I retired from personal blogging in July 2008.
But you can find me over at http://blog.xero.com.
We had a bit of coverage in the paper this morning including this story on what we’re calling the Xero Network
As Ben noticed we’ve been surfacing a bit more of some functionality we’ve been wanting to do since we started Xero but we had to get most of the core accounting platform done first.
Firstly some background.
When we looked at the small business market, an observation that came through very early was that while it was massive, most of the global technology players do not sell technology solutions to small businesses.
That is because the Enterprise Sales model does not scale down to small businesses (as NetSuite is finding). Of the global tech solution giants only Microsoft appears to sell across the SMB market - primarily desktop productivity tools.
So flipping that around I believe small business has not yet had the full benefits of technology applied to them. Most tech smarts has been applied to Enterprises.
The SaaS model allows increases the viability to sell to, and support, the enormous but fragmented SMB marketplace and provides an opportunity to deliver enterprise level features to small business.
We also observed that small businesses do not do integration projects. As an example small businesses should probably have a basic CRM system but as supplier and customer data is already in their accounting system they are forced to do an integration exercise. Which of course they don’t.
So another benefit of SaaS is that we can do that integration work for them, so they don’t need to think about it. That is what we are doing with the Xero Network.
This is exciting because working with other software providers we are making things easier for small business customers - saving them time and money.
This model allows us in the SaaS industry to work together, sharing each others customers and working together to make our solutions more compelling.
Of course there is nothing new here. This is Business to Business (B2B) computing but applied so that we have host to host connectivity between our systems to that our customers don’t have to know about integration. B2B is a big part of SMB SaaS behind the scenes.
There are numerous models. All of them start to drive community effects. In our system we can do ‘Xero to Xero’ transactions, ‘Partner to Xero’ transactions and most excitingly ‘Partner to multi Xero’ transactions where a single system generates transactions on behalf of many individual users. Like in the real estate industry.
As mentioned we believe that SaaS providers should work together, so we’re including a list of partners inside our applications and will include them in our marketing programs. It will be the case that we have multiple partners doing the same things. We also know that our partners will work with multiple accounting systems so I think the best approach is be open and up front with all partners and let customers decide what combinations of solutions suit their needs.
To implement this we have developed a portal that allows our partners to get our documentation, code samples, manage their profile and most importantly test their interfaces with us. We are all busy so we wanted to make it so that we could engage pragmatically with our partners and they could be largely self sufficient (i.e. not have to wait for us).
As we are just passing around messages (which may be files or XML fragments) we can expand the services we offer through the interface quite quickly as partners think of more things we can do.
So I’m really excited about this. It’s a big step forward. I want to especially thank the team at iPayroll who we have been working closely with. They played a big role in helping us to refine our invoice message format.
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Rod,
Just another small milestone for the team - as at 12am tonight the bulk of the early Xero adopters like myself will have completed their first financial year with it. Thought you might like a users perspective on where Xero has slotted in to the business day…
Ritual 1 - Each morning. Make coffee, crank up Xero & Outlook. Transactions ex BNZ are reconciled and overnight emails checked before the coffee cup is half empty.
Ritual 2 - 1st of the month following GST period. Send an email to Gary at Prior Blackburn Ltd (Hamilton - I’m in Auckland) letting him know the GST is good to go. By lunchtime he’s gone into Xero, adjusted any cockups from my end and confirmed the damage / refund.
Over the next few months I’ll be utilising more of the features, especially the invoicing as our business model changes. Well done so far, and it’ll be interesting to see the uptake in tomorrow’s “State of the Nation” report.
Rod, have you though about the functionality that could be offered to charities and non-profit organisations from SaaS? While it’s not going to be a money spinner by any means it offers a great opportunity for SaaS companies to prove some basic concepts and not be socially responsible.
We agree. Xero is half price for charities and not for profits.
We haven’t marketed this yet but if you sign up you will see the options.
Brilliant to see this Rod,
Its all about the end customer, the small business, and with an ecosystem of applications built around core business data like contacts/customers, invoices, its going to make it a lot easier for a small medium to have a super smart platform for running and growing their business.
And all at the cost they probably currently pay to maintain there little computer network covered with package software and the maintenance issues.
Being a lean mean systemised machine is a key competitive advantage for small mediums, especially those trying to take on big opportunities with big players.
One of the problems I’m coming across in connecting to others via XML/HTTP is the stability of the interface. Too many vendors steam ahead and make interfaces obsolete faster than the others can follow. I’ve just got off the phone with a very frustrated customer from UK who spent enormous amount of money trying to integrate my interface with an MIS package they have in house.
Well, they updated it a few days ago just to find out the new MIS interface is incompatible and they have to start from scratch. They probably won’t and I’m going to look bad even if it’s not my fault.
Not the first time. I had to bail out of another integration project early on.