Quote Stock Sell has had a lengthy tech history, it was originally written in MS Access and has undergone a number of rewrites in SQL and is now fully rewritten as a web based SaaS product. It is targeted for small to mid sized businesses, in particular those who want to deploy systems that will allow them to scale over time. It is particularly suited for businesses that track serial numbers, batch numbers or expiry dates and hence is suitable not only for businesses in the hard product areas but also for FMCG, pharma and other product-based businesses.

Quote Stock Sell is realistic about the appetite of small businesses to actually dive into the analytics of their business. As founder Mark Lazarus:

Let’s be honest – how many owners of small businesses really want to log in to a software system and run reports to find out business information, most prefer to just check the P&L and balance sheet to see what is happening at a glance.  As such we try to reflect changes in Quote Stock Sell straight to the balance sheet – for instance if you mark inventory as faulty in Quote Stock Sell, we journal that value into “Faulty Inventory” on the balance sheet

Anyway back to the product. Quote Stock Sell has a wide breadth of inventory functionality. Some of the key areas covered by Quote Stock Sell are:

• Customer management
• Supplier management
• Quotes
• Orders
• Employees
• Products
• Inventory
• Warehousing
• Point of Sale
• Invoicing
• Supplier returns
• Reporting

That’s a very wide range of functional areas and ticks most of the boxes that the majority of small product companies will have. Quote Stock Sell is tightly integrated with Xero and I was keen to quiz Lazarus about this strategy and how much risk he sees of Xero encroaching onto their territory – Xero has already, after all, announced that it will be introducing some inventory functionality in the near future. In a logical response, he told me that

With regard to Xero stealing our lunch – that is always a thought in the back of every add-on developers mind.  We think Xero have a lot of other priorities before they can cover all the features of our system.  We’ve had many years of development go into our product.  Ultimately the answer is “Yes”, Xero could steal our lunch, but I think it’ll take them a while to come up with the same recipe (as they are busy with many other things), and maybe what we’re doing is not really something they would like to do.  We spent many years hoping Quickbooks would come up with a system to cover what we needed so we didn’t have to keep developing our inhouse system – but it never happened, maybe Xero will be different, but for now we have a window of opportunity, and we also have plans to eventually move into a wider market space and other verticals as well, diversification is key, but we have to start somewhere and this is where we chose, the Xero add-on space, we hope it will be fruitful for us.

It’s a point of view that makes sense, Xero is likely, at least in the short to medium term, to only skim the surface of what real product companies need to runt heir business, given their focus purely on this space, Quote Stock Sell should have no problem keeping ahead of them. The product looks really strong, I would suggest that the UI is perhaps one area that lets them down a little bit, it seems to show the products routes in a previous generation of software. but a pretty UI is simply lipstick, what really counts is what’s under the hood and by this measure what we have here is a very strong inventory product.

Scribe has just released its own enhanced platform which aims to make data integration quicker, easier and in my view most importantly, available to others than the usual technical elite. Scribe is already fairly well known in the CRM integration space – it has 12000 or so customers worldwide and spans integration requirements in the cloud, on-premise and of a hybrid nature.

The interesting thing about Scribe is that is uses a pretty innovative visual design environment that was actually inspired by Scratch, the MIT Media Lab developed programming language that was created in order to help children learn to program. Scribe has an interesting take therefore, it hides all the complexity far into the background, and offers up a highly visual environment for business people to create their custom integrations.

Scribe also offers pre-built solutions for commonly used integration needs (for example specific integration tasks for Microsoft Dynamics, Salesforce, ExactTarget, Marketo and QuickBooks). They’re also strongly set up for ISVs to use their platform, Scribe enables solution bundling and distribution via the Scribe marketplace, a trait that is occurring more often as vendors see to find low-cost ways of distributing their product – allowing third parties to monetize on your platform is well established in the consumer space (iTunes or Google Play anyone) and is becoming more so in the enterprise space.

