Suite Wars

Suite Wars

If Day One of Accountex ended with a bang, due to the tunes coming from the Sage stand, then Day two ended with another bang – the acquisition of Futrli by Sage.?So, the hard work that has taken place over the past couple of years behind the scenes, has been given a significant public airing, with the acquisition of Go Proposal, Oct 2021 and now Futrli, to add additional cloud functionality above the existing Sage Business Accounting Cloud suite.

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So, what we are seeing is a clear move by the dominant compliance players to regain the “T – centre of the court” to use a squash analogy, from the much-celebrated cloud bookkeeping products of more recent vintage.

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If we look at the UK accountancy marketplace then we have a number of choices, aimed at different levels of the market.

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ENTRY-LEVEL

The most complete cloud rich area of the suite area, with Capium and nomisma having complete compliance suite offerings, including bookkeeping apps, but also having proposal and practice management software.?Aimed at smaller firms, the suites have been available for a couple of years

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We can now add Xero and Intuit into this section.

Xero with strong customer advocacy, well at least until the last 12 months, added Xero Tax into its portfolio in 2021.?Of course, the trick here is to work how much functionality the Xero products offer, compared to your incumbent vendor, if you are using an established player.?If you have “simple” clients, then the Xero suite offers an alternative to previous suppliers. The challenge is what percentage of your client base will these tools apply too.?A reasonable number of clients sitting outside the Xero offering, will cause significant workflow and management issues, which render any cost savings meaningless.

Capium – full compliance suite, along with bookkeeping.?Public records state that they have over a 1,000 clients

Nomisma – a long term player in the entry-level sector.?Now headed by Simon Guest, who learnt his trade at IRIS, headed the team that delivered a full suite at Taxcalc and has quickly led nomisma to impressive growth in recent times.?A full compliance suite, along with bookkeeping, practice management and proposal.?

BTC – cloud suite released in 2022, but also has a partnership with Pixie, for Practice Management.

Taxfiler (IRIS) Snatched from under the noses of Intuit in 2019, IRIS added a Practice Management module, after some effort

FreeAgent – offered a Corporation Tax and Year-end accounts for “simple” clients for several years.

TaxCalc – the well-established Persona and Corporation tax solutions have developed a complete suite for the smaller practitioners.?Practice Management has been added, but with a very lukewarm reception.

Sage – one of the few UK listed businesses, who entered the accounting compliance market with five acquisitions in 18 months, at the start of 2000, which gave them 4,000 firms.?The disparate approach, led to many quickly departing to principally IRIS, due to a superior integrated product, but also poor relationships.?Sage has many accountant relationships due to Line 50 and payroll, where they are the dominant player, by a country mile.

After struggling with poor product releases; e.g. Sage One and poor sales and marketing approaches, which burnt client relationships, Sage has been actually leading the way with cloud-based compliance products, among the established vendors.?Accounts Production, Corporation Tax and Personal Tax have all been available for several years, along with, after a few attempts, a decent cloud bookkeeping product, Sage Business Accounting.

Over the last two and half years, Sage has built a small and compact partner community but also acquired Auto Entry, Go Proposal (￡13 million) and Futrli (￡20 million), Futrli being its second acquisition from Notion, in recent times.?Practice Management is the missing piece in the cloud compliance offering.?Whilst the missing functionality gaps within GP, in its toe to toe fight with Ignition, will be reduced with AML shortly, it remains to be seen, how a true PM solution will be developed.?Whilst it’s easy to say that large companies have large development budgets, they also have a lot more competing teams, countries and products, for that development money.?Whilst acquisitions will always include a “magic sauce”, that it is never made public, it remains to be seen

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Bright Group ?The Bright Group has been established with the backing of Hg in 2022.?Bright Pay has been a well-regarded payroll solution, for the UK and Ireland.?Relate software was merged with Bright Pay in September 2021, with Paul Byrne being appointed as CEO and the group being headquartered in Ireland.?Accountancy Manager was added into the group in March 2022.

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Intuit is in the process of adding tax products, having been unsuccessful in making any acquisitions, in the UK compliance sector, since their true arrival in the UK in 2011.?It was interesting to see the normal, large and inventive Intuit stand at Accountex, for a UK business, that appears from the outside, to be following its UK parent in reducing its accountant's channel, certainly, their marketing has markedly reduced in volume.

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MID Market

CCH – Well established, multi-national corporate business, with a strong presence in the USA and Netherlands, as part of Wolters Kluwer.?They have a tradition of working with the larger accountancy businesses and then pushing downwards. Large firms have traditionally bought on a best of breed basis, whereas the mid-tier benefit hugely from the integration that IRIS brought to the market and established market dominance in compliance.?Competitors such as CCH and Digita have caught up on the integration piece.

In the process of moving their portfolio to the cloud, this is causing some disquiet to their client base.?Access to clients comes through CCH and they offer a cloud link through One Click.

20% market share puts CCH second in the compliance market share league table.

