Many Accountancy Age readers will know of Paul as a past President of the ICAEW. So it was of interest when speaking to him last Friday that he informed me that he has become Executive Chairman of Rugged Logic - a developer of forecasting software for accountants. Paul has been involved with Rugged Logic for some time. However following a reorganisation he has taken on an executive role and is in the process of carrying out some restructuring work on the company. In a previous life ran Druckman IT - a provider of accounting software.

Rugged Logic has been around since 2003 and its technology has been developed around Microsoft Excel. Industry sources suggest that Rugged Logic has had a tough time getting their business off the ground and it will be interesting to see how it is reshaped under Paul’s leadership.

Accountants may wonder why it is necessary to buy a third party tool for forecasting. Most accounting applications offer a capability for forecasting and there have been a number of vendors supplying forecasting tools for 20 plus years. I suspect part of the reason for this is that when forecasting becomes complex IT tools can make the forecasting process more rather than less complex. Excel offers a basic structure but out of the box needs a lot of work to create a robust, easy to use forecasting application. The challenge for a vendor is how to create a sophisticated, yet easy to use application for this sort of requirement. The challenge for a user is how to ensure they get trained properly on the tool and subsequently manage the deployment, often to a large number of employees. Sadly in the past this has been something that many (most?) organisations struggle with.

To get IT right it is of course important that you have the right tool for the job. However the success of most projects depends on an organisations ability to manage change. More on this subject in future postings

Readers of Accountancy Age may be aware of a US vendor called NetSuite – who has developed an Accounting/Business/CRM software solution. The product is written as a hosted or SAAS (Software As A Service) application – and is accessed via the Internet. The company is backed by Larry Ellison, founder of Oracle

They are currently in the process of floating the company and yesterday (5^th December 2007) released a mass of data with pre-float information. In the 9 months to Sept 2007 they reported revenues of $76.8m and losses of $20.6m. Formed in 1998 it has taken the company some time to reach these figures – but they now have c. 5,400 active clients. Out of interest this compares with Salesforce.com ( CRM SAAS vendor) who has c. 38,100 customers and was formed in 1999. Salesforce sales revenue for the fiscal year ending Jan 2007 was $497m.

In terms of the potential value of NetSuite on float it is likely to be in the range $773 to $952m. Not bad for a loss making company and reminiscent of the Dot Com boom at the turn of this century. Time will tell whether investors will get a good return on this investment.

So will NetSuite make it in the accounting software market? The bulk of the $76.8m revenue reported above comes from the Americas region ($63.4m or 82%) so the pickup in the rest of the world including the UK is slower. Certainly the marketing resource applied to the UK has been limited which may have impacted the level of new business. Also UK companies may be slower to adopt SAAS compared to US organisations. SAP has launched its mid-market SAAS solution and is planning to invest heavily in its product so is likely to give NetSuite a run for their money.

Will Sage or Microsoft push against this one wonders? US software vendors in the past have often focused their effort on their local market and countries like the UK has been on the edge of their radar screen. If NetSuite/SAP/Microsoft wants to make it big time in the mid-market they will need to have a truly global offering – with appropriate marketing and support in the UK. There are too many vendors chasing the Accounting Software space. Will some of the smaller players be pushed out? This in part depends on the frequency with which people change their accounting system. Many users keep their system for 5 plus years and so it will take some time for the smaller vendors to lose their client bases. Or will SAAS/ the newer vendors offer a compelling reason for an organisation to change sooner? I haven’t seen a killer argument for accounting software to date.

Web sites are buzzing with information on the new Microsoft Accounting Software.

One challenge for all the entry level vendors is their ability to price and deliver adequate support to their user base. Even though Microsoft’s latest entry level offering is free, users may well struggle to get the software up and running without some face to face training – which can cost several hundred pounds a day. There is a UK discussion forum on the Microsoft site which includes questions about VAT handling which highlights this problem.. More information at

http://www.microsoft.com/office/community/en-us/default.mspx

Most accountants will agree that regardless of the tool, users need a reasonable level of accounting skills to use any product. Many small charities do not have these and rely on helplines to slowly work their way through the problem. Helplines cost money to staff and charities ultimately have to pay for this. For an entry level system to really take off this issue needs to be addressed. It will be interesting to see whether Microsoft develop a new approach to this that might work – for example via interactive training/support. If they can tackle this they may make it in the entry level accounting software space.