Last month Greenpeace produced their latest quarterly ‘Guide to Greener Electronics’. This makes worrying reading. According to this report the amount of electronics products discarded globally has skyrocketed, with 20-50 million tons generated every year. Apparently if this e-waste was put into containers on a train it would go once around the world.

Electronic waste (e-waste) now makes up five percent of all municipal solid waste worldwide, nearly the same amount as all plastic packaging, but it is much more hazardous. Whilst the UK press campaign for a reduction in the use of plastic bags – only a small part of packaging, the focus on technology waste is limited.

The WEEE (Waste Electrical and Electronic Initiative) became law last year to try and address this issue. However according to a survey conducted by Informatics in February only a third of SMEs had heard of WEEE. The responses suggest that many SMEs in the IT and telecoms industries may be neglecting their environmental responsibilities. The report from this work added that SMEs generate 60 per cent of all commercial waste in England and Wales so it is critical that all users of electrical equipment understand what WEEE means for them.

In March this year VNU Net reported that UK consumers and business unnecessarily junk 12.5 million computers every year which end up in landfill, or dumped in the countryside. However, one recycling charity hinted at a lack the political will to do anything about the situation. Currently one on four people dumps their PCs at the local tip. Only one in ten people give their old PC to a friend or charity.

To compound the situation research suggests that the average lifespan of computers in developed countries has dropped from six years in 1997 to just two in 2005.

WEEE may help with recycling - but it doesn't tackle the issue of the toxicity of individual computers. The Greenpeace report names and potentially shames vendors. Samsung comes out most favourably – and Nintendo is at the bottom of the list. More information at http://www.greenpeace.org/international/campaigns/toxics/electronics/how-the-companies-line-up

Gloomy – yes. However, through greater awareness, there is the opportunity for computer users to recycle equipment in an environmentally friendly way and to put pressure on vendors to ‘Green up’ their products. I would encourage FD’s and accountants to add environmental standards to their evaluation criteria when buying new equipment

The reports in the press earlier this week of the latest Blackberry ‘outage’ gives cause for concern. The outage came on the eve of three US presidential primaries, hitting politicians and those in the business community alike. Users in North America on Monday experienced delays or were unable to receive emails from around 3.30pm for a period of three/four hours. This is not the only time Blackberry users have experienced issues, the last major outage being in April last year.

Blackberry is not alone in having problems with their service delivery. Salesforce has suffered outages also in the last year – the most recent being reported on Tuesday this week. Google Mail has also attracted criticism where there have been reports of significant email delays over the last week or so.

This is likely to affect the confidence of organisations considering adopting a SAAS (Software as a Service) model for their future business applications. In the case of Blackberry you might argue that a three/four hour downtime is not that bad. However for business users who rely on Blackberries, a delay of this nature can cause serious issues.

Conventional systems where the servers are managed by the company using them are of course not without their own problems. And remote users rely on Internet access to work on any system. Accountants working with offices/companies in the Gulf Countries and India will no doubt be aware that five Internet lines went down late last month – caused it was suggested by a combination of power failure and an anchor cutting two seabed lines. Traffic using these lines was rerouted via other cables but the problem caused serious delays/performance issues whilst the lines were fixed.

Over the coming years SAAS and internet technology is likely to settle down. As more Internet lines are set up the service reliability will continue to improve. SAAS developers should be able to get their products working 100% of the time once their code base and technology architecture matures.

But we are not yet at the point that SAAS vendors offer cast iron solutions – nor where the Internet lines that they use are rock or seabed solid.

Organisations considering adopting new SAAS/mobile technology need to have adequate backup plans for outages which may involve keeping local server based systems on standby. Not helpful for those building a business case for SAAS based on reduced cost!

The web has been awash with chit chat on the bid by Agresso for CODA last week. Will it go ahead - the view seems to be yes, but at the end of the day who knows? What impact will this have on the Accounting Software Market and of course on CODA customers?

The last few years has seen a fair amount of consolidation in the Industry. Sage continues to buy up companies. Infor has made a number of acquisitions including Systems Union with the Sun Accounts and Pegasus products. Iris has acquired CS Group etc etc.

As a result a number of vendors now own several completely different Accounting Software products. Microsoft and Oracle being two examples. What are the options facing these vendors?

1. Make money out of the well established and usually profitable user bases. This is typically achieved by cutting back on R&D and staff/support costs, increasing prices and trying to sell add on products/services to the installed base. Impact on users is usually not that positive. Less new product comes out, prices can go up and service can deteriorate. Suppliers that take this approach rely on customers to be slow to switch to another vendor – as it is so much hassle and expense.

