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MYOB Enterprise Greentree

Australian accounting software company MYOB bought Greentree for NZ$25.5 million. It will pay another $3 million if the owners meet unspecified targets.

It’s the latest move by what was, until recently, the regional leader in small business accounting software.

Over the last five years Xero has hammered MYOB by offering a clean, online, subscription-based alternative to desktop PC accounting software.

The pair squabble over numbers, but whatever the details, Xero has pulled a lot of market share from MYOB in New Zealand and Australia. And that fact alone informs every major decision MYOB makes.

Xero looms

Xero thinks big. Its goals stretch far beyond Australasia, the New Zealand based software company wants to handle the world’s small business bookkeeping and expand into providing wider fintech services.

In contrast MYOB remains focused on Australia and New Zealand. Which goes some way to explain why it bought Greentree. If Xero is expanding outwards, MYOB is pushing up.

Greentree is a New Zealand-based business software company with a range of ERP (enterprise resource planning) products. It sells to around 850 organisations in New Zealand, Australia, the UK and US. It’s a quiet achiever, an export earner and something of a catch for MYOB.

Greentree sweet spot for suites

Most of Greentree’s customers are larger than the companies that buy small business accounting software from the likes of MYOB and Xero.

They include firms like Ryman Healthcare, Mediaworks, Easiyo and Johnston’s coachlines. These are big names in New Zealand, but they are small in regional terms and tiny on a global scale. Greentree also counts schools among its customers.

Even so, the important point is that Greentree’s customers are organisations that need more than basic small business accounting. There are dozens of ERP modules in the firm’s portfolio.

To a degree this squares with MYOB’s other recent New Zealand acquisitions. In the last three years it has purchased BankLink, PayGlobal, Ace Payroll and IMS Payroll.

While this portfolio extends MYOB’s reach into adjacent markets, the thrust is to push upmarket to serve more lucrative customers. ERP buyers spend a lot more each month MYOB can charge for small business accounting software. Greentree licenses typically run to many thousands of dollars a year.

The cathedral and the bazaar

While MYOB is moving upscale, it is also vertically integrating. This is in contrast to the focus at Xero which has developed a vibrant ecosystem of partners that create point apps extending the brand’s reach.

Writing in the NBR, Chris Keall quotes Ben Kepes who says MYOB will treat Greentree as a cash cow. He warns it will bleed the company dry while moving its customers to MYOB products.

That sounds plausible. It’s a tried and tested strategy. Many software companies have treated acquisitions the same way in the past.

Keall and Kepes also mull over the potential, imminent parting of the ways between MYOB and Bain Capital, the US private equity firm owning a majority stake in the business. In the greater scheme of things, Greentree is too small to be a material consideration in what happens next to the company. On the other hand, a timely acquisition shows the management isn’t asleep at the wheel — something potential investors will want to see.However, it looks as if MYOB is feeling the heat from competition with Xero at the mass market end of the accounting software game. Moving into markets where customers are less inclined to count pennies speaks volumes about how MYOB views the future of small business accounting software.

wellington cloud

Xero is the biggest thing that’s happened to small business accounting since PCs made their way from geek bedrooms and into the office.

Putting accounting in the cloud was a stroke of genius. Cloud accounting is here to stay.

For a long time MYOB dominated small business accounting in New Zealand and Australia. Today it is playing catch-up with Xero.

Xero, MYOB pick your cloud accounting partner

Strictly speaking  MYOB isn’t far behind Xero. Perhaps the New Zealand cloud service has a six month lead on its rival. Given the way the internet warps time, that’s a huge gap.

There are four main accounting software players in the New Zealand market. Xero, MYOB, Reckon and Intuit. Australia has all these and its own Saasu.

Xero is a long way in front in terms of sheer performance. It also beats competitors with mature apps for mobile phones and tablets. Business people on the move can do everything on Xero, perhaps saving more complicated reporting for when they are in front of a PC.

MYOB has a wider range of products. Xero is one-size-fits-all or more accurately three-sizes-fit-all. MYOB has products for different tiers of business and with differing levels of cloud integration.

If you want something a little more specialist, say inventory control, you’d need to buy a third-party add-on product to use with Xero. MYOB covers inventory in its own range.

Intuit, Reckon behind

The last time I looked Intuit and Reckon were about as far behind MYOB as MYOB is behind Xero. You may see things otherwise if either company’s products have features that you particularly need.

If you’re not interested in accounting, it may be best to leave the decision about which software to use to your accountant. Many accountants commit to one or other of the big software brands, Xero and MYOB are just as far ahead of their rivals with professional bean counters as they are with end users.