So what can customer’s do with Scribe? Using Scribe’s Integration and Replication Services, Connectors and pre-built solutions, customers and partners can:

• Replicate cloud data to a local database for reporting, analytics or backup
• Integrate key customer data (e.g., sales data, contact information) across critical business systems such as CRM, Marketing Automation, ERP and support
• Connect on-premise and cloud-based CRM and ERP to everyday applications such as Marketo, ExactTarget, GoToWebinar and QuickBooks quickly and easily

The idea of enabling third parties to build specific integration functionality and sell it on the Scribe platform is, while not novel, interesting and should help the company gain more market share. I really like their super easy visual approach to creating custom integrations – it’s a democratization of integration that will only do good things for a deeper adoption of cloud tools.

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.

My background and entry into the technology industry came from my experience wrangling tech for a number of different small and mid-sized businesses. I’ve seen first hand just how much work is involved in tailoring discrete solutions into something that actually meets the specific needs of the business. This is even more difficult for resource constrained small businesses that lack the cash and IT skills of enterprise.

As we move into the cloud-dominated world, the issue of integration is made more prominent as enterprises realize just how many different systems are being used throughout their organizations. While one of the best things about cloud is the widespread democratization of technology, this is also one of the most problematic areas. All of a sudden, managers and IT staff are scratching their heads about how to reconcile the issues created by business units having to interact with many software solutions from a ton of different vendors.

It’s for this reason that when Paul Miller and I started talking about content for the upcoming CloudBeat conference, that integration and the cloud was one of the areas we wanted to focus on. But my take on integration is even wider than simply “stitching together a

True application integration, in its purest sense, is one angle that needs to be seriously analyzed. There are many companies trying to solve this conundrum — from working out how to integrate the data and processes of businesses using both QuickBooks and Salesforce to pre-packaging “bundles” of software for specific verticals and selling them as a package. Companies like SnapLogic, Dell Boomi, IBM Cast Iron, and others are trying to work on this problem set.

But there are other areas that integration come into play — services like Tibco’s Tibbr and Salesforce’s Chatter are attempting to build a social fabric across an organization that, at least with a broader definition, constitutes a sort of integration. They bring together discrete sets of data and workflow and try and deliver sense out of them all.

Other solutions like WalkMe aim to resolve the cognitive dissonance that comes from too much exposure to too many different solutions. WalkMe has taken the approach of enabling online self-service to overcome some of what integration aims to solve — the user experience problems caused by discrete packets of software.

And then there is a further discussion to be had, that of whether lightweight integrations, a sort of “minimum viable product” approach to software integration, is sufficient in this loosely couple modern world or whether the traditional enterprise approach with big and heavy integration solutions, data warehousing and ETL is still required — does the proliferation of APIs solve this issue?

I’m looking forward to moderating an integration session at CloudBeat where I’ll be talking with panelists including SnapLogic CTO Chris Wagner and Informatica SVP Juan Carlos Soto. The overarching theme for the integration track is to explore the real need for consistent workflows, integration tools, common data formats, and other solutions to help tie a multitude of disparate systems together.

In my session, we’ll be focusing strongly on lightweight cloud integration versus enterprise-grade and asking whether companies really need all the bells and whistles that come with traditional integration solutions, like ESBs, ETL, or EAI tools. Or are today’s exponentially growing library of APIs, paired with more affordable SaaS-based integration tools, enough to get the job done well?

It’s going to be a fun and informative session — why don’t you join us?

• Salesforce implementations
• IT recruiting
• Managed services

I sat down for a discussion with Paulo Kaiser, COO of BlueWolf to understand their progression as an organization, and their use of cloud tools to help them grow. Until recently, BlueWolf was using QuickBooks, a manual expense management system, Salesforce for CRM and OpenAir as their professional services product. They’ve changed the way they do things however having moved financials to FinancialForce, and PSA to a custom application they created themselves of Force.com. Expenses have been moved to Concur.