2. Try and grow each product in the stable in its own right. This is typically achieved by trying to find a niche for each application and drive new business through separate sales/marketing teams. Sage, for example, achieves product differentiation by having different applications on sale in different countries. There is limited evidence of the success of this strategy in terms of generating real growth for a particular product for a vendor. Vendors struggle to create a compelling marketing message on each of their products and can cause confusion if they offer several different products for sale. I would suggest Microsoft is an example of this. Having vendors with different products on sale in different countries carries the risk that global players will take out their market share over time – by having one product sold/used globally. Larger clients benefit from having one application in use globally. All organisations should gain from the economies of scale a vendor enjoys from developing/selling/supporting one product globally.

3. Integrate all products into a new/combined application – or move users to one of the products. Microsoft has/is trying to bring the previously named Solomon, Navision and Great Plains together. Oracle is making similar efforts with Oracle Financials, Peoplesoft and JD Edwards. Combining products creates a huge challenge as different product operate in different ways – e.g. with their GL coding structure. This is limited evidence that this approach will succeed.

The alternative of trying to get a customer to switch from one product to another is fraught with difficulty. The conversion route can be tortuous and costly – and often leads to customers looking at solutions from other vendors. Pegasus in the 1990ies tried this approach, buying up several user bases and trying to convert them to their mainstream products. They had limited success with this.

So what strategy will Agresso adopt with Coda? Cash cow seems very tempting for the CODA/Dream core ledger clients. CODA does have some tasty BI tools that they could merge into Agresso of course – which could help the Agresso client base.

I spoke today to Gareth Arnold – the UK Product Manager of Microsoft’s new entry level accounting system. He was very bullish. Since launching the product late last year they have had thousands of downloads and a real interest in their new application.

Microsoft is putting considerable effort into recruiting Accountants to Microsoft’s Professional Accountants Network. They offer free software, training and support to members of this group. In the UK they have already exceeded their recruitment targets that they hoped to reach by June this year and if the current rate of sign up continues it will not be long before they overtake Sage with numbers of accountants in their program.

With the entry level product, Accounting Express, being supplied free of charge they have an attractive offering. In terms of the potential impact on Sage Gareth says that the product is focused at organisations that are not big enough to have an employed accountant/accounting professional on board – typically with up to 25 staff. This is certainly close to the Sage 50 product range (previously called Sage Line 50) and is likely to affect future sales of this product.

At the moment Accounting Express/Professional has been focused on the UK and US markets. Compared to Intuit with QuickBooks Microsoft has some work to do to develop and supply a global product. In the long term there is the opportunity for vendors to offer one product globally – and enjoy the economies of scale that this brings. QuickBooks has made good progress in this space and Microsoft will need to thing hard about bringing out a global product if they want to really succeed.

Interestingly Microsoft has decided not to offer their product as SAAS (Software as a Service) i.e. a hosted web based solution. Some would argue that part of the reason for this is their determination to encourage users to keep their PCs/Desktops – and continue to buy software for each machine from Microsoft. However, the counter view is that web based solutions are still not being adopted that widely and accountants prefer to have their data loaded on a machine in their office – rather than an anonymous server with the obvious security concerns. I expect their decision to offer their software to run on a PC will have little impact on their sales in the next few years.

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.

Microsoft has just announced the long awaited Office Accounting. The idea took shape at Microsoft in 2001 and Microsoft has been promising its release into the UK for the last 2/3 years - and now it is here! There is a free version - Accounting Office Express and an an enhanced version - Accounting Professional - from £149.99 per user. Further users/modules are priced seperately.

So will this product take off? Early review of the product indicate some positive features - including strong integration with the core Office products. The product also has some data conversion capabilities for Sage which might attract some users to switch products

So where will this go?  Microsoft have not made a stonking success of their various products/attempts to gain a dominant position in this market over the last decade. Some may remember that Microsoft has had two entry level products in the past - Microsoft Profit and Microsoft Money. Some years ago also they tried to buy Intuit - the authors of Quickbooks. However the current pricing makes it an attractive alternative for say Sage or Quickbooks so maybe it will take off.

Sageline 50 - the dominant SME product in use in the UK, has been around for almost ever. However users often have mixed views of the ease of use/functionaility of the product. Could Microsoft take Sage head on in this space?

It is certainly worth having a look at this product if you are unhappy with your existing software - and you can download the Express version for free.