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IRIS – Dominant market player with 60% approximately compliance market share, driven by the superior integration that was offered by one central database.?Hg has invested several rounds in IRIS since 2002, and is undisputedly the leading PE house in European tech, and certainly accounting tech, having IRIS, CaseWare, Silverfin, Dext, and Bright Group in their UK and Ireland stable, as well as VISMA in the Nordics.

IRIS led the way in integration with the advent of Self-Assessment and the early noughties. Self-Assessment was enhanced with Practice Management, Time and Fees and AutoMail (letters).?Today, it would be called disrupting the market, but the superior technology, backed by a slick sales and marketing engine, with great support, led to massive growth.?Of course, the challenge is to keep this level of growth, whilst maintaining both customer advocacy and also investor support.?

IRIS have been trying to move to the cloud for many years and after one failed attempt, now appears to be close.?Whilst traditionally viewed as a closed environment – IRIS or nothing, IRIS Elements is a new open approach. You can use core IRIS compliance products and then plug additional apps into Elements. So, if you wish to use Elements, you can also plug in competitive Accounts Production systems, as well as your favoured apps, such as Ignition, if you desire.?Elements Practice Management will be based on Senta, which IRIS acquired in January 2021. Elements is going to be launched in a phased approach, and will see the addition of new tools into the IRIS suite:

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2021

IRIS Elements

AML

Smart Tax

June 2022

IRIS Elements

Standing Data

IRIS Proposal

IRIS Communications

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October 2022

Practice Management

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June 2023

All IRIS products will be available in the cloud, with comparable functionality to today.

Thomson Reuters Digita

Digita was acquired by Thomson Reuters (TR) in April 2008 and was supposed to lead the growth of TR in Europe. However, upon the acquisition of Abacus Corporation Tax from Deloitte in October 2009, TR’s focus returned to providing tax solutions to Top 4 accounting firms and multi-national organisations – something it does well.

It has offered a cloud practice management product for several years; Onvio and is moving its compliance products across.

Caseware

Run by the impressive Simon Warren, for the last twelve years, caseware has a cloud solution for the mid-tier and large firm sector.?Very well regarded within the large firm segment for its Year-end Accounts and Audit products, caseware also has a customer base within the corporate sector.

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Cloud Tax solutions have been available for a decent amount of time.

Caseware is part of the Hg investment portfolio.

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Enterprise

Silverfin entered the UK market in 2019, to great interest and quickly won an award for software innovation from Accounting Excellence.?However, since then we’ve seen a steady turnaround in sales directors and teams and some changes in strategic direction.?

The Silverfin aim of delivering “Connected Accounting” appears to be over, with the original aim of offering data standardisation through “Ludwig” not taking off.?Enterprise software takes time. a lot of time, and money, to set up correctly – compare it to putting a team member into a dark room, locking the room and not returning for two months.?Having announced to the UK market that it offers streamlined working papers, accounts production, corporation tax and personal tax to the UK space, personal tax is now off the development agenda – meaning that connected accounting is now.

The recent appointment of Lisa Miles-Heal as CEO sees a very shrewd appointment, in a bid to regain the interest and enthusiasm of the UK launch in 2019.?However, we don’t see many examples of enterprise solutions that push down into the mid-market.?Enterprise solutions are good at being enterprise solutions.

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What Should I do?

Stick or twist. So much choice – or is there? ?So, if I’m in charge of technology strategy at a firm what should I do?

Only caseware has a complete cloud solution for their respective section in the mid-market, but Capium and nomisma, xero and BrightGroup do in the entry-level sector??However, the functionality has be investigated, before launching into a buying decision.

However, some of the product solutions, in the above vendors are heavily criticized for being poor.?Some as the result of the acquisition, need to be integrated.

I’ve seen some accountants laud Xero for the data flows with the addition of Xero Tax, but IRIS have offered this for 20 years plus? ?Not yet on the cloud, but via a hosted solution.

Several vendors have made acquisitions, but let’s see what enhancements are made, or most importantly, what data flows are enhanced.?What’s also going to be intriguing, is what are the strategic decisions behind the acquisitions, decisions that take the product in directions that we don’t expect – anyone remember IRIS buying Exchequer to take the product downmarket and take on Line 50? (IRIS Office Accounts Online – IAOO)

Having spent 20 years in this space, I find it an intriguing and exciting sector.?The decisions being taken, the acquisitions being made, the new entrants.

It has so many twists and turns ahead, and it’s a subject that I will return too…..

Feeling overwhelmed? Cloud, Apps, advisory and GDPR causing you headaches? Looking for a cure to the above issues and then grow your firm, whilst spinning all these plates.

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I am currently working with a small number ambitious Accountants, with BIG growth plans. Let technology accelerate growth, not be a handbrake in your accountancy business.

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I have worked in the accountancy software sector since May 1996. I worked at IRIS ( Corporate Sales Director: 1996 – 2006) and Thomson Reuters Digita (Sales Director: 2008 – 2011).?Since working for myself, 2011, I have consulted with Nomisma, onkho and PANALITIX, amongst working with many firms directly.

I can be contacted via LinkedIn, @LangdonHamblin [email protected]?