In discussions with Kaiser, he identified the following benefits, problem areas and opportunities for the spread of products they’re using:

• With ten offices worldwide, moving to a cloud based financial system has improved performance. Previously BlueWolf was closing its monthly books about 20 days after month-end. Kaiser reports that the move to FinancialForce, and the ability to work on the books across the distributed offices has seen the time taken to close books half
• Invoicing is quicker and cheaper than before – by using the financial and PSA tools on a common platform, BlueWolf has the ability to give sales and credit staff insights into each others area. This cross-departmental visibility has reduced credit issues by allowing Sales and consulting staff to flag credit issues with customers during their regular contacts
• BlueWolf has seen the real breakdown of siloes – by adopting a consistent platform, data is able to be presented in actionable contexts across the organization
• One key failing of the platform is the real lack of analytics – BlueWolf would find it very useful to be able to gain analytical insights across the different products and departments
• Interestingly BlueWolf doesn’t use the FinancialForce PSA offering, Kaiser put this down mainly to the fact that it was, until it was acquired by FinancialForce recently, a product created and offered by Appirio. As such BlueWolf was loathe to embrace it. Beyond this however Kaiser did allude to the fact that their PSA requirements were not able to be completely met by the product, hence building an offering themselves.

Summary

The BlueWolf story is a copybook example of the benefits of cloud – of course BlueWold is a company that makes its money selling cloud products and hence could be expected to be an enthusiastic evangelist for the move – that said, numbers don’t lie and the benefits that BlueWolf is seeing in terms of efficiency and financial outputs is persuasive.

In terms of glaring holes – I’ve thought for awhile that analytics is an area that Salesforce needs to spend a lot of attention on. As a real enterprise IT platform player, it needs an analytics offering that sits across its entire platform – something that can identify patterns and draw insights across different product areas. In the same way that single sign on was an obvious (and recently announced) area of development for the company, I’m picking that the next 12 months will see this area built out strongly.

There’s always areas that a platform needs to improve upon but what impressed me most about the BlueWolf story is the way they’re using the salesforce ecosystem the way its been evangelized now for a couple of years – Force.com applications, third party offerings on the AppExchange alongside the core Salesforce offerings are all delivering integrated benefits to the company.

• Pure-play cloud vendors (FreeAgent, Xero etc) build pure Saas applications and do away with any need for desktop applications
• Hybrid vendors take existing desktop products and “cloudify” them in order to deliver what they believe is a “best of both worlds” solution

I was recently contacted by Levion, a new company that aims to deliver a hybrid desktop/cloud QuickBooks application. According to co-founder Jacob Gotleib, Levion is built to augment the desktop version of QuickBooks for users who need to interact with it remotely or from multiple devices. Rather than the traditional approach which is to integrate into specific functional parts of the desktop application, Levion has created an online user interface which mirrors QuickBooks functionality. Basically a user installs the Levion connector on the Windows PC that has the QuickBooks application on it – thereafter the connector allows users to access the online UI within a browser across various internet connected devices.

I was kind of intrigued by the Levion approach. Initially I was a little dismayed at the approach they were taking to pushing their product;

Getting a briefing from some people explaining the huge risk that cloud based accounting software is. Sigh… #FUD

— Ben Kepes (@benkepes) July 10, 2012

But outside of this FUD, it’s probably a fair comment that for some businesses at least, a hybrid approach to software is optimal. I reached out to Levion with some specific questions about their app.

