As part of their onboarding and proof of concept, EdgeSpring has developed CrunchEdge, a public playground where people can explore EdgeSpring applied to the Crunchbase data. I’ve had a bit of a play and it certainly does what it says it does – allows people to drill down into the part of the data set that is relevant to them – in the case of CrunchEdge that could be getting some data on deal size, on vertical industry, or on any other part of the data that is of relevance. The EdgeSpring platform allows users to:

• Acquire data from any source and bring it in to the platform – currently from SQL, Hive, salesforce.com, and some other sources.
• Manipulate data to meet specific requirements
• Query the platform – either manually or programmatically
• Derive visualizations off the back of the queries

In terms of its go to market products, EdgeSpring offers to distinct products, SalesEdge and MarketingEdge – as the names imply, these two products offer sales and marketing people the ability to gain insights into their area of specialty and to be in a position to assess where to best prioritize their time. SalesEdge offers pipeline management as well as salesperson-centric opportunity visualization and management-centric salesperson reporting. MarketinEdge on the other hand attempts to connect the marketing initiative data to customer acquisition/retention data to more accurately assess the efficacy of marketing initiatives. EdgeSpring already has some interesting customers including Equinix, Netflix and Intacct.

I really like the area that EdgeSpring is going in to. As with other BIO solutions the key barrier to uptake is the ease of adoption/deployment. If they’re able to make it far easier for organizations to get started leveraging business intelligence, they look set to achieve some real success.

Intacct, until now at least, hasn’t talked much about this problem space, apparently happy to leave these larger and more complex situations to vendors like NetSuite. A conversation I had with an Intacct customer recently suggests that this strategy is changing somewhat and becoming more nuance. Intacct does provide a consolidation functionality as detailed in the video below:

Anyway – in this case the consolidation was more nuanced than is usually the case. The customer, Kith Media, was formed in 2011 to take over financial management for several operating subsidiaries that were divested from a large media conglomerate, including print phone directories and internet-based local search services. Kith Media’s particular situation meant that they needed to maintain separate books for each of its distinct business entities, while eliminating reporting work done outside of the financial system, such as using Excel for reports.

The original entity used QuickBooks, while the acquired entities had all used an Oracle system as part of their former owner. CFO of Kith Media, Jim Henderson explained to me that this situation means that the company had a real greenfields opportunity – they weren’t going to use Oracle and QuickBooks wasn’t going to scale to handle the new complexity of the combined organization. Henderson only had a few weeks to both decide on and implement a solution, so one of the key drivers was simplicity and ease of deployment. He performed a kind of quick-fire due diligence on both Intacct and NetSuite, with Intacct articulating a novel approach towards the consolidation problems the company was facing. Instead of a complex consolidation approach, Intacct suggested using the dimension functionality of their general ledger – essentially a way to tag transaction data in the system across multiple tracking categories. In this case, Kith was able to separate items by operating entity for reporting and analysis. Henderson got to 20% of due diligence with both NetSuite and Intacct and became convinced that this novel approach to consolidation would actually work. The cost savings that Intacct brought (compared to NetSuite) along with the simplicity the solution delivered convinced him to go all-in with Intacct. The video below has more information about Intacct’s dimension approach:

It’s not consolidation in the traditional sense of the word – but it brings some distinct advantages in terms of reducing the TCO of the software (since multi-entities can be run from within one instance) and also removes the need for complex cross-instance consolidation setup. Kith got up and running on Intacct in four weeks – something of an achievement given the usual timescale that these sort of projects require – the company uses Intacct for its revenue recognition and expense management processes, a boon compared to their previous approach of using manually prepared Excel spreadsheets.

As I said before – the mid market opportunity is an attractive one – customers with, in general, more of an appetite for moving to the cloud; a generally fairly complex functional requirement and not a huge number of competitors means that Intacct and the handful of other companies targeting this space have a large prospect base, and one which, as the example of Kith Media shows, don’t take a huge amount of work to get over the line.

FinancialForce.com, the cloud applications company, today announced record results for calendar year 2012.  Within one year, FinancialForce.com increased annual revenue run rate by more than 90 percent, from 9 million in 2011 to 17 million in 2012, significantly expanding their customer base in Accounting, Professional Services, Billing and Media. Additionally, the number of customers using both Accounting and Professional Services Automation (PSA) grew by 120%.  Finally, 2012 also saw the expansion of FinancialForce.com’s enterprise customer base as average contract value rose by a significant percentage. 90% of the company’s growth is due to larger deal sizes.

