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Software giants tipped to make new ‘land grab’ in 2018

Software giants tipped to make new ‘land grab’ in 2018

Microbusiness is tipped to be a battleground for the major accounting software providers in 2018, with some big names already making moves to secure their stake in the gig economy.

Technology Katarina Taurian 11 January 2018
— 2 minute read

Director of partnerships at GovernRight, Matt Paff, predicts that 2018 will see a significantly increased focus on microbusiness and the gig economy by software providers servicing the Australian market, and he thinks Xero is in the driver’s seat to win market share.

“The small business market is one massive opportunity, but the self-employed market is growing exponentially. They become effectively the extended market. The person who puts their bedroom up on Airbnb. The person who is an Uber driver part-time when they're driving home from work. They are getting paid through some form of accounting technology,” Mr Paff told Accountants Daily.

“I think the big boys are going to wake up and say, ‘Well hang on. There's a huge opportunity to grab that land,’” Mr Paff said.

The potential of the gig economy is not lost on Xero and national partner director, Rob Stone, said the software company will have a defined focus in 2018 on servicing microbusinesses.

“I have a big focus on how I can support microbusinesses who are accountants and bookkeepers around Australia. So I’d love for 2018 to be almost known as the year of the small firm,” Mr Stone told Accountants Daily.

“We are definitely seeing that trend of more sole practitioners going out on their own,” he added. “There is a trend in the Australian economy where there’s an increase in the gig economy and an increase in people side hustling.”

Mr Paff is not alone in his views. Former Sage director of accountants, Michael Smith, similarly predicted this would be a year that the “microservices” market was tackled in a big way.

“I don’t think the future is in big heavyweight solutions. I think the future is in the smaller ones, with a high degree of artificial intelligence involvement,” he told Accountants Daily in mid-2017.

Companies like Reckon are already refocusing their efforts towards microbusiness, particularly in light of selling its accountants practice management division to MYOB, which is set to be finalised in the first quarter of this year.

Others, like NSW-based Invoices To Go have enjoyed steep growth by focusing on sole traders, now providing services in some form to about 250,000 businesses globally.

A telling indication of the rise and future of microbusiness also lies in Australian think tank The Grattan Institute’s most recent recommendations to federal government on the matter.

The Institute called on the government to adjust workplace and taxation laws to ensure that gig economy workers are appropriately protected, regulated and taxed.

“The prize for getting this new online economy right is large and governments should not try to slow its growth in order to protect vested interests,” said Grattan productivity program director Jim Minifie.

The shift in the marketplace also creates an avenue for the bigger software players to go direct to consumer, Mr Paff said.

“I think it’s going to be a big market grab with the shift to micro business… which is especially taking accounting technology to the consumer. I think what we’re starting to see is a big evolution of attracting the consumer base accounting technology.”

For Xero, Mr Stone said its focus in that respect remains on partners, which range from sole practitioners up to the big four.

“We call them partners for a reason, we see it as a partnership. We are not trying to disintermediate partners working with those clients — that approach hasn’t changed to what we have been doing to date,” Mr Stone said.

 

Software giants tipped to make new ‘land grab’ in 2018
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