SaaSy Accounting: Online Accounting Systems are Abundant and Capable

I’ve had the privilege of helping developers of many of the mainstream accounting software products in use in the U.S. market and the opportunity to follow many more over the last 30 years.

No trend has been more fascinating than the emergence of Software as a Service (SaaS) accounting that began in the late 1990’s and has accelerated in the last three years. Products at all levels from entry level to enterprise-capable have been built by competent engineers with vision.

SaaS products run entirely in a web browser. They eliminate installation of local software, or thick clients as they are sometimes called, on the desktop. SaaS also allows upgrades in mass inside a data center. SaaS products provide simpler integration with other accounting products whether they are SaaS or desktop based. Legacy products developed using old technologies have found new life by adding SaaS and mobile modules.

This mixture of desktop and SaaS or the hybrid approach seems to solve many business issues with minimal disruption. We expect continued innovation in products using the SaaS model because it drives out so much cost on the development and support side, and also provides benefit to the end user.

The Shift

We have seen more new accounting products developed in the last three years than in the decade from 2000-2010. By latest count, there are over 25 new products, some of which are in the market, and some which will arrive in 2013 and beyond. The products are thoughtfully developed, have specific target markets, well-defined capabilities, and solve specific business problems.

Sometimes the products have been developed by well-established publishers such as Intuit or Sage, and other products have been developed by start-ups such as Monchilla or Aplos. If you believe that products that are SaaS can’t solve your client’s business issues, you may wind up being sadly mistaken.

Products that are quite robust such as SAP’s Business by Design, NetSuite, Intacct or Financial Force have high end features similar to mid-market products of the past. Entry level products such as SageOne, FreshBooks, Wave Accounting, Less Accounting, Xero, Accounting Relief, or QuickBooks Online have evolved quickly over the last two years to become much more robust than when they were first released.

My current rule is that if you have not looked at a SaaS product within the last six months, you can’t be sure of what the product looks like or what it is capable of accomplishing. The user interface on a number of these products has changed notably in the few months. Many vendors have updated their product to be more mobile or tablet friendly.

The software publishers are learning about what makes a SaaS product easy to use and what makes them more functional and faster. Usability features including colors, dashboards and quick lists are all features of the latest SaaS applications.

As an interesting example of focusing on accountant usability, Xero has the capability to generate a financial statement package as part of the base offering. QuickBooks Online has banking matching feature that allows for rapid import of electronic banking transactions.

Even traditional desktop products are now routinely hosted in cloud data centers. Products in this category include QuickBooks, Sage 50 (formerly Peachtree), Sage 100 (formerly MAS 90), Open Systems TRAVERSE, Dynamics GP and many other mid-market products. Beyond simple hosting, these publishers are routinely extending their product offerings by adding a SaaS service such as Sage Payments.

A number of these products have been mobilized by synchronizing key data into a web site and/or by creating a mobile application. Products may be extended by adding a more sophisticated capability such as Avalara AvaTax for sales tax calculation and filing or Concur Small Business for expense reporting.

Other products are extending their capabilities by offering SaaS enabled modules. For example, CYMA has an extensive Human Resources system to support their payroll processing that is web-enabled and “SaaSy.”