The company also expanded its staff globally by 60%, across the United States, United Kingdom and Spain.  As cloud spending continues to be a top priority for CFOs and CIOs, FinancialForce.com is poised for aggressive growth again in 2013 and projects more than 100 new hires across the globe to keep up with its rate of growth.

Update – apparently it was an incorrect statement in the Financial Force statement about 90% of growth coming from larger deal sizes. Something to do with misinterpreted statistics.

The mid market is one that is very underserved by cloud accounting/financial vendors – NetSuite used to play in this space but is rapidly moving up the food chain leaving FinancialForce and Intacct to scrap over the mid sized customer base. These results are indication that there is an appetite in the marketplace for midsized organization to move to the cloud It’s also interesting to see that even FinancialForce is seeing a move to larger organizations as larger deal-sizes become more prevalent.

As expected, FinancialForce is enjoying the network effects of having customers using both financial and professional services automation products – and I’d expect this trend to continue – I’d also expect the company to add additional services that further increase the network effects of discrete, but closely integrated solutions.

Founded in New Zealand, TradeGecko is now based in Singapore and part of JFDI, a member of the global accelerator network. TradeGecko borrows cues from more enterprise-focused SaaS applications and includes an activity stream in order to surface relevant information for different people dealing with a stock management process. My experience gives me first hand knowledge of the face that SMB inventory-management tools are generally cumbersome on-premise offerings that are expensive, inflexible and difficult to use – some new entrants are trying to solve that and TradeGecko covers some areas touched on by other companies such as Unleashed Software, BrightPearl and Magento. At the top end, and generally out of the range of SMBs, are the enterprise grade SaaS plays like Intacct, NetSuite and Salesforce.

TradeGecko is aimed at a wide range of businesses including importers, distributors, wholesalers, manufacturers and designer-makers. Co-founder Carl Thompson formerly ran a clothing label part of his frustration at the the amount of administration involved in managing traditional systems led to the founding of TradeGecko.

TradeGecko is currently in beta and is currently integrated with Shopify. Further integrations with Xero and VendHQ are in the pipeline.

Given this background, it’s interesting to hear of Zuora’s announced partnership with FinancialForce, Intacct and Sage – seeing it now embedded in all the major mid-sized accounting products. It’s an interesting move and one which sees Zuora take a subtle shift to more of a best-of-breed rather than a suite approach.

Previously Zuora had announced a partnership with NetSuite – since that time NetSuite has started talking about its own offerings in the subscription and billing space. It is no coincidence then that these announcements are all coming on the day before NetSuite’s global conference, SuiteWorld. No coincidence also that Zuora is not sponsoring SuiteWorld – if you sense a subtle parting of the ways there you’re probably not far from the truth. This marks a conscious shift for Zuora who is now talking about a best of breed approach and moving away from the “one suite to rule them all” message that NetSuite prefers. If there was any doubt about the significance of both the timing and the messaging of this news, Zuora clarified that by including a covering note from CEO Tien Tzuo in which he writes “…finance departments and CFOs look to retool their companies for the subscription economy, they want best of breed” – fighting words indeed.

With this move, Zuora is integrated into FinancialForce, Intacct, Sage, Workday and NetSuite – their aim is to help CFOs, no matter what financial software they use, navigate the growing importance of the subscription economy. Zuora’s net position is that financial systems cannot cope with the complexity of modern commerce, specifically the dynamic nature of;

• Pricing offering customers multiple price plans, bundles with one-time, recurring and usage fees, and pay-as-you-go pricing;
• Relationship commerce for the ongoing subscription lifecycle which includes the initial order, change orders, add-ons and renewals;
• Automated subscription billing and payments high volume for B2C businesses or more complex B2B businesses; and
• Forward-looking subscription metrics to forecast future revenues and growth.

If the messaging from Zuora itself wasn’t strong enough, the CEO of Intacct, Robert Reid, came out with the announcement with both guns blazing in NetSuite’s direction saying;

Our alliance and this new framework enable joint customers to realize  the true value of Zuora and Intacct together. This is a perfect example of how cloud
computing makes it easier for companies to select integrated best-of-breed systems like Intacct and Zuora, instead of being forced into a suite of average products from one
vendor

While there is much that goes on this space that can be simply put down to positioning and maketing, the fact that with this announcement Zuora is integrated into all the financial systems that matter is another indication that they are becoming the vendor of choice. While it is true that everyone in this space has a different focus (Vindicia for example is well ingrained in gaming), Zuora is rapidly becoming the de facto standard – a position that sets them up well for strategic moves (either an IPO or trade sale) in the short to medium term.

