CCH CEO claims rivals focussed on clients, not accountants

Cloud accounting program iBizz delayed by several months, writes analyst Ben Kepes.

Hot on the heels of the CCH acquisition of Acclipse and its practice management and client side accounting solutions, I sat down with CCH CEO Russell Evans to take a deep dive into where the industry is in general and CCH in particular. The space is a storm of innovation right now – Xero is building a practice management offering, helped along by its very recent acquisition of SpotLight Workpapers. CCH’s buyout of Acclipse indicates its desire to increase its portfolio of software for accounting firms.

Evans was quick to point out that CCH was a company 100 percent focused on servicing accounting practices. This was in contrast with other companies in the space such as Xero and MYOB which were primarily focused on selling accounting software to SMEs, the accountants’ clients.

While not wanting to talk about specific competitors, Evans said customers had told him they felt other vendors delivered a conflicted story. MYOB and Xero claimed cost benefits for clients and reduced spending on accountants, but this put them in competition with the accounting partners they used as a channel. And the new breed of software didn’t solve SMB problems, Evans said.

CCH is integrating its regulations and tax policy products with Acclipse’s upcoming cloud accounting program iBizz to enhance accountants’ ability to compete in difficult times. CCH will soon deliver tax-effective accounting where tax changes by regulators flowed directly through to the practice management product, Evans said.

A practitioner could set up an entity within iBizz and have the latest regulations and tax optimisation approaches delivered within the software. By contrast, other vendors simply directed practitioners to the relevant tax department website, which was an inefficient approach, Evans said.

 

iBizz launch delayed “by several months”

Evans spoke about the cloud accounting program iBizz which Acclipse has been developing. Readers will remember that this software was aimed at businesses and was to be deeply integrated with financial data services company Banklink, which provides bank feeds in Australia and New Zealand. iBizz was due this month but Evans told me the launch is still a couple of months away.

I questioned Evans on the fact that iBizz is, at this stage, little more than an announced product with nothing substantive to show. His response was that CCH was very anal when it comes to acquisitions and that it had spent three months going through the Acclipse product line, including iBizz, to ensure that it was robust. He also noted that BankLink, the integration partner for iBizz, had built an impressive reputation with accountants and that its reputation would carry iBizz through.

While the exact pricing of iBizz was still up in the air, Evans confirmed it would be competitively priced.

Evans also reflected on varying approaches towards bank integration. Xero has relied on US financial data services giant Yodlee to provide bank feeds from Australian and overseas financial institutions. Evans questioned the robustness of this approach as the screen-scraping methods used by Yodlee to gather transaction details from internet banking accounts has been suggested to be a breach of a customer’s banking terms and conditions.

As an aside I questioned Evans on a potential acquisition of BankLink by CCH. Evans reiterated that BankLink is a great product that CCH is very interested in.

 

Impact of Xero’s free practice-management approach

I then spoke to Evans about the price pressure that practice management vendors would start to feel as Xero’s free offering gains traction. Integrations between CCH’s other products (workpapers, regulations, etc.) would drive enough value as to make the cost of practice management a secondary concern, Evans said.

Accountants were more interested in value than cost savings, Evans said. iFirm delivered the broad range of functionality a practice required and WorkFlowMax (Xero’s practice management solution) did not, he said.

I questioned him on a couple of other vendors in the space, Reckon and MYOB. Reckon does a great job at the higher end of the market with the larger accounting firms but that they were suffering the pain that legacy vendors feel when trying to move to the cloud, Evans said.

Evans pointed out that MYOB CEO Tim Reed was a canny operator, and that owner Bain capital has not yet had an investment go bad. However, Evans acknowledged the extreme pain that MYOB was going through now as it attempted to re-engineer itself.

CCH’s parent company, Wolters Kluwer, also owned European mid-market accounting solution Twinfield. I quizzed Evans about the potential to expand Twinfield’s base into the Asia Pacific market, and correspondingly to expand Acclipse products elsewhere. This is something that CCH are actively looking at and I got the distinct impression that we’ll see iFirm expand into other countries very soon.

We then talked about another leg of practice management, document and general content management. I noted that Reckon have recently acquired Linden House Software, a UK based content management vendor.

While not giving anything away, Evans totally agreed that content management was a very important area and one that was sensitive for accountants. He explained their desire to have a solution that gave them control of where their data was located, a veiled reference perhaps to the fact that Xero was planning to integrate (via WorkFlowMax) with content management vendor Box, which stores data in the US.

 

Summary

Right now the market is strongly polarized. Xero, which gives practice management software away for free as a channel strategy to help accountants sell software to end users, can be contrasted from the other vendors who sell practice management solutions and, in the case of CCH/Acclipse, will have a very cheap client-side solution that sits alongside a strong bank integration platform.

Xero’s take on this is that they’re disrupting the marketplace, a claim which has a lot of merit. Sholto covered this approach and strategy over here. While their solution is still a little patchy, they’re working hard to build it out.

CCH/Acclipse would counter that Xero’s solution is lightweight and that accountants feel threatened by Xero’s client side solution which is pitching (at least in part) directly to end customers. What is sure is that this space is incredibly interesting and getting more so by the day.

 

Bio and disclosures: Ben Kepes is a technology analyst and commentator who advises a number of technology organisations across the globe. He has consulted for MYOB and Xero and is an investor and director of Connect2Field which is 30 percent owned by Reckon. Ben is co-founder of LiveMigrate which provides migration services from desktop accounting software to Xero. He is also an adviser to many companies (either formally or informally) in the accounting software ecosystem. Ben’s writing can be seen at www.diversity.net.nz and he can be followed on Twitter @benkepes

 

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This post has been written by a guest writer and/or reposted at the invitation of BoxFreeIT.

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