We’ve all heard of the rise of entry level cloud systems such as Xero and QuickBooks, but for organisations positioning themselves as mid-market trailblazers, why can’t their accounting software keep up?
Intuitive functionality is vital for these UK and global-facing firms who want accurate reporting, real-time forecasting capabilities, and seamless integration so they can manage time and budgets as well as make business-critical decisions swiftly. Paul Sparkes, our commercial director, provided this insight to Finance Derivative magazine into why this transformation needs to happen now if companies are to leverage their mid-market credentials…
Wind the clock back 20 years and there would be tens of pre-cloud solutions available from a multitude of vendors, serving small to medium-sized organisations across the UK. Each of these systems would continually evolve with increasing functionality to meet customer demand and outpace competition including Sage, Pegasus, Access, and Exchequer.
These vendors dominated the market and enjoyed decade-long growth and more, with extremely loyal users backing their every move. However, the emergence of cloud computing and the idea that software didn’t need to reside on-premise meant that many of the incumbent vendors had a mammoth challenge on their hands.
Understandably, strategies were devised to continue harvesting the base while attempting to cover new opportunities presented by cloud. This was a cliched path to tread though as dominant incumbents were obsessed with existing business models and struggled to step away – think Nokia, Kodak and Blockbuster, to name a few.
As these giants fell, nimble newcomers appeared with no customers to appease, zero revenues to fear losing and a visceral passion, belief, and clarity in how the new technology would disrupt the status quo.
In the accounting software world, this has been evidenced by the dominance of entry-level systems, such as Xero, with NetSuite for the corporate entities at the other end of the scale. These cloud-first solutions were therefore not burdened by legacy customer bases, historic contracts, migration challenges and cost challenges.
However, as these innovations took flight, organisations with 30-300 staff – who were too serious and demanding for entry-level packages nor wanted complex tools at the other end of the spectrum – were left with a lack of choice. In response, a vast majority of on-premise software users had to cope with unsophisticated upgrades that weren’t fit for purpose nor were true cloud solutions that met their growing needs.
That’s because the harsh reality of creating highly functional cloud Software-as-a-Service (SaaS) solutions requires a huge amount of investment in time, budget, and resources. And when presented with the idea that a tool may be four-years-in-the-making without revenue, that’s a courageous first step many vendors simply aren’t willing to take. And when others in the market have tried, and failed, to succeed when bringing accounting SaaS systems to life, the risk profile is often too high a bar to overcome.
Why ‘fake cloud’ needs to be eradicated from the market
In response, several organisations have opted for quick fixes – creating tools that use both their old and new system and are effectively ‘fake cloud’. In other words, their product looks like true cloud software on the surface, but the lack of performance and integration struggles are instant giveaways.
That’s why, at present, there are only a handful of high-calibre, cloud native finance and accounting SaaS solutions available within the UK’s mid-market – compared to 20 years ago when there would’ve been at least 50 tools on offer.
What are the next steps for the accounting SaaS mid-market?
Challenger brands will typically build what their target audience values, and therefore uses. And so, they’re disrupting a marketplace armed with the capability to look at the best ways to design intuitive software that provides maximum productivity savings, ultimate flexibility, and simple usability for high-growth companies.
As they continue to challenge the status quo too, listening to what customers and prospects are telling them, and responding as swiftly as possible, will be imperative. This shouldn’t always centre on functionality either, as service is just as important. For example, evaluating contract length and flexibility is a must for challenger brands to succeed in this arena. Typically, the mid-market has been accustomed to integrating a solution that comes with a three-to-five-year agreement – meaning they’re unable to switch swiftly to and from providers and are effectively being held hostage by their software.
Disruptive brands recognise the resentment among clients who feel ‘trapped’ and, ultimately, the winners will be those who offer all benefits without the handcuffs. As customers get wiser, more flexible alternatives will continue to emerge. And, the multi-year contract ‘lock-ins’ will seem prehistoric to up-and-coming millennial finance directors who have been more accustomed to monthly commitments and the option of cancelling at any time.
Although cloud accounting software has been around for more than a decade, it’s only now that mid-market organisations are starting to see the disruption. Offering a greater level of freedom and agility with their solutions will prove to be more valuable than ever before.
Get in touch today to find out more about our iplicit solution. Book a free demo, call 020 7729 3260 or email info@iplicit.com.