Intuit are keeping things a little quiet – in fact despite multiple emails to their PR folks they gave no comment about the arrangement. Intacct however are (as expected) very keen to talk about the deal. Dan Druker, Intacct’s VP of marketing, was keen to talk about Intacct for QuickBooks graduates but referred questions about the partnership to Intuit. He was quick to point out that Intacct is a great fit for QuickBooks graduates and points out that the deep channel relationships that Intacct have lessen’s the risk and cost when graduating from QuickBooks (at least compared to moving to an on-premise mid-market solution). In some material I’ve been privy to, Intuit is articulating the rationale for this deal as follows;

Intuit has teamed with Intacct, the leading cloud computing-based mid-market financial software company, to meet the sophisticated financial management and accounting requirements of companies that are stretching beyond QuickBooks.

Companies love the ease and flexibility of QuickBooks but some of our larger customers require more advanced functionality, increased automation, and improved financial controls. Some signs that your company may be ready to graduate from QuickBooks are:

• You are struggling with reporting and can’t analyze operating metrics.
• Inefficient manual processes are reducing productivity and introducing errors.
• Your team depends on spreadsheets to run or report on your business.
• You’re dealing with multi-entity,multi-currency, and/or global business issues.
• You seek real-time visibility into project costs, revenues, and profitability.
• You require formal financial consolidation and/or are concerned about GAAP, IFRS or Sarbanes-Oxley compliance.

In the past, moving from QuickBooks to a more advanced system was a relatively costly and risky process. It involved purchasing, installing and implementing complex financial software, buying servers and staffing IT personnel. It was a difficult and expensive experience for companies used to the simplicity and elegance of QuickBooks.

Interestingly 60% of new mid-market customers for Intacct are coming from QuickBooks having butted up against the functional limits of the product – this is an impressive trend and indeed begs some questions about where this partnership might head. Intuit is walkign a tight rope – their larger customers need to feel that there is a progression for them as they grow, but Intuit also wants to avoid losing customers who are still well served by QuickBooks. This balancing act is highlighted when Intuit says that;

If you are happy with QuickBooks, we look forward to serving you for years to come. But, if you are stretching beyond the capabilities of QuickBooks, we encourage you to take a look at Intacct.

It’s also worth noting that this is the year that most pundits are predicting an IPO for Intacct, should this partnership with Intuit become more formal, that would be a serious validation for the company, and would give it a nice hook on which to hang their claim of being the mid-market financial solution of choice.

I’ll continue reaching out to Intuit and report more as and when they make a public comment about the partnership.

After my post about Intacct’s offering, I was approached by Tom Brennan from FinancialForce to point out some aspects of the integrations versus single suite debate that he felt were relevant to the announcement. Brennan concurs with Intacct’s perspective that there is a real need for a SRP offering, but is dismissive of their multi-vendor approach. Brennan says that;

A 3-cloud approach like this cannot deliver the seamless customer experience that cloud users expect. Especially those using Salesforce CRM that are used to the seamless connectivity that exists between the array of applications on Force.com. Intacct doesn’t sound sure when they say “…the integration between each application is quite deep…” Deep is a matter of perspective I suppose

Standing aside from the obvious competitive issues here, and the marketing puffery that goes with that, there is an important point in all of this. The question remains as to how much of an impediment it is to ask workers to face the jarring experience of trying to interact with multiple different applications and UIs. Undoubtedly data integration helps with the information exchange, but if inconsistent UIs are a barrier to adoption… then perhaps we have a problem.

This reminds me of the attitude that Jim McGeever, COO of NetSuite espoused during our panel. When asked how to define a “suite” in this modern age, his attitude was that Netsuite considers a suite as being something that;

..owns an entire business process from start to finish

And presumably does so with a consistent user experience and interface. As Brennan pointed out in his email to me;

the key to achieving SRP [and by extension other functional needs] is the integration that goes beyond a superficial level. Only by using apps that are developed specifically to work together without redundant data and complicated update routines can this truly be a reality

Customers want results – and there’s a valid opinion that says that three separate databases, UI’s, logins, reporting tools and workflow engines are an impediment to that aim. Of course some functional areas are so niche that it is unrealistic to expect a fully integrated solution will be available, but for a commonly needed offering such as SRP, I wonder how much of a barrier to customer acquisition a disparate UI and workflow approach will be.

As part of this release, Intacct is announcing two major developments, a broad services resource planning offering, and a new UI approach.

