace and accountants and bookkeepers that sit on the fence too long will begin to compete for a dwindling number of clients who refuse to move to the cloud as the majority look for accountants and bookkeepers who are knowledgeable in this space….

Chris, we are not religious…we are just meeting customer demands…. :)

Brett
18 August 2012 #

If you don’t change then you will fail I doubt many accountants still practice business like they did 50 years ago even 15.
You have to keep adapting your business or someone else will take your customers.
I am building a house and am doing everything online I don’t have the time to do it the old way, funny thing is most of the building companies never emailed me back quick enough guess who got my business. Times are changing faster than ever before

Tim C – FGS
20 August 2012 #

Well done Tara for being brave enough to actually raise a point of difference comment on what is normally a comment love-fest space.

And shame on all you cloud bullies for jumping down her throat!! Perhaps Tara’s clients love her and will never leave her because she is a damn fine accountant! The Cloud is irrelevant because she is so good at what she does and her clients will be telling their friends how lucky are because they have an accountant who cares rather than tries to sell IT products to them.

This seems to get lost in all the hype and (as so eloquently put by Chris) religious fervour about “the cloud”. It doesnt make a scrap of difference what software you use or where the server is located if you can’t do what it says on the tin.

As the leading adviser to accounting firms in Australia about harnessing the true power of Xero, we often find that those who are preaching about the “cloud” and how wonderful it is, have taken their eye off the ball and moved so far away from what they should be doing if they want to be known as an accountant and not an IT consultant.

There are many many accountants who embrace Xero, love the Cloud but love being their clients accountant more so get on with it and dont feel the need to be a Cloud Evangelist.

Michael ‘MC’ Carter
21 August 2012 #

Tim, your reference to bullying is a tad over the top. Debate and stating opinions is not bullying.

I agree, well done to Tara (and now you) for stating contrarian opinions in a pro-cloud blog. Your statement of “The Cloud is irrelevant because she is so good at what she does” however is a non sequitur. I’m sure there were plenty of ‘buggy whip manufacturers’ who were very good at what they did. (Your comment reminded me of this scene http://www.youtube.com/watch?v=MfL7STmWZ1c from the movie ‘Other People’s Money’ where Danny DeVito’s character is explaining to the angry shareholders that new technology has made their old technology obsolete. Replace reference to ‘fibre optics’ in that speech with ‘cloud computing’. )

You seem to infer that caring for clients and advising clients on moving to the cloud are somehow mutually exclusive? In my experience, practitioners (like Growthwise and others) who are passionate about educating clients about the benefits of cloud apps/infrastructure, are doing so *because* they care. Not to sell IT products. (I was tempted to use two exclamation marks there. ;) ) They are just generally passionate about helping their clients change and adapt.

Accountants and advisors who don’t educate their clients about the benefits of cloud computing (assuming they are up-to-date and aware of these benefits) are the ones not caring. It’s easier for an accountant to just do a client’s compliance work and let them keeping doing what they have always done, than it is to try to advise them on how they can improve what they do.

That, to me, is brave.

I agree with your inference that what matters most, at the end of the day, is the advice an accountant gives a client. Not the IT infrastructure behind the advice. However … I think we are at a point in history where finally advisors *can* be freed up to focus more on thinking about clients’ needs and truly advising them, rather than ‘crunching numbers’. Crunching numbers is an elaborate series of ‘if/then’ statements and calculations. Something best suited to technology, not creative/intuitive brains.

In the past, an accountant wanting to give future-focused management advice would have to spend (or have his/her team spend) around 4 or 5 hours just preparing the reports and graphs etc. to communicate the situation to a business client. That makes it an expensive meeting for the client before a word of advice has been uttered. Automation and sharing of data between cloud-based apps eliminates so many low value tasks. It makes no sense to ignore the benefits.

By the way, congratulations on being “the leading adviser to accounting firms in Australia about harnessing the true power of Xero”. Did I miss that award? ;)

Tim C – FGS
21 August 2012 #

3 quick points MC

1. those buggy whip manufacturers you mention are very busy nowadays from what my wife tells me about the e-books she is reading!

2. A faceless and nameless person belittling Tara through their choice of name IS bullying and needs to be called so people realise how cowardly it is.

And putting smiley faces behind comments is easily interpreted as passive-aggressive behaviour! Luckily, I know Richard well enough to know he was definitely taking the mickey (insert smiley face here if I knew how to do it)

3. Thanks for the congratulations. It was an easy one to win

Steph Hinds
21 August 2012 #

If I can bring this back to the point of the topic Chris was raising. The event Chris and I both attended on Cloud & the NBN was a fascinating look at the opportunities we have as a nation in the future. This looked at the Health, Education, Government, Big and Small Business benefits of being able to use tools available that come with faster internet speeds. Cloud whether we like it or not is a main beneficiary of this.

Despite this, recent surveys as Chris refers to show that SME’s are slower to adopt. Government consultation as well as some of the surveys show this reluctance is due in part to education on the benefits of Digital. Xero, along with many other Cloud based solutions are seeing rapid growth that contradicts the survey. The Government forum focused on strategies to educate SME’s (along with Health etc as well) on how they can utilise the biggest Technology Infrastructure Investment made in Australia. The education for SME’s is coming. Some accountants who have a passion to ensure their clients are ready to capitalise on any opportunities are assisting in this education process. Of course over the coming years there will be many other Industries that also assist in this Education process.

Congratulations to Xero on taking a forward interest in the SME market in Australia.

Nerida Gill
22 August 2012 #

Great article. The alarming thing you said is that 40% are coming from a base of no accounting software. Starting to use accounting software, if it is done properly, in itself will improve a business.
Our customers love the flexibility the cloud gives to access from anywhere. This is increasingly significant in our fast moving western world.

Selina Iddon
8 December 2012 #

This seems to get lost in all the hype and (as so eloquently put by Chris) religious fervour about “the cloud”. It doesnt make a scrap of difference what software you use or where the server is located if you can’t do what it says on the tin.

Add your comment





We welcome all feedback but prefer a real name and email address.