Will the force be with new online software?

Is the latest entrant to the online accounting market a “waste of money” or just what the industry has been waiting for to push the boundaries of financial software?

Last week it emerged that salesforce.com and Unit 4 Agresso would merge their technologies to create FinancialForce.com ­ a new internet, or cloud, accounting software product.

The move is significant because salesforce.com is widely regarded as having transformed the customer relationship management (CRM) software market by lifting the proportion of users from 5% of the business world to more than 30% in just eight years.

One expert observer believes the company’s intervention is “great news” for the industry ­ not least because salesforce has huge financial clout compared to other players in the accounting software market.

Salesforce.com posted revenues of $316m (£199m) in the third quarter of 2009 and has a current market cap of $8bn. Aggresso recently posted revenues of around $275m.

NetSuite, their biggest accounting software rivals, has revenues of $41.6m, though that is rising fast. And Competitors say salesforce.com is joining the accounting software market too late.

Craig Sullivan, vice president of international products at NetSuite, believes salesforce is “late to the game”. He said: “They have cobbled together a disparate solution but NetSuite is available out of the box. In that regard it’s an incomplete solution, low-end and not competitive to NetSuite.”

But Dennis Keeling, founder of Business Application Software Developers Association, believes this is “exactly the right time” to enter the sector as it starts to pick up. “It will rejuvenate the market,” he said.

Strategically, many believe that accountants won’t buy into online software because of the security risks involved. But Bruce Francis, vice president of corporate strategy at salesforce.com, is bullish and stressed that there was “unmet” demand in the market.