Services Resource Planning (SRP)

Druker was quick to explain that they see SRP as being a much broader approach than Professional Services Automation (PSA). His perspective was that PSA, while appealing to a large number of prospective customers, is a far more narrowly focused product than SRP which is instead built to meet the needs of any organization providing service offerings, not just the narrow range of professional service companies. In terms of what the Intacct SRP offering includes, they have inked deep partnerships with Clarizen and Salesforce that will offer deep synchronization between the three products – using salesforce to manage the customer relationship aspects of services organizations, Intacct to handle the financial management and project accounting parts of the puzzle, and Clarizen to cover the project and work management aspects.

As part of the offering, Intacct is broadening the project account aspects of it’s product, including the following features;

• Project summary – real time visibility into complete financial picture of projects
• Automatic labor cost allocation and posting
• Automatic, client facing project invoicing
• Automatic milestone and percent complete billing

SRP is available now with pricing starting at $1500 per month.

New UI

Intacct has looked deeply at its user interface and is rolling out changes to deliver on what it is calling a “consumerization of business applications”. Essentially this means a tablet and mobile ready, and highly graphical user interface which includes application maps for broad functional areas with menu trays for more granular tasks.

The idea is to deliver on the long-promised idea of giving finance people within a business the ability to truly work remotely that the sales teams have been enjoying for a few years. In pitching their offering, Druker included a story from an Intacct customer that goes some way to showing the utility of a mobile application, even for a generally office bound role such as finance;

Here is the setting – poolside with my wife in the most northern city in Argentina in a town called Purmamarca enjoying a cerveza. Just had a wonderful day experiencing Argentina at it’s best. Laying down at the pool with my iPad to see if there were any fires back at HQ. Sure enough I needed to review and approve some PO’s. I logged on to Intacct on my iPad and solved the issue in 5 minutes. Back to my wife and my cerveza.

The quote may sound a little evangelical, but it’s a real world example of the utility of easy mobile access.

Intacct into 2012

Intacct is positioning itself well to mop up a significant share of the mid-market financial space. While giving no firm information, there seems a very strong indication that we’ll see an IPO from Intacct sometime in 2012. That timing makes sense as we see Intacct move strongly to consolidate its position. From a metrics perspective, Intacct is seeing 10 million API calls a month and growing – speaking to the depth of use of its platform. It’s also interestingly seeing a 60-65% attach rate with salesforce – being able to leverage salesforce’s market success further will be a key scaling strategy for them going forwards.

Xero – more customers, more revenue, more hiring

Had its 6 month report that it’s required to make as a publicly listed company. In its report, Xero had some pretty impressive numbers with customers now well over the 50000 mark and revenue up well worldwide. Non-NZ revenue now makes up more than 40% of Xero’s revenue, mainly this comes from Australia and the UK with both over $1M revenue. The rest of the world (which includes the US) is still tiny with only 400K of revenue, but recent attendance at industry events stateside, the relocation of the CTO and the community manager to San Francisco and the soon to be announced appointment of a US managing director will hopefully change that fact.

Xero is still loss-making, but that loss has reduced 27% in this reporting period (from $4.7M to $3.7M). Of course its world-total of 50000 customers is still a drop in the ocean compared to the three incumbents Sage, Intuit and MYOB who between them service around 8 million customers, but Xero’s growth trajectory is what’s important and this is heading in the right direction.

I’m still picking a major funding announcement in the near future to fund what will be an extremely expensive US market entry. In other news, Xero announced the resignation of both its chairman and co-founder Hamish Edwards. Neither of these is a surprise, Chair Phil Norman has led the company through its startup and IPO phase and now hands over to someone else to take the company through its next growth phase. In the case of co-founder Edwards, ever since his return from a posting to the UK I have had questions from Xero partners as to his actual role in the company. While he’s still officially an executive within the company, I suspect his operational role will go the same way as his governance one and fade off into the twilight.

Brightpearl – big name hires and great growth

Brightpearl, the ERP vendor who has a solution that sits nicely between tools like Xero for micro businesses and much broader offerings from the likes of NetSuite has been going gangbusters.

Brightpearl has announced two high-profile executive appointments including Harriet Fletcher from Rackspace as Marketing Director, UK and James Scott, formerly MD of Channel Advisor in EMEA, as a senior consultant on the company’s ecommerce strategy.

Brightpearl is enjoying strong growth and is pushing heavily with its channel sales strategy – something that a product that suits larger businesses than solutions targeted at micro-businesses can do. I’ve said before that Brightpearl is a very promising application, I’d class it as down a rung from Intacct, but really only competing with a product like Saasu to the small and mid sized organization that requires a full breadth of features.

