Consolidation has begun!

Stuart McLeodCEO & Co-Founder, Karbon

The Australian accounting landscape has changed quite dramatically today with the purchase of Reckon’s Accountant’s business (the software known as APS, primarily) by MYOB. There’s quite a bit to go through with this, so I’ll give it a go.

Firstly, there are a few large practice management systems, predominantly tax-originated systems, available to Australian accountants and quite a number of smaller solutions. Sage’s HandisoftAPSMYOB’s Accountants Enterprise have been battling it out for years. The Reckon business has been struggling to make the transition to the cloud, and since losing the rights to sell Quickbooks to the Australian market, has been going backward, with Xero being the main beneficiary. Their APS business has been the mainstay of the annual distribution to their dividend-hungry shareholders.

APS had successfully built a business against its competitors because it was a superior product and offered better service to MYOB’s AE. There can only be one thing in play here for MYOB, which is to hang on to the revenue for as long as it possibly can. I can’t imagine there is any appetite to develop two enterprise-style practice management systems inside one company. I’m sure there will be a sunset date announced over the next year or two. And even if they wanted to migrate, there’s no easy, or even complicated technology between the two systems that will facilitate this and encourage current APS users over to AE.

All this amounts to 3,000 firms going into a practice management system review process over the next three years or so. The business for consultants in the space, such as our friends Alan Fitzgerald over at PracticeConnections and Dyean Moodley at DEVTHA Consulting, just got very busy. Having said all that, the challenge is certainly there for MYOB to really step up and support their new found customer base with love and attention and a great product migration strategy.

I suspect there’s going to be further consolidation. There are some excellent applications in the Superannuation industry such as Class Super, document management products like HowNow and tax products, such as the superb product that Anthony Migliardi and his team at Xero have produced, that bring us back to a best-of-breed situation again. Just like in the small business arena where eco-system applications have thrived, we’re going to see the same in the practice management space very soon.

The integrations team is going to be busy!

Exciting times.

Stuart McLeod
CEO & Co-Founder, Karbon

Stuart started his first business 11 years ago and has had many successful ventures, including Paycycle, founded in 2009, which he sold to Xero in 2011. He then built the global Xero Payroll team that delivers payroll software across the US, AU, UK and NZ markets. Stuart is now paving the way for smarter tools to improve how knowledge workers collaborate with their colleagues and look after their clients.

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