Q: So you’re a web based UI integrating into QuickBooks right? Is this via the Intuit Partner Platform or what?
A: While we are an Intuit Certified Developer and love working with Intuit, the Intuit partners, and QuickBooks users, we chose to develop our own client program rather than use the Intuit Partner Platform. The reason for this is that the Intuit partner platform does not support many of the features that we plan for Levion. Our program, the Levion Connector, facilitates the integration from the web UI.
Q: How can you integrate with other web apps (e.g. Freshbooks, Zendesk, Taulia) is that via your API or QuickBooks?
A: We do not have any plans to integrate with non-QuickBooks business apps in the immediate future. We are focused on providing QuickBooks customers the benefits of a web based accounting app without having to switch off the desktop version of QuickBooks. We believe that the robust features of QuickBooks desktop, especially the more featured versions, combined with Levion’s online portal provide an unbeatable combination.
Q: Again – if it is a standalone app, what security is there over integration with QuickBooks – what versions do you support, what languages/frameworks are you built upon?? Rest or SOAP API?
A: Levion, later this year, will be offering flexible security roles and permissions. We already offer a robust revision/versioning system, which was built originally for a company to prevent employees from creating two versions of invoices–one version that stated higher prices to the customer, and the other version, changed on QuickBooks, to reflect a lower price that would allow the rogue employee from skimming of the price difference.  Additionally, we plan to give our users security rules that could be triggered if a sale price was lowered by a certain percent, and required a manager to give approval.  The main advantage is that you can have your QuickBooks experience inside a web browser without having to consider complex, and user-unfriendly technologies such as VPN, Citrix/Remote Desktop, etc. We support any version beyond QuickBooks 2007; the Connector/Sync Tool is developed in C#/Microsoft .NET framework 2.0, which communicates to our Goliath server using a push technology called long polling. The web application is built on JRuby using the Rails framework, built on distributed workers with Resque. Our database back end is MySQL, while we use Redis/Resque to handle some of the more CPU intensive aspects of parsing XML. Our app already supports the REST API; at this point, it is undocumented, but when there is enough demand, we will devote efforts to providing support for third party developers for our service.

MyPOV

I’m not against hybrid desktop + clpud solutions per se, but in order to consider them they need to deliver the benefits that pure play cloud solutions can bring. one of the reasons I’ve been bullish about the Intuit Partner Platform (IPP) is that it enables third party SaaS apps to integrate in with the core QuickBooks data – so if I want to use another invoocing, time tracking, project management or other application, I can do so. Levion on the other hand is a great integration with QuickBooks, but that’s all it does. it delivers on one promise of cloud software, the ability to access it remotely via the web, but it doesn’t deliver the true benefits of cloud (integrations, an API, agility etc).

I also worry about a third party application that is a hgihly customized deep integration with a desktop application. There is so much that can go wrong there, and so many ways that the desktop vendor can shut off access in the event they don’t like what the integration does. As such Levion, while an interesting idea, is a dangerous step for customers to make in my view.

On my first ever trip to the Bay area, six or so years ago, I attended the, now defunct, Office 2.0 conference. At the event I moderated a panel looking at what Accounting 2.0 actually meant and the value it could drive. The panel was a who’s who of the space and included folks from bill.com, Mint, FreshBooks and Wesabi. As an aside it’s interesting to see where those companies are today – both Mint and FreshBooks are still around and growing well while remaining independent. Mint was famously acquired by Intuit while Wesabi has sadly departed.

During the panel, Mike McDerment, founder and CEO of FreshBooks eloquently articulated their rationale for remaining laser-focused on being purely about invoicing and not jumping into the full cloud accounting space. It is a strategy that I’ve been dubious about ever since FreshBooks launched – I believe invoicing is only on part of the broader financial system requirements of an SMB and to miss out the other integral elements (accounts payable, general ledger etc) was somewhat of a half baked concept.

I always figured that the company knew best and their rampant growth was an indication that they were right, and my ideas were flawed. Bear in mind that FreshBooks boasts of customers in 120 countries, has built a 90 person company and has more paying customers in the US than any other accounting/invoicing application apart from QuickBooks.

News from an open letter to the FreshBooks community from McDerment recently changed all that. In the letter, McDerment told of a fundamental change within the company, a move to changing the way they describe what they do from being Cloud Invoicing, to Cloud Accounting. McDerment notes that over the last few years the company has slowly introduced more non-invoicing specific functionality – expense tracking, profit and loss reporting etc. He reflects on the fact that many FreshBooks customers are using the product as their “accounting system” and hence the company is now articulating what they do as accounting software.

Semantics or a Fundamental Shift?

