Resellers - pay attention to accounting software

The only thing more boring than accounting is accounting software. But unless you follow the industry you would be surprised to learn it is one of the most dynamic, innovative and hotly contested markets out there. 

And most importantly for resellers, the developments in cloud accounting software will play an enormously important role in determining technology strategies for SMBs. A future column will look at how this is now a reality in the SMB market, but the theory has already been proved and is most evident at the big end of town.

Cloud-based ERP systems such as NetSuite and CRM programs such as Salesforce.com use their platform-as-a-service to provide infrastructure and code for developers to build custom applications for their customers. This is nothing new – NetWorld and CloudForce have been around for several years. But these two vendors in particular are pushing the automation of business software at a snappy rate.

Witness NetSuite’s announcement of SuiteCommerce, a B2B and B2C “headless” e-commerce engine that lets developers build a “responsive design” interface that works across websites, smartphones, tablets, and in-store point-of-sale.

“You can put any ‘head’ on top of NetSuite now: you can put a retail point of sale system on it, you can put a phone on it, you can put a tablet on it, and all of those UIs come back to the same data repositories, so you can recognise the customer regardless of channel,” NetSuite CEO Zach Nelson told journalists at a lunch in Sydney in October.

Nelson promotes the advantages of building an interface directly on top of the ERP system rather than using a separate program for e-commerce that needs to be integrated into a second database in an accounting or inventory program. The breakthrough for SuiteCommerce is that developing interfaces for NetSuite no longer require specialist skills. Web developers can customise websites using standard web development tools quickly and easily.

In 2007 Kitchenware Direct was the first Australian customer of NetSuite to roll out an e-commerce site. However, at the time it was very difficult to find a company “anywhere in the world” which could customise the interface for the Australian market.

Kitchenware Direct eventually tracked down a single developer in Uruguay who could help them. (That developer grew his business alongside the development of Kitchenware Direct and eventually was acquired by NetSuite.)

Kitchenware Direct decided to create a team of developers in-house to take advantage of the NetSuite upgrade.

“The existing e-commerce platform has been fantastic for us,” says Peter Macaulay, owner of Kitchenware Direct. ”It’s easy. Any web developer with current skills can develop for NetSuite.”

Interestingly, NetSuite says its commerce business didn’t take off as rapidly in Australia because it was unable to support local payment gateways. NetSuite plugged this hole last year in a deal with Australian payment gateway SecurePay. Now the Australian market is taking up commerce-as-a-service as fast or faster than the US, Nelson says.

These comments were supported by Kitchenware Direct’s Macaulay. Macaulay told journalists he had attended online retailing conferences in the US over the past three years and had seen Australian businesses come from behind and surpass the US in their adoption of online marketing strategies.    

Goodbye integration, hello development

There’s a common theme here which has been covered in past columns. Fixing servers is gone. But integrating several line-of-business programs is also on the way out.

Companies like NetSuite are building cloud software that is complex and fully-featured enough to run a whole business by itself. At the other end of the scale, cloud programs can talk to small business cloud accounting packages such as Xero by simply copying an API key between the programs. If server maintenance has disappeared into the cloud, where’s the opportunity? 

As discussed with Office 365 or Google Apps, the commissions selling cloud software are so pitifully small that they are too paltry to build a serious business. Resellers in the apps game need to choose a vertical industry, learn the best-practice workflows and procedures based on cloud software, and then roll them out to client after client just like a batch of cookies.

NetSuite is giving resellers a different area to explore. Swapping server skills for web development may be easier than shifting to business improvement consulting. At least web development is within the technical realm and therefore more likely to be in resellers’ comfort zone.

But the interesting thing is that technical skills are not enough. Resellers still need to get close to clients and their clients’ customers to find out which user interfaces will attract the most support, loyalty, returning visitors and ultimately sales.

The web development is the easy part. Resellers will probably find it more difficult learning the online marketing, sales behaviour and design skills required to make an e-commerce site highly successful. These types of skills, which are learnt and practised in close quarters with clients, are essential to carving a niche that is profitable and yet not competitive with NetSuite’s direct sales staff.

“When a vendor has a direct sales model there can be a lot of conflict (with its channel). But we’re setting our stall out to deliver solutions to customers,” Don McLean from NetSuite developer Online One says.

By focusing the consultancy on design, Online One could differentiate its solutions to the vanilla installs offered by NetSuite’s direct sales team.

 “When we talk about e-commerce we’re talking about it in the sense of design. NetSuite don’t do any art around the service, they don’t do design.”

Online One also builds solutions specific to our market on NetSuite’s SuiteFlex platform.

“We’re becoming a provider of solutions for things that NetSuite can only do through our services and products as well,” McLean says.

Channel bookings grew 170 percent this year off “a solid base”, says Mark Troselj, NetSuite’s Asia Pacific director. Many of these were website implementations, he adds. Seven resellers have signed up this year including e-commerce specialists Blue Arc. NetSuite’s Melbourne office has grown from two to 12.

NetSuite sees the opportunity in business-to-business sites. While many companies have B2C covered, they can add more support and services and a high-quality B2B interface to attract more sales.

“B2B customers expect a B2C experience. They still want the same experience from consumer sites but with different terms, they want credit, and so on,” Nelson says. But unlike B2C, “a lot of stuff has to happen on the backend with B2B. It’s not just taking a credit card and making a one-off sale.”

For Australian resellers game enough to explore South East Asia there are plenty of opportunities for cloud-based software in general, says Troselj. One would expect emerging markets such as Vietnam, Cambodia and Thailand would not have a reliable broadband network to support using cloud software.

However, these countries also suffer from poor power supply which causes enormous headaches for large companies trying to run their own data centres. Ultimately it’s easier to outsource the data centre operations to a cloud provider such as NetSuite and spend the money on good wireless connections with reliable providers, Troselj says.

“If you have an iPad with a 4G connection from a global telco then you can be online the whole time.”

It’s also a much more predictable strategy for a multinational looking to expand into Cambodia to buy local staff 4G-connected tablets and laptops than to invest in a locally run data centre. And it’s much cheaper to use NetSuite as an exploring tool rather than roll out a full expansion of SAP for several million dollars, Troselj says.

NetSuite’s strategy in South East Asia is much more focused on using partners than going direct given the cultural, political and technological vagaries of each market. If you’re looking for a life after servers, custom web development is one avenue to keep in mind.