While accountants can earn commission by signing you up to one service or another, it’s worth letting them make a few bucks on the deal just to keep your life simple. There are huge efficiencies when your accountant can get cloud access to your books, any financial benefits they earn from commission are far less than the value of the time you’ll save.

Australian-based accounting software firm MYOB aims to win back ground lost to Xero with an emphasis on its cloud credentials and by sharpening its pencil.

At a busy MYOB 2014 Roadshow event in Auckland’s Sky City Convention Centre, the company took the wraps off new product lines, renamed existing products, more cloud integration and three free mobile device apps.

Starting later this month the company’s web of existing products will be reorganised into three tiers with fresh names to more clearly differentiate products.

Banklink

At the low-end is Banklink – a simple online service for micro-businesses who farm out their bookkeeping to specialists. MYOB acquired Banklink, a New Zealand-owned bank feed business, in May 2013 for $136 million.

CEO Tim Reed says the bank feeds provided by Banklink are secure and reliable. He says: “It is a differentiator”.

Reed says it will launch the Essentials range in April. This is effectively a reboot of the company’s Live Accounts.

MYOB Essentials

Initially there will be two products, Essentials Cashbook and Essentials Accounting. Like Banklink, Cashbook will only be available from MYOB partner. Later in the year Essentials Accounting will become two products – one version with, the other without payroll features. Reed says only 30 percent of customers use the payroll system and that some customers say getting rid of it would simplify matters.

MYOB’s upscale range is to be renamed AccountRight and will come in four versions including a Premier edition for larger companies needing up to 50 users.

In addition to shaking-up the accounting packages, MYOB showed a free smartphone app due to be released in the second half of the year. This allows users to access data from the AccountRight software while on the move. There’s also a touchscreen Windows 8 app – that uses the Metro interface – to get at AccountRight data.

Mobile payments

Finally, the company showed off a smartphone mobile payment system that uses a hardware card reader allowing users to take card payments while on the move.

It would be almost impossible to get through two hours of presentations covering accounting software for New Zealand without mentioning Xero. MYOB showed restraint in this department – only two passing references – until New Zealand-based general manager Adam Ferguson compared prices between the two.

According to Ferguson, MYOB beats Xero pricing in each area. He says the Essentials Standard edition is $23 a month compared with $50 for the equal Xero product. He went on to make favourable price comparisons between MYOB products and Xero combined with third-party add-ons. Ferguson also says prices include unlimited telephone support.

Clean looking software

There’s also a nod towards Xero in the clean, stripped-back look of the updated MYOB screens. Ben Ross, who oversees MYOB user experience and design, says his brief was to come up with a simple, easy to use interface. Among other things, this meant removing charts from standard screens. The streamline design comes with lots of white space – all optimised for touch screens.

A remaining difference between MYOB and Xero is the need for local client apps in some cases. All processing takes place in the cloud, but while Xero and LiveAccounts live in a browser, AccountRight users still need to download software to get more functionality. 

Both MYOB and Xero are busy fighting for end-users, behind the scenes there’s another battle to win over accountants and other finance professionals who either sell or recommend software to their clients. A slice of MYOB’s presentation was given over to wooing partners with a clear message the company prefers to give them the business.

wellington cloud

Accounting software company MYOB says half of all new registrations it takes in New Zealand are for the company’s cloud products.

Chief technology officer Simon Raik-Allen says New Zealand is noticeably ahead of Australia when it comes to cloud computing. Uptake here is around 50 percent while on the other side of the Tasman around 40 percent of registrations are for cloud products.

In both cases the change has been rapid. Raik-Allen  says two years ago the numbers in both countries was around eight percent. He says compared with the rest of the world both Australia and New Zealand are enthusiastic cloud adopters.

Small business slower

There’s a marked difference between small business users and the rest of the market. Raik-Allen says: “When we surveyed ANZ about cloud, 16 percent of small business users say they use the cloud. This compares with 80 percent of users in larger companies.” There could be a perception problem here though, he says eight percent of small business users didn’t know if they were using the cloud or not.

Perhaps this isn’t so surprising. When MYOB did market research before entering the cloud market one of the most common responses from customers was that they don’t care how the accounting software is delivered so long as all the important features are available.

Raik-Allen says the spade work for business acceptance of cloud computing was done more than a decade ago when online banking was introduced. He says the banks offered easy to use sites that made people comfortable with the idea of dealing with money on a screen.

He says there’s still plenty of work to be done educating customers about the benefits of the cloud. There’s clear evidence that once companies make the move, they perform better. He says cloud users tend to have more sales in the pipeline and are more likely to see rising revenues.