While some might suggest that this is just marketing spin, designed to offset the increasing threat of full-blown SMB accounting solution Xero, I believe that there is more to this announcement than simply branding. FreshBooks has built out a very rich level of functionality for invoicing, but it has discovered, I believe, that SMBs want to tick off all the boxes of their accounting requirements from one vendor. While this is something of a departure from a company that has long been an advocate of the best of breed style of SMB software (FreshBooks is a foundation member of The Small Business Web, an affiliation of software vendors selling to SMBs who all adhere to a viewpoint about integrations and point solutions), it is a logical one. Businesses don’t want to have to invoice in one application but to go into another application to reconcile their bank accounts or provide their data to their accountant – they want to do all of that in one application, with one user interface and experience.

Reassessing the Accounting Landscape

Cloud accounting for SMBs is a largely untapped potential market, particularly in the US. While Xero is the biggest global vendor, with 100000 customers it is an important, but tiny player when compared to the desktop behemoths, MYOB, Sage and Intuit who together account for around six million business customers. No one has yet really got to scale in this space. Enter now FreshBooks who can boast that five million companies have used their product over the time of their existence. While FreshBooks has a massive free user base, and clearly a large number of those five million have dropped off, it’s fair to say that in terms of mindshare, FreshBooks beats Xero hands-down. What Xero does have, is a strong channel and partner strategy with accountants, and this is something that FreshBooks are starting to talk about now. In his letter McDerment stated that;

While FreshBooks will always be designed for you, the business owner, we are going to make it easy for you to work with your accountant, and make it easy for your accountant to work with FreshBooks. So while your FreshBooks account won’t have all the advanced features that accountants need at their fingertips, and it won’t be mired in accounting jargon that’s confusing and complicated for you, we’re going to build bridges between your FreshBooks account and the complex tools your accountant needs.

That’s an aspirational message, but a difficult one to deliver. Accountants are notoriously conservative and at the same time concerned about threats to their traditional revenue. This is something that Xero has battled over the years and generally managed to obviate through their very strong messaging about accountants being their route to market and trusted partners – indeed, while Xero surely has a direct sales strategy for part of its operation, this is somewhat understated and the accounting partners sit front and center.

Not so FreshBooks who haven’t needed strong ties into accounting practices – a move to full accounting changes this and FreshBooks will need to carefully balance their self-service, SMB-led uptake, with the concerns of accounting partners who are undeniably something of a gatekeeper when it comes to choosing software for SMBs.

Crystal Ball Gazing

The space just got a little more interesting. In the US Intuit has largely been asleep at the wheel and doesn’t have an overarching compelling cloud story. While the Intuit Partner Platform is interesting, it hasn’t seemed to set the world on fire. Xero on the other hand is still an unknown in the US. It has reached a global figure of 100000 customers which is impressive, but US growth and go-to-market is still largely unknown, especially so considering how fragmented the US market is and the fact that Xero follows a strong strategy of using accountants as a sales channel.

And now FreshBooks ponies up and seeks to translate its massive customer base (both paid and free) into something much bigger. So does intuit acquire FreshBooks in order to both gain a compelling Cloud solution and counter the threat from Xero? Perhaps – Intuit has, after all, shown a history of acquiring companies to further their product portfolio. Note though that FreshBooks is well funded and firmly entrenched. A land-and-expand strategy which sees them remain independent but leverage their footprint in the invoicing space to become the new uber-accounting vendor is also plausible.

And what does it mean for Xero? The fledgling in the US market? Well in many ways it is positive, FreshBooks now helps it to articulate the benefits of Cloud accounting and does so in a more direct-sales model which isn’t overly threatening to Xero’s channel strategy.

Time will tell – stay tuned for updates!

Update – as expected, Xero CEO Rod Drury would not comment on particular acquisitions to be announced but did make a comment in response to an email I sent him about the CCH/Acclipse deal saying;

On the Acclipse deal if you were us you’d see it as a good sign if a competitor decides to be acquired rather than go it alone. Means you’ve hit max value. So that’s a good sign what we are doing Is working. Congrats to Mike though. Not many people successfully exit businesses and he has done it multiple times.

