The eBay Effect

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At a service auction held by a nonprofit group in North Jersey, one of the organization’s members offered to teach participants how to bid on eBay. The session sold out. He offered another, which also promptly sold out.

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If he had more time, a third session probably would have sold out. And it’s episodes such as this that demonstrate how average people are becoming used to eCommerce via both eBay and Amazon.com.

Small wonder that there is a growing suspicion that online business applications have a more promising future. It’s not a landslide, but consumers and businesses are getting more used to using services on the Web, and companies like NetSuite are benefiting from this comfort level.

NetSuite isn’t exactly a mammoth company. It had just under $20 million in revenue for 2003 and the company recently increased projections for 2004 from $40 million to $50 million, based on first quarter results. By comparison, Microsoft Business Solutions in a tough March quarter had revenue of $153 million. There’s a gap to be crossed before we declare online accounting the wave of the future. It’s more a cultural gap than a technology gap, because it’s hard to accept many of the reasons people don’t use financial applications online. These same business people place their money in banks, without worrying too much about hacked computer system. I always ask, “Do you think there’s a box at the bank labeled, ‘Bob’s money?’” It’s all data. The same firms hand off their payroll data via fax and phone to companies such as ADP and Paychex. They think nothing of using an ATM to get cash, relying on the systems to keep balances correct and sort out errors. And as to the old, “The telephone line might go down,” I reply, “Which fails more often, your desktop computer or your telephone carrier?” No, given the chance for viruses, and accidental or deliberate destruction of data, I maintain that a person or business’s data is nowhere in more danger than its own hands.

Some friends with a lot of knowledge still argue that putting accounting applications on the Web is riskier. Perhaps. But as applications coalesce into systems that include CRM, HR, payroll, and accounting, the arguments for remote access with secure back-up grow. Online has a lot to recommend in terms of ease of use and updating all these.

It’s not just NetSuite moving into this market. SAP has held from the first that its BusinessOne application isn’t an accounting application coupled with a CRM package. It’s one code base. Similarly, Exact Software has its online system, eSynergy, with CRM, HR, and payroll features, and it plans to move its Macola ES financial system to the same online code base.

It’s still early in the game. The $1 billion in revenue at Best Software coupled with the $650 million in trailing 12-month revenue for MBS account for a substantial part of the financial business in the mid-market.

But bit by bit, online is becoming a little more familiar, a little more of a choice that looks safe. And the more businesspeople use applications such as eBay and Amazon.com in their own lives, the more they will find it easier to make the move.

 

**Need Insights?**
Editor Robert Scott also writes “Consulting Insights,” a free, twice-monthly electronic newsletter that addresses issues concerning the consulting and reselling market. It’s insight with an attitude. If you want to subscribe, put the following in your browser address line:
subscribe.webcpa.com. You can also visit us at
www.accountingtechnology.com

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