Microsoft's foot in the door...
3 Nov 08
The software gian targets the smallest companies with its new accounting software
by Guy Clapperton
Microsoft Office Accounting has been part of the Microsoft Office family for about a year in the UK and it is starting to gain a foothold.
People said it wouldn’t work, people said Microsoft didn’t have the same cachet as Sage in the small business accounting systems market and to be fair, people were right about that – Sage remains far and away the market leader.
Microsoft, however, is starting to do well in specific niches. Gareth Arnold, head of the product for Microsoft in the UK, makes a valid point about targeting small businesses as your customer. The Government’s definition of a small business is anything with between one and 50 employees. “My view is that’s far too broad,” says Arnold. “The needs of the 50-person business are very different from those at the bottom end.”
Indeed – the one-man band might be a sole trader and therefore not technically an employee anyway: it all gets a bit complicated. “Having said that, the product is extremely scalable.” When a business starts to grow it does not have to junk Office Accounting. “You can easily have 20 people accessing the program at the same time.”
Nevertheless Microsoft focuses on the smaller end of the official definition of small business. There are two versions: Express, for really basic users and downloadable free, and Professional. It competes in the same sort of market as Sage Line 50, though Arnold is keen to stress that it does not work in the same way as any other accounting system on offer.
It competes with Microsoft Excel as it is designed to be used by the novice accounting system user. Microsoft wants to grow the market rather than take share from other people, it claims.
By focusing so narrowly on the smaller trader, the company can take advantage of things organisations of that size have in common – for example their intense hatred of paperwork and unwillingness to learn accountancy-speak because there is no time.
“Office Accounting integrates with [Microsoft Office] applications absolutely superbly so that a one-man band or sole trader has an unbelievable set of tools to become more productive or professional.” You can take a contact from Outlook, generate an estimate or invoice and send it straight back to the customer by e-mail through Outlook. It makes the process simpler so more small businesses will, for example, deliver an invoice on time. This takes a lot of the fiddliness away from putting a quote together so it takes less time; Arnold believes small businesses often do not give an estimate when they say they will because they are too busy doing their actual business. Make it easy to do with a touch of a button and everyone gets the estimates they need.
Other automated functions include a PayPal button on the invoice (PayPal allows payments to be made via the Internet). The customer hits the button and is taken to PayPal’s site so that they can pay on the spot.
This takes advantage of Microsoft Word’s ability to store templates and automates the whole process. “It takes literally seconds,” comments Arnold.
Another way in which the software works along the lines of a small business is by tracking bills. “A plumber goes to a supplier and finds he’s on credit stop – he doesn’t know why, but it’s because he hasn’t been able to keep track of his supplies or keep track of payments properly by hand,” says Arnold. The software contains an automated timeline with prompts to pay bills and when someone is approaching their credit limit.
None of this means accountants are frozen out. Microsoft regarded it as very important that accountants should get their own view of a client’s information, and built in accountants’ facilities.
Firms can join the Microsoft Professional Accountants Network for which they get a copy of the software, a copy of Microsoft Office Small Business Edition, support and training and a link on the Microsoft “Find a Local Accountant” tool. They can add their logo to the software’s packaging so the customer perceives it as an extra service from the accountant, and the software itself has an “accountant’s view” in which the information is reformatted for them. The user sees none of this – just a workflow that asks what they want to do, whether they want to pay a bill, issue an invoice, or receive a payment – it is all very intuitive.
Users of the system speak highly of it. Duncan Reid is managing director of Edinburgh-based IT consultancy Icelantic, and has measured a difference in the way his business performs.
Previously it would take two days to add up all the time sheets and effectively audit the company’s activities before invoicing for the month. “It takes about two hours now,” he says.
Better still, previously there were small jobs of about 15 minutes each that would not earn a great deal for the business and would therefore not be added to the timesheets, just because it was fiddly for such small amounts. Now any appointment that is added to Microsoft Outlook is sent straight to the relevant timesheet so every job is charged.
“I reckon I’m getting half an hour of chargeable time out of everybody every day, which is about £2,000 extra income per month.”