Xero is holding it’s annual Australian conference in Melbourne this week and in keeping with the norm for tech companies, we can expect some important announcements to be made at the event. I’ve received multiple notes from people speculating about potential news including acquisitions – some likely, some less so. here’s a round up of what I’ve heard an my assessment. (Disclaimer – I am co-founder of LiveMigrate, a service that helps businesses migrate from MYOB or QuickBooks to Xero and hence have multiple interests in Xero’s moves).

At the time of publication I hadn’t received any response from Xero about these rumors  – if I do so I’ll update this post with their comment.

Xero to Buy Vend?

A couple of sources have suggested that Xero will be announcing an acquisition of cloud POS provider Vend. I reached out to Vend CEO and founder Vaughan Rowsell for his comment. Recently landed from a holiday in Fiji, Rowsell denied the rumors, but did so in a typical relaxed manner;

Not us, Bula! It’s cold

While any CEO with his salt will deny rumors (or at least refuse to comment upon them) regardless of their veracity. In this case I’m tending to dismiss the chances of this being a legitimate deal. Here’s my reasoning;

• Vend has been spectacularly successful and is gaining customers at a fairly astonishing rate. The investors behind Xero Vend (in particular Point Nine Capital out of Berlin), having invested in other high growth SaaS plays (Zendesk, FreeAgent) will be well aware of the worth of such growth and hence any purchase price could be expected to be very high. Add to that the fact that given their shareholding in FreeAgent, Point Nine would be unlikely to accept a deal that involved stock, and you have a deal that would likely be mainly cash-based. That would be a big ask for Xero, they’re well capitalized, but with profitability still aways off, shareholders might balk at using up free cash to fund a big acquisition
• Making a big acquisition like Vend would be a risk for Xero in terms of shareholder perception. Until now Xero shareholders have been remarkably patient with the company in terms of growth and profitability forecasts. A purchase of a rapidly growing SaaS vendor could be seen as an admission that Xero’s growth projections were a little too positive and could spark a move in that sentiment. Already some people are questioning Xero’s half billion dollar market cap
• Admittedly Xero and Vend share some major shareholders (Rowan Simpson and Sam Morgan) which makes a deal a fairly natural move. My feeling however is that both Simpson and Morgan realize the potential that Vend has and will be unwilling to exit on that potential too early – Vend is only beginning to ramp up on its massive potential and, most importantly, is still an incredibly nimble business – an acquisition by Xero would likely negatively impact on their ability to innovate quickly
• Final word on this topic goes to someone who is very much “inside the tent” with both these companies. That person told me the telling fact that within Vend there is a longstanding joke that Vend is the only Xero partner of the year that Xero CEO Rod Drury can’t actually buy

Xero to Acquire in the Practice Management Space

Sources also tell me that Xero will announce an acquisition in the general practice management space. I’m aware of details but to protect my sources will keep the specifics under wraps. Suffice it to say that the acquisition of practice management and client side vendor Acclipse last week by CCH will have sent some shock waves throughout Xero HQ. Sources tell me that Xero themselves had been courting CCH and the decision of the company to acquire a competitor outright will be seen as a blow.

Xero’s acquisition of WorkFlowMax last year went some of the way to providing accountant practices with a credible end-to-end solution but there are still significant holes in that story, made all the more evident by the sort of product integration that Acclipse CEO Mike Chisholm is talking about. As I said after speaking with him last week;

The final leg in the story of the modern practice however is that of documentation – accountants need to utilize providers of case law, precedents, best practices and standard forms and CCH is a major provider of these sorts of services – a practice solution that ties client and practice-side solutions, and delivers them alongside relevant documentation is a significantly valuable proposition for firms.

When the deal with WorkFlowMax was announced, it was spun as the final part of the practice-side solution. The reality however is somewhat different and while practices I talk to are generally positive about WorkFlowMax as a project management tool, it really doesn’t meet their needs in terms of preparing workpapers, managing documentation and the like. Xero has for a few years now been evangelizing the “modern practice” message. While this is a great aspirational story, practitioners want to see some concrete evidence of a compelling and complete solution for their clients, their practice management, their document management and their actual workpaper requirements. With CCH/Acclipse getting close to being able to deliver this post integration, Xero needs to build up its proposition, and they realize that this is one area in which they need to execute by acquisition or development rather than simply third party integration.

