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Get in the cloud or risk the boot: Xero preaches to the choir

Xero warned partners at its annual conference today they risked being dumped by clients if they didn’t get on board with the cloud.

It’s a logical thing for a cloud accounting software on a global domination mission to say and the company’s sales GM Amanda Armstrong acknowledged it was preaching to the converted, but there was substance to her message.

The latest annual Good, Bad, Ugly report from CCH Business Fitness showed revenue in the sector had been dropping since 2011, falling another eight percent from 2012 to 2013, with client base decreases of up to seven percent a fall in the number of clients per partner of seven percent. But there was an opportunity to provide value added financial services and advice around business growth and succession planning for an emerging generation of decision makers that were more tech savvy, Armstrong said.

She added about 35 percent of members of the New Zealand Institute of Chartered Accountants were aged over 50.

“That means there’ll be a mass exodus of partners in the next five to ten years and currently 60 percent of firms don’t have a plan to deal with that,” Armstrong said. “The next wave of decision makers will be way more tech savvy and want to use the cloud. Are you and your firm prepared for this?”

She cited research by CCH iFirm in Australia that