From its inception in 2000, AccountingWEB's IT Zone tracked the evolution of cloud computing, starting with an introductory guide that summer to accountancy's application service providers. It was another four years until the phrase software as a service made its first appearance on the site.
What was clear during this period was that while Salesforce.com and others were making in-roads into the CRM and HR, accountants were reluctant to let their ledgers out of their sight. The 2001 dotcom bust appeared to confirm the sceptics' worst assumptions and in the autumn of 2002, 88% of respondents to an online AccountingWEB survey said they were unlikely to rent applications over the web within the next 12 months.
Hosted services operator IT Inside Out is credited with reviving internet accounting in 2003 by introducing a Sage-approved hosted version of the popular Line 50 application called Online<>50. After signing up nearly 100 accountancy firms, Online<>50 found that Sage wanted to change the licencing arrangements and introduce its own hosted application. This initiative has not been a spectacular success.
The November 2005 debate about whether software as a service gave power to the user lined up new wave evangelists such as Online<>50's Rob Lambden, Twinfield's UK representative David Terrar and Astute Software founder Ian Skinner against Sage's UK managing director Paul Stobart.
Skinner quipped that it was time the industry stopped selling software as though it were vintage port - "the older it is and sweeter it is, the more expensive it is" - and others questioned whether desktop and client/server software suppliers could wean themselves off their licence-based revenue models.
"We haven't got to where we are today without being close to the market and what's going on," countered an irked Paul Stobart. "The proof of the pudding will be in the eating over the next few years. ASP/on-demand/SaaS is really a red herring to what's really going on. Customers want to have more choice about how they buy and pay IT services and software.
"I don't see our business model changing overnight. What I do think is customers will choose to have some software deployed locally and some available via hosted services. And others will remain traditional and have their own IT departments... I don't think the battleground will be fought on whether your software is available as a service or as a client/server program, but on who's got the best service, the best brand, the best channel to market and the best customer base. It's still the same old imperatives, just the technolgy has changed."
By 2007, the buzz was building around SaaS, mainly stoked by bloggers such as Terrar and Dennis Howlett. In AccountingWEB's preview of technology trends for the year, I highlighted the emerging trend, but commented: "The ratio of smoke - no doubt reflected by a few backstage mirrors - is still disproportionate to the fire of serious implementation, but we have moved from the novelty phase to a place where companies are beginning to seriously weigh up the advantages of local installations versus services hosted in the internet cloud."
That year was indeed a turning point. The summer's Software Satisfaction Awards online poll showed that 7.75% of the accounting and finance respondents were running SaaS applications. A year later, the proportion climbed to just under 10% - a 30% year-on-year increase.
During 2008, two parallel developments added to online accounting's momentum in the UK. With new entrants to the market arriving on a weekly basis, Xero and e-conomic brought more sophisticated, accountant-friendly features to British accountants in what was termed (to the irritation of the established players) internet accounting's second coming.
Within a matter of weeks, AccountingWEB was documenting a third wave - the appearance of ERP as a service systems from the likes of NetSuite, Mamut and Workday. Where these suppliers adopted the integrated suite approach, Salesforce.com's application platform Force.com was encouraging companies such as CODA to develop best of breed Cloud applications that would interoperate with other Force.com hosted programs.
Further validation of the SaaS model arrived in the 2008 Software Satisfaction Awards which were dominated by relatively young online service providers such as KashFlow, NetSuite and Really Simple Systems. In spite of the darkening economic climate, NetSuite's vice president for international products, Craig Sullivan, argued that the time had come for cloud computing to show what it was about.
"With the economic downturn businesses are looking for ways to cut costs, increase efficiency and increase their ability to achieve customer satisfaction. Our message to finance directors is that software as a service - and particularly our business suite approach - will save you money," he said.
With CRM and HR managers convinced of the benefits, the focus of the industry's attention will be on finance for the year ahead, with providers pushing hard to find the killer applications and clinching arguments to overcome the accountants' qualms.
Earlier in 2008, Richard Messik of accountants Vantis, who has been involved with the pioneering Easycounting online system since 2000, offered his perspective on where the profession stood in relation to cloud computing. "There's no question that getting accountants on board has been a hurdle. But everyone is going to have to file Self Assessment and VAT online - in this day and age, everything is net-based, so it's time has got to come," he said.
Further information on accounting in the Cloud is available in the following AccountingWEB.co.uk articles:
Internet accounting - the 2008 SaaS round-up
Small business accounting software resources - online options
Online accounting systems assessed
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