The world moves on however and recently intuit quietly announced to its partners that it had decided to “decommission” their federated applications approach and to focus exclusively on Intuit Anywhere – a model that moves the focus away from having organizations use applications within the Intuit framework, but rather to let QuickBooks data flow out and interact directly with applications. The original IPP approach delivered some real benefits – it gave third party applications access to QuickBooks data and it did so within a consistent UI and billing model, however these benefits also created problems for developers and this would seem to have limited the uptake of the IPP by application developers.

In notifying developers of the change, Intuit admits that IPP forced them to adopt a particular approach and resulted in some burdens on them. Intuit told those developers that;

• You wanted to allow customers to access your app anywhere, including via the Intuit App Center AND your own website
• You didn’t want to have to use our billing system or user management
• You didn’t want create a new version of your application just for our channel and therefore support two versions of your applications
• You want us to use industry standards for authorization and Single Sign-On (SSO)

From a conceptual level this is actually a little disappointing – especially for the smallest of SMBs, a consistent UI and single billing relationship certainly removes some complexity form their life. Under the Intuit Anywhere model customers need to learn various UIs and have payment relationships with all the vendors individually – this places a degree of burden upon them that doesn’t do anything to ease the onramp to multiple applications.

It seems to me that there is another story here, one of sub-optimal execution. In talking with a number of Intuit partners, I’m told that the process of integrating with IPP was long a torturous – in fact many vendors decided to not integrate, mainly because the process was so difficult. In an environment where developers have only so much development resource and an almost infinite number of applications with which they can integrate – it’s an easy decision to make to forego one that is going to place a massive burden on the development side of the house. While I accept that creating and maintaining essentially two separate UI’s (one for IPP and one for a vendor’s own web application) is a pain for developers, I also believe that Intuit should have been able to reduce this burden by executing IPP well. I’m also told by people that outside of the development process, the approval process for acceptance into IPP was a little arduous.

Intuit is articulating the belief that Intuit Anywhere strongly follows the Facebook approach of embedding its presence across the web. The difficulty that I have with that is that there is no workflow tied to Facebook – users have a seriously limited number of functional options (like, comment or share). This is very different from a business application where there are real workflows that need to occur within and between applications.

All of this serves to highlight the real difficulties that a desktop vendor faces when it tries to move into a cloudy world. Intuit has a difficult challenge and it’s fascinating to watch it modify its approach over time. It will be interesting to see how quickly Intuit Anywhere develops now that all resource can be applied to it rather than split between it and the IPP.

News recently that Xero has nabbed Intuit executive Ian Vacin is a real sign that Xero is ramping up their US operations, but also that within the US marketplace Xero is more and more seen as the promising vendor. In a post announcing his appointment, Vacin speaks to this very points, describing the due diligence process he went through when looking at hiring on with Xero. As he said in the post;

It was only a few weeks ago that I decided to leave Intuit for Xero. I’ve made the change not only because I believe in the product but the team, the company and the vision.

While it’s true that Xero is a relative unknown in the US market – both at a client level and within accounting practices – the fact that Vacin led the QuickBooks ProAdvisor Program, the very program interfacing with accounting practices in the US speaks to the seriousness with which Xero is going after this market. While the incumbent player Intuit has great existing marketshare, their innovation strategy largely follows a consumer facing enablement path – their Intuit Partner Platform does a great job of enabling QuickBooks users to interface with SaaS applications. That strategy, while great from the client side, does little to tell practitioners a story that resonates with what drives them. Xero has that story and is now gearing up to deliver it into the marketplace.

Their path won’t be easy – the US is a large and fragmented market – but hires like Vacin speak to the growing chances of Xero to pull this one off.

Disclosure – I’m co-founder of a company that provides a migration path for organizations wishing to move from desktop to cloud based accounting software. That’s not really much of a conflict with this post per se, but in the interests of full disclosure and all….