Intacct – awesome channel growth and possible IPO

I’ll be covering some product specific news from Intacct in the next week or two but on the business side Intacct has also been growing strongly. They have 5000 companies using their solution (bear in mind Intacct sells at a much higher price point than products like Xero) and their own VAR program is accounting for 50% of sales (up from 35% last year). This is further proof that a smart channel strategy which sees partners really add value to the core product is a great way to get ahead, even in this disintermediated cloudy world.

CEO Rob Reid has also stated that the company has enough financing to pursue its own IPO but hasn’t offered a specific timetable for this move.

MYOB – New generation platform for a hybrid world

Desktop software vendor MYOB has finally rolled out its new line of products that see it finally move from a completely desktop based provider to a hybrid one. Th new generation of products are the result of a three year development project and moves the product base onto a completely new platform which will allow for hybrid desktop/cloud functionality.

The rebuild sees MYOB moved to a .NET SQL platform which will see it, over time, offer customers an on-premise, cloud or hybrid choice as to where their data is held. Part of the success of this project revolves around the opening up of core APIs and this is one area I’d be excited to see some progress from MYOB on.

QuickBooks – Problematic outages

While Intuit follows its own hybrid approach with the Partner Platform, it also has a full online version of its software. QuickBooks online hasn’t had a good time of it lately with some high profile outages in recent weeks. The really telling part about these problems is that they’ve been recurrent and have happened over multiple days and weeks.

While I believe that the IPP is a more important and valuable cloud play for Intuit, outages on its sister products tarnish the Intuit brand so here’s hoping Intuit can kick things into gear rapidly.

More news coming soon – but suffice it to say that things are looking rosy for the SaaS accounting vendors…

Intacct

Firstly Intacct, a company I’ve written about previously and one I am picking for a significant funding event sometime in the near future. It raised a further $12M funding round a couple of months ago, but I expect that potential acquisitors are sniffing… Anyway in Intaccts latest results, they boast of some pretty impressive numbers

• Q4 – 193% year-on-year growth for new bookings
• FY 106% growth in new bookings
• Intacct channel partners enjoyed 40% growth between Q3 and Q4

It’s not just financial performance that Intacct is crowing about though – they’ve always been quick to talk about uptime and other measures. This report sees;

• 100% availability for this quarter
• 99.995% availability for the entire fiscal year

Intacct occupied a relatively unique space. At the top end of town there are a number of players jostling for position – NetSuite, SAP and others. At the lower end of town there are a plethora of SMB accounting products – both for the incumbents like Sage, MYOB and Intuit, and also the new entrants – Xero, FreeAgent, IAC-EZ. In the middle space however there is a distinct lack of solutions that are suitable for the “bigger than small, but smaller than big” set. Intacct fits this space nicely and the opportunity for them is massive.

NetSuite

In other results released, NetSuite CEO Zach Nelson, in his inimitably charming way, was ebullient when announcing their Q2 results. The previously covered customer wins at Groupon and Qualcomm were brought out again to justify the contention that NetSuite not only provides a robust alternative for some of the biggest businesses around, but does so in a way that is far more agile than traditional alternatives. In terms of financial results, NetSuite reported;

• Record revenue of $57.8M – up 23% YoY
• 30% increase in billings YoY
• Q2 operating cashflows of $8.4M

NetSuite still reported an overall lose, in fact that loss has widened on last year (from $7.2M to $9.8M). While being a fan of profit-making ventures, given the growth potential for NetSuite, this isn’t a signficianct concern. NetSuite too has some non-financial measures that are perhaps even more indicative of where their trajectory is heading;

• An additional 328 customers were signed, the highest number for a couple of years
• Channel contributions to the revenue figures grew 50% versus last Q2 last year
• Global pipeline in the “big deal” category is up 85%
• Average deal size rose to $40K
• A record multi year deal to expand its footprint within tier two subsidiaries in a 45000 person business

It is this last category of statistics that gives a sense of the future trajectory for NetSuite, with a channel strategy that is absolutely turning on the gas, with customer signings on the up, with a pipeline that is bigger than ever before and with deal size rising ever higher, it is obvious that NetSuite’s own graph is trending upwards – that’s exciting as it builds an impressive base for post-downturn acceleration that could see NetSuite really hit it out of the park on its way to being a major player.

What it Means

Cloud rives agility, drives relative cost savings and drives the efficiency of the businesses that utilize it. The performance of both Intacct and NetSuite in relatively constrained times is testimony that the marketplace buys that vision and is showing so with their checkbooks. That trend will continue, and will only accelerate as these vendors gain even more traction. If you’re a channel partner or implementer living in the old world, while I’d not suggest that your world will end any time soon, it’s safe to say that it’s looking less rosy than a few years ago.