Stealing the Goose

Stealing the Goose

Interesting comments on the Xero blog last week from Xero CEO Rod Drury regarding the failed discussions between MYOB owners Archer Capital and BankLink New Zealand over the acquisition of BankLink. According to AFR BankLink rejected Archer’s tabled offer of $NZ100 million –

“It’s understood Archer has terminated discussions with BankLink New Zealand about buying the business and folding it in with MYOB, Australia’s biggest accounting software provider. As the story goes, PwC-advised BankLink, which is a supplier of live bank feeds, was seeking a higher price than the $NZ100 million ($80 million) tabled by Archer.”

AFR suggest that now the deal has bitten the dust Archer will start seriously considering strategic options for an exit of MYOB.

Rod commented on the situation suggesting that it may signal the end of windows desktop software –

“You can deduce from this that thousands of Australasian small business customers are going to be sold to a new business owner. It also potentially marks the end of the old Windows desktop software model in Australasia.”

I’m not sure the possible sale of MYOB by private equity investors Archer Capital signals the end of desktop software, but there is an interesting situation playing out with MYOB.

Rod goes on to discuss how MYOB have been slow to adapt to cloud computing, labeling their technology strategy as ‘compromised’ and stating that –

“With their sunken investments in client side technology they have moved to a synchronization between desktop and online rather than the Single Ledger strategy. This is difficult and expensive to pull off and we believe will accelerate the adoption of pure cloud solutions.”

In August 2010, 4 years after Xero was founded, MYOB released an online version of their desktop software called LiveAccounts. During those 4 years no doubt MYOB have been through the five stages of grief – denial, anger, bargaining, depression and ending with acceptance that, with continued erosion of their customer base to SaaS providers, they should perhaps develop an online version.

The previous owners of MYOB, including Xero board member Craig Winkler, knew the writing was on the wall when they sold MYOB to Archer in 2008. The problem MYOB had, like many of the other market leaders in desktop software, was that developing an online version of your software would not generate more revenue. The customers for their new online offering would likely be the same customers who had purchased the desktop version and were choosing to stick with something they thought they knew. It was an attempt to stem the tide of users moving to SaaS solutions.

To compound the problems for MYOB in 2010 they discontinued pay-per-call phone support for MYOB EXO customers suggesting that customers requiring support should pay for an annual support plan. The change in support, designed to create the same kind of revenue stream that the SaaS model provides vendors, irritated many existing MYOB customers resulting in those customers looking for better alternatives to MYOB, such as Xero.

Small businesses are agile, fast moving and quick to learn new technology to improve business processes. Although MYOB software is designed for small businesses it appears that MYOB themselves have lost the agility and speed required to service their core market effectively. Like the giant at the top of the beanstalk, small SaaS providers like FlexiTime have stolen the goose that lays the golden egg and the MYOB giant has been too large and slow to stop them.

With the increasing number of enquiries from MYOB customers looking for a better online payroll solution FlexiTime have developed a data port for MYOB payroll data. Send us your MYOB files and we can load them into your FlexiTime company so you don’t have to enter employee and pay history data.

In addition to the benefits enjoyed by SaaS users such as no need to backup, no need for costly upgrades when tax rates change and access to your payroll from an internet browser, FlexiTime provides MYOB payroll users with a raft of additional tools for managing employee time.

 

Robert Owen
robert.owen@flexitime.co.nz

Founder & CEO of FlexiTime.

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