April 25, 2014

Five questions from the Xero-Workflow Max acquisition

What it means for Xero users and developers.

BoxFreeIT spoke to Xero CEO Rod Drury the day after the acquisition was announced about the details of Xero’s plans for time and job management software Workflow Max.

Drury discussed whether Xero would swallow up its latest purchase as it did payroll provider Paycycle and the implications for Xero’s community of developers. Separately, Drury announced that Xero would give away practice management software based on Workflow Max and Xero to accounting firms that signed customers to Xero.

 

BoxFreeIT: Will you extend Xero by adding Workflow Max’s features to it like you did with payroll software acquisition Paycycle?

Rod Drury: No. We’ll do more on the practice management side, but what we’re finding is that on the web just sending data through APIs works really well. So there are no plans to integrate. The Workflow Max brand will stay and compete against third-party software vendors that do more vertical time and cost billing systems. We’re really keen to keep the (developer) ecosystem alive.

 

BoxFreeIT: Xero customers have complained of a lack of a more advanced quoting system in Xero. Why wouldn’t you just add Workflow Max to Xero?

Drury: We’ll do simple stuff inside Xero. We still think that basic quotes is something you expect in your basic accounting software, but for more advanced, full job costing and time recording then we recommend Workflow Max or any number of other partners.

 

BoxFreeIT: Wouldn’t it be cheaper and easier for customers if you integrated Workflow Max into Xero? Reckon (distributor of QuickBooks) mentioned to me yesterday that you’re asking customers to pay for two separate programs with different interfaces compared to all the features you get in QuickBooks.

Drury: It’s not that expensive – you look at a TCO (total cost of ownership) basis we’re far cheaper, there are no servers and you can share the data. And I think the market has spoken. We have gone from zero to 60,000 customers in a very short period of time.

The issue that Reckon have is that they’re selling heavily on the accountant side with their APS product and we don’t think you can monetise that any more. Why should accountants pay for the tools they need to do their clients’ books? Why should they pay twice?

So I can understand why they’d be concerned.

 

BoxFreeIT: Xero said that the Paycycle acquisition was “an exception” and that it was committed to supporting third-party developers. Is this a step away from that or another exception?

Drury: It’s always a fine balance. We’re going to keep Workflow Max for other customers, and it’s still on the application directory so that it competes with everyone else. We’re keen to see innovation in the ecosystem. The reason to buy Worklow Max was the Xero Practice Manager. We’re going to create a specialisation of Workflow Max for accountants as it has now but with more configuration as well.

 

BoxFreeIT: Now you’re sellling Workflow Max you’re competing with your partners?

Drury: Yes sure, the same way that Microsoft does with its CRM (customer relationship management software, CRM Dynamics). We’ve communicated that clearly with our partners and given them good guidance of where we’re going and they should be verticalising their apps as much as possible.

There are only a few people that can win horizontally and we think that smaller developers really focusing on industry verticals is the way forward.

 

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