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Number of SMEs (millions) / # year operating (approx)
US 29.0 m / 2 years
UK 4.3 m / 3
OZ 2.0 m / 3
NZ 0.4 m / 6
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Xero and Sage – a tale of two centuries
Den Howlett | On September 26, 2013
I was unable to attend this year’s Xerocon but you can catch all the upbeat stuff over on the Xero blog. If it was anything like last year, then I can imagine it was a high energy event. Some of the numbers are staggering compared to last year.
Two day event in 2013, one of which dedicated to
partner training, one day only in 2012
500 attendees in 2013, 230 in 2012
30,000 UK paying customers, again doubling up
The company is still struggling to get the spaghetti soup of UK bankjng to play ball with automated bank feeds but that doesn’t stop Xero from trying. They need to crack that nut because those feeds represent the backbone from which customers can be (reasonably) assured their accounts are up to date. That in turn allows Xero to promote the idea of morphing accounting practices away from number crunching towards that of the trusted business advisor.
Now contrast that with Sage.
The Guardian reported that
Morgan Stanley issued an underweight rating on Sage after hearing what Xero had to say
Ouch – that’s got to hurt given that Sage remains the dominant accounting software player in the UK market by a considerable margin. Here’s what Morgan’s say:
…with 200,000 customers and expecting 80% revenue growth in 2014 (versus Sage’s expectation for 4%). It highlighted that 60% of customer wins come from incumbent accounting platforms (Sage, Intuit, etc.). This figure illustrates the risks incumbent vendors face, in our view, as cloud understanding and adoption increases in the small business customer base.
The company highlighted that a total of 1,256 accounting practices have adopted Xero in the UK. This compares to 82 practices that have adopted Sage One. This has driven customers of above 22,000 in the UK for Xero, versus the 12,000 customers Sage has reported on Sage One.
Clearly there is some clarification needed around the numbers but what interests me here is that despite Sage’s bulk, it can’t seem to build significant momentum around its own solution. Is this another case of ‘Can’t change, won’t change?’
...........
My only remaining question then is whether the huge bulk of small business that currently use either spreadsheets or something like Sage will see things the same way and be prepared to make the cost trade offs against functional need. The answer to that may well form the basis upon which vendors like Xero can accurately forecast their true market potential.
http://diginomica.com/2013/09/26/xero-sage-tale-centuries/
Den Howlett
Dennis Howlett has been taking the buyer's perspective in analysing application vendor offerings for more than 22 years following a 20 year successful career in IT and finance related roles. 'Never knowingly under opinionated,' Howlett takes strong positions in the interests of getting to the truth of what drives customer value.
