I agree that a lot of SaaS providers are cheaper than Online 50, which I have long thought is overpriced. However, as you have raised the economic argument for SaaS - interestingly I think it's the first time it's been raised here despite the fact that this community seems to spend most of its time discussing this matter - I do have a question for you in return.

The clients I see as being most likely to be suited to using SaaS are small businesses for whom I guess most accountants would traditionally recommend a spreadsheet, Sage Instant, or Quickbooks. I want to know why a client would prefer to pay £19 a month (for our sponsor Xero, as an example) in perpetuity rather than purchase a standalone product for up to £115 which they probably only need to upgrade in 3-5 years time? Even if they upgraded every year, Sage Instant is half the price of Xero.

I realise there is an argument that where clients have suspect bookkeeping skills the security blanket of 24/7 oversight of their accounts by a professional will be money well spent, but for those that are at least passably competent, I cannot see that a quarterly or annual review of an emailed backup would be vastly more expensive (if indeed it was more expensive at all).

I'm not a Sage fanboy, merely an experienced user, and my inner geek would love to embrace SaaS wholeheartedly, but I'm waiting for you, Dennis et al to convince me of the economics.

[To give a fuller answer, I also think some clients might not be very happy to have their sensitive business data stored in the cloud, even though I personally am reasonably convinced of the security issues. This has been discussed at length in previous posts so please don't bother responding to it.]

Valid points. However, I would take issue with your statement: "...The clients I see as being most likely to be suited to using SaaS are small businesses....." I don't believe that is the case at all. Sure, a number of SaaS products are aimed at the "small" business but products such as e-conomic or Twinfield  are full service systems which can do as much if not more than their onpremise equivalents.

Likewise, the " ...24/7 oversight of their accounts by a professional" need not only be directed at clients with "suspect bookkeeping skills". A canny professional can offer this as a true added value service, being able to monitor and respond to real time information and turn round management accounting information much quicker as a result. This sort of service response is what is needed in  these difficult times and can only be a major plus factor for those businesses seeking additional or ongoing bank support.

As I said above, I dont believe that the economics (no apologies for the pun!) is, or should be, the overriding consideration. The value added service offering must play a vital part.

I think in a lot of cases there are two reasons why accountants and clients don't change over to SaaS.

The first is apathy.  "This is how it's always been done" is a very sticky patch of quicksand that it takes a lot of energy and guts to climb out of.

The second is time.  So many business owners on both sides of the accounting divide are desperately busy.  They're fire-fighting.  They simply don't have the time to learn new technology.

Anyone agree/disagree?

M

After a lifetime in the software product business, I well understand the inertia which means Sage can continue to milk an increasingly frustrated customer base.  One (entirely unoriginal) solution is to offer software which both does and costs less than a full-blown accounting product.  By building new capability for the business process at the business end, and feeding good data into the advisor, the symbiotic 24/7 connection you talk about should be possible without the pain of ripping out the current infrastructure.

@Em - I have to agree, wish it weren't so, but it is.  So we have to work with the ones who can see the advantages (you could call it "having the vision", but does that sound a bit too evangelical?).  Those that try it and find it advantageous will tell others (both clients and practices) and things will gradually snowball as more come to realise the competitive disadvantage that they are at because those that have tried it are experiencing a better service while incurring lower costs, compared to traditional solutions like Sage 50 or Online 50.  This is true for both accountants and clients.

I think that most people see this change as harder than it really is.  A lot of the online systems require very little commitment of time or cost.  The commercial commitment is almost nil (for example, £12.99/mth and cancel any time) and some of the systems are so easy to get on with that there is no need at all for formal training or consultancy.  You generally get more than you expect too - for instance, we provide support via a telephone hotline, interactive help, videos and on-site visits to support practices.

Mark Davies

We often see accountants that resist SaaS come back to us after initially saying they had no interest. The reason? They lost clients who wanted to use KashFlow and wanted an accountant that is happy for them to do so. We often see customers that are faced with the choice of changing accountant or changing software. In our case, the software usually wins. And one of our existing partner accountants gets a new client. The world will change around the accountants, those that don't change with it, die.

I think the security angle is going to become crucial for this decision. I am not saying it necessarily should be, just that it will be. Whereas beckaup and security of on-premise solutions are entirely controlled by the user, cloud solutions do require trust to be invested in the on-line supplier. If North Korea can hack into the White House's computers, how safe is safe? Regards, Ian Digby

Ian - security is obviously important but has to be kept in perspective. Most of us continue to use online banking where a lack of security could result in actual monetry loss. So why should online accounting be any different.

I agree with Ian. Both backup and security are crucial factors. The business should ensure that they capture regular (weekly) backups from their cloud systems. These backups should also be readable by alternative products (either online or locally installed) to ensure that the business can easily recover their application capability.

Ian, Chris - totally agree and any decent online accounting vendor needs to provide for that.  We backup the data every 15 minutes (or 96 times a day) and provide a button within the application so that any company (or their accountant) can send themselves a complete copy of their data, as often as they want.  The data is saved in MS Excel CSV file format, which is readable by any other system.

Mark Davies