Analysis: Do MYOB’s claims to “next-generation software” stack up?

The cloud accounting battle heats up.

Until now Xero and Saasu have had free rein to establish themselves as the only serious options for cloud-based accounting. (Let’s leave aside hosted versions of desktop software which don’t connect to the world of cloud software.) Now the incumbents are finally joining battle for the cloud accounting market.

MYOB has just kicked off preliminary marketing for the long-promised AccountRight Live. AccountRight Live is not here yet – the final shipping date is yet to be announced – but MYOB is running a roadshow this month promoting the software to partners and is giving demos at the upcoming ATSA conference in Sydney this October.

The new software carries the slogan “Cloud without compromise”; the compromise refers to browser-only software such as Xero and Saasu.

Instead, MYOB is promoting the fact that it gives users the option of using its desktop software while still getting the benefits of cloud. These benefits are real and include being able to work in areas with no internet access such as on planes and in regional areas and mobile blackspots.

A desktop program can often access data much faster than cloud programs which “aren’t geared towards rapid data entry”, as one accounting firm moving to Xero’s WorkflowMax Practice Manager said.

MYOB will also be pushing the fact that accountants and bookkeepers can latch onto the benefits of the cloud without leaving the familiar interface of its widely used accounting programs.

IT industry watchers already know this hymn sheet; the arguments are identical to those made by another incumbent, Microsoft. In the cloud productivity scene, Google is the browser-only equivalent of Xero/Saasu to the desktop-plus-cloud Microsoft.

MYOB and Microsoft also get a sweeter deal by holding onto their revenues from desktop software. In Microsoft’s case it sells several licences for its cloud service, some of which include the desktop software and others require a business to buy it separately.

The Microsoft-Google analogy is instructive because like Xero and Saasu, Google came out with a cloud productivity suite long before Microsoft did. However, it has failed to make any real dent in Microsoft’s near universal market share.

The analogy breaks down when you look at Xero’s success in its home ground, New Zealand, where it has effectively broken the twin incumbency of Reckon and MYOB in the SMB space. The comparatively fragmented accounting software market is very different to productivity software.

 

Is MYOB’s approach better?

MYOB’s use of the terms “first generation” and “second generation” can be disregarded as marketing bumf. Cloud software works well or it doesn’t, and it is just wrong to claim there is a generational shift towards “cloud plus desktop” software when the majority of new applications these days are browser-only.

But MYOB’s hybrid strategy is a very strong one for emotional rather than technical reasons. It will probably appeal strongly to an accounting world seemingly nervous about the cloud-only approach.

Yes, most accounting work is done in an office not on a plane, and many accountants would no doubt prefer Xero’s “beautiful accounting software” to the ugly familiarity of MYOB, but the emotional appeal of desktop software should not be underestimated.

Despite this year’s self-inflicted wounds, MYOB remains in a very strong position. It will unleash a huge marketing blitz to convince its customer base that the time to move to the cloud is ripe – without leaving behind the desktop safety blanket.

Xero still only has a toehold in Australia. MYOB’s biggest threat at this stage is itself. If MYOB executes its cloud strategy well, as Microsoft has done, it could shore up its market share. But MYOB’s track record raises questions.

The technology has to work well and not be crippled by bugs or slow performance. Another botched release like AccountRight 2011 or the recent debacle with this year’s tax tables could expose the greatest weakness of desktop software – the user is responsible for upgrading it and protecting it from viruses.

Perhaps it’s no coincidence that shortly after MYOB began its attacks on Twitter this month, Xero CEO Rod Drury responded in kind: “Upgrading software sounds like a drag. Move from MYOB to @xero and we’ll do all future upgrades for you while u sleep.”

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