Packaged accounting software vs SaaS software

A growing number of businesses are forsaking packaged accounting software in favour of accessing it as a service over the world wide web. We investigate the benefits and improvements worth taking advantage of.

When looking for a new accounting software package for his small business, Con Zeritris chose a relative newcomer to the accounting software market in Sydney-based SaaSu, So-called software-as-a-service (SaaS) companies have been one of the most interesting trends in software in the past five years, with the trail blazed by the US-based customer relationship management system, developer Salesforce.com. Accounting systems are now receiving the same treatment. 

Under the service model, clients don’t purchase any packaged software. Instead, they pay to access a system that is hosted on the internet, in a similar way to which they might access online banking or Facebook.

The idea is catching on. In addition to SaaSu, New Zealand-based accounting software maker Cognito is also offering its MoneyWorks accounting software as a service through partners, while Reckon will consider doing the same if it sees sufficient demand.

MYOB also recently released an entry level, online invoicing and cashbook system in New Zealand called BusinessBasics Online. Both this application and the SaaSu service automate the process of creating and coding transactions and daily bank feeds, making bank reconciliation a thing of the past and freeing up valuable administration time. MYOB is continuing to add features to BusinessBasics Online and anticipates launching it in Australia late this year.

MORE INTUITIVE

Zeritris came across SaaSu while using Google to search for an alternative to MYOB for his IT contracting management business, InduistrieIT.com. He says the software provides most of the functions of MYOB, but he believes it is more intuitive.

“There is probably some more complex functionality missing that MYOB supports, but certainly for my business, which is not overly complex, it has everything I need,” Zeritris says. “Where there is some functionality missing there are simple ways to get around it.”

He was also impressed that he had completed the migration from MYOB to SaaSu in a matter of days, and is happy that he doesn’t need to do anything to support the service himself. He believes the service will also support him as he seeks to grow the number of contractors he is managing, in line with his goal of growing from less than 20 today to more than 500 over the next three years.

The chief executive officer of SaaSu, Peter Cooper, says interest in his company’s web-based accounting system is growing, especially as the software can be integrated with other applications, such as internet banking, LinkedIn and Google, to assist in running the business. The latest release includes activity management features.

“Your accounting package is usually recommended by accountants, whereas business owners are really looking for things that will help their business run more efficiently or grow,” Cooper says.

COST EFFECTIVE

Because the software is paid for on a rental basis and hosted by SaaSu, Cooper says there is no capital requirement upfront for clients, and the cost per year is half the price of comparable accounting packages.

While SaaSu represents an emerging trend amongst software generally, it is unlikely that the packaged software we have become accustomed to will disappear any time soon.

Other packages continue to evolve and develop at a steady pace. In April, Reckon released the latest version of its QuickBooks product, dubbed QBi. Around US$1 billion has been spent redeveloping the software, which now includes a structured software database embedded within the software to ensure that it can service the needs of growing businesses.

According to the chief executive officer of Reckon’s business division, Gavin Dixon, the advantage is that a new company can purchase a $29.95 software package that can scale up to 30 concurrent users running a business with turnover in the hundreds of millions dollars.

“The previous versions of QuickBooks haven’t been able to go above ten concurrent users and, if you had significant volumes, the performance degraded and you needed to condense or archive data in order to maintain a reasonable performance,” Dixon says. “The new version has no real limit.

“In the past, once customers grew out of QuickBooks or MYOB Premier they needed to go to an enterprise resource planning solution like Exapta, but those kinds of products have a different order or magnitude in terms of cost and complexity.”

Dixon says in one instance a client was investigating switching to an ERP application, but was put off by the purchase price of $136,000 and $27,000 in maintenance costs. By comparison, QuickBooks cost only $5,250 and $3,000 in annual maintenance.