"Accounting software ecosystems.”

It’s a term you’ve likely been hearing a lot as software vendors increasingly work to build coalitions of developers to provide add-ons to their core packages.

But exactly what are these ecosystems? How do they work? And, perhaps more important, how can your firm profit from them?

One way to look at them is as an integrated suite of best-of-breed products — with the keyword being “integrated.” The reality is that an online accounting software solution often won’t be able to meet the needs of all types of firms and their small-business clients, and this can be especially true for those serving specific verticals or niches. For example, gaps may exist within a platform for scheduling or payroll, or perhaps there’s functionality within the software that could be improved upon. To deliver a robust solution that can, in fact, be all things to all people, vendors are fostering “ecosystems” of developers to create add-ons that integrate with their core packages.

“For years, it has always been, ‘Do you want a best-of-breed product? So, you choose the best product for the firm in each category. Or do you want a suite of products, where it is all from one vendor and you take advantage of working with one vendor?’ It has been that way for many, many years,” said Ray Barlow, vice president of accountant solutions at Sage North America. “As the cloud evolved and cloud accounting became more and more popular, now we have this capability of integrating in the cloud this platform. … With that comes this huge ecosystem of existing partners that do specific things that help accountants or small businesses do their job faster, better, quicker.”

Added James Maiocco, general manager of business and corporate development for cloud accounting platform Xero, “When you look at the market in a variety of different industries, most industries tend to be fairly vertical in nature but accounting has always been horizontal because everybody has finances and everybody has payroll, etc. So, the desire behind an ecosystem — regardless of whether it is Xero or any of our other competitors — is to really help to meet the needs of a customer because customers have unique needs in a variety of different industries or trades.”

 

EASY ENTRY

How do these ecosystems work? The good news is that they are designed to be pretty easy.

In some cases, the integration already exists within a solution, enabling you to easily link right there online with that accounting solution you are using and automatically pull that data into the application. In other cases, it may take a little more set-up.

For example, Intacct customers who wish to install the Intacct-Salesforce Connect app, which is one of many apps found on the Intacct Marketplace, can do so in just a few clicks. The Intacct-Salesforce Connector, which links the cloud accounting solution with the cloud CRM solution, was pre-built on the Salesforce.com platform and, according to the vendor, there’s no need for expensive third-party integration, IT support or custom consulting. With Intacct-Salesforce Connect, a firm’s sales team can turn quotes into orders with a single click, verify pricing in real time, and more — all without leaving the CRM solution. With Salesforce integration, both Intacct and Salesforce CRM are always up to date with the latest information, including product and price lists.

Intacct-Salesforce Connect is among a handful of add-on modules and connectors built by the Intacct development team to extend core Intacct functionality. The Intacct Marketplace also features direct integrations built by Marketplace partners leveraging Web services to connect their solutions to Intacct, add-on solutions built by Intacct partners leveraging the Intacct platform, and third-party connectors.

“Once a CPA firm discovers a solution that is relevant to their business, typically the Marketplace will provide some good information to get them started. There will be some automated ways to connect with the vendor to get the conversation going,” said Aaron Harris, chief technology officer for Intacct. “In most cases, the integration is pre-packaged, so there’s little work to do to get integrated with Intacct.”

David Leary, senior developer evangelist for the Intuit Developer Group, said that for an accountant or small-business owner adding an app to QuickBooks Online, the experience is similar to clicking a “connect to Facebook” button, which then grants that app permission to access your Facebook data.

“App developers can put a button inside their app that says, ‘Connect to QuickBooks.’ And then you can click that to give that app permission to access your QuickBooks data,” said Leary. “Essentially, that is the experience for the accountant.”

For the last few years, Intuit has been hard at work attracting third-party software developers and ramping up its QuickBooks Online ecosystem to help small businesses. Today, there are more than 300 apps that can be integrated with QuickBooks Online available on Apps.com.

One such app on Apps.com is Expensify, which syncs directly to QuickBooks Online. Expensify’s mobile app lets employees use their phones to photograph and code receipts. Next, the SmartScan feature transforms those receipts to expenses. After review, transactions are exported to QuickBooks. After export, expenses post against a user’s employee or vendor record in QuickBooks, while company card transactions are booked to their corresponding credit card liability account.

“Overall, [developers have all] really, in my opinion, done a pretty good job of allowing someone to quickly integrate their accounting solution into whatever application they want to use,” said Barlow of Sage. “There are some pretty slick interfaces out there.”

At Sage, the vendor is demolishing the walls between the front office and the back office with Sage Live. Sage Live, which is a business and accounting app on the Salesforce1 platform, allows you to connect CRM, accounting and financial data to have “one office.” Built to scale with a business, Sage Live works with thousands of third-party apps through real-time integrations and APIs, powered by the Salesforce1 cloud platform.

Sage Live is available on the Salesforce App­Exchange, an apps marketplace with more than 2,800 partner apps and more than 3 million customer installs.

 

ECOSYSTEMS = OPPORTUNITY

As many firms are discovering, eliminating silos of data via an integrated accounting software ecosystem not only enhances efficiencies but also unlocks additional opportunities. This is especially true for those serving specialty niches.

“We think that in this current generation of technology, there’s just much more available to companies to completely automate even the most unique requirements that they have,” said Intacct’s Harris.

Seeing the benefits firsthand is Houston-based AcctTwo, a cloud-based accounting technology and outsourcing firm and Intacct value-added reseller. “We have dozens of faith-based clients — both churches and faith-based ministry organizations. They have very specific needs, and the ecosystem of products has allowed us to identify the best solutions that solve their specific issues around credit card reconciliation, budgeting and tithing. This is just one example of how the ecosystem has allowed us to tailor solutions to meet the needs of a specific industry. That same configurability also means we can offer the best solution to businesses or nonprofits that are in new industries where we haven’t had a lot of experience, so it’s a win-win for us,” said Peter Wagner, director of marketing at AcctTwo.

Also reaping the benefits is Dallas-based BTerrell Group, which is an Intacct VAR and Marketplace partner. “Our firm has added additional sources of recurring Software-as-a-Service revenue from automations that we’ve created to extend Intacct functionality, automate business processes, or connect to other best-in-class Web applications,” said managing partner Brian Terrell. “In addition, we create product suites benefitting specific industries to add focus to our marketing efforts. Finally, because we work with other Intacct business partners, we see opportunities we might otherwise not, which provides us with additional business experience and product knowledge.”

Echoing the sentiment, Craig West, vice president of channel sales at NetSuite, a provider of cloud-based business management software, said, “From our perspective, probably the greatest revenue opportunity for them would be around delivering end-to-end ERP services to their customers. … Where that
really starts to get even [greater scale] is when we combine the two elements of the platform, the [Suite Developer Network] element and the implementation element to get into productizing their IP … to then leverage not just ‘NetSuite the technology’ to deliver a business system but ‘NetSuite the platform’ to deliver a very industry-specific business system.”

Menlo Park, Calif.-based Redmond Accounting is leveraging Intuit’s QuickBooks Online ecosystem to serve as the outsourced accounting department for many of its clients. “The app ecosystem just opens up so many niches for accountants or accounting tech people. … For us, we were picking the [apps] and becoming experts and becoming certified and writing out our standard workflow for the apps that made the most sense for when you are acting like an accounting department,” said Laura Redmond, founder of Redmond Accounting, which uses such apps as Bill.com, Expensify and Hubdoc that integrate with QuickBooks Online.

For those eyeing a niche, Xero user Cristina Garza, “chief number cruncher” for Denver-based Accountingprose and CannaComply, suggests looking at your current client list to uncover potential verticals you may already be serving, and then identifying the challenges you’d like to solve. Also, be sure not to underestimate the power of industry conferences and talking with vendors.

 

A MUST FOR THE FUTURE

Dawn Brolin of Windham, Conn.-based Powerful Accounting not only believes that accounting software ecosystems represent significant opportunity for firms but goes as far as to say that every firm of the future must employ a director of application implementation. In fact, in January the firm hired such a person to focus on sharing the QuickBooks Online ecosystem with the firm’s client base.

“Her whole goal is to learn the application. So, she has to be certified in the application. … She has to know how to sync, which is fairly simple, QuickBooks files with these applications,” said Brolin. “Her job is to understand the applications and the ecosystem and how they are going to integrate based on a client survey. So, our director of application implementation has to understand the main pain points of the client, and then help set up the ecosystem based on those pain points. She then implements and coordinates between the applications and the client.”

Accounting software ecosystems may have shifted into high gear, but it’s important to remember that the industry is still evolving.

“There are many firms that used to have sort of a best-of-breed perspective on the applications that they work with, so they had many applications that weren’t integrated and they managed,” said John Barnes, director of workflow solutions for Wolters Kluwer Tax & Accounting. “I think what’s happening now, and you’re seeing it across the industry, is that more and more firms are looking for the ability to get a core set of applications or modules that are already integrated, and they are just looking for the additional adjunct pieces to be integrated to that. I think it is going to continue to evolve.”

Through its Open Integration Platform, Wolters Kluwer provides the ability for third-parties (both vendors and customers) to build integrations into CCH Axcess products. This could include integration with common data as well as services specific to products, such as accessing files in CCH Axcess Document.

“The future is even more apps,” added Barlow. “The app culture is here to stay. It’s going to get even more popular as more and more people begin to look at delivering products that solve a problem and fit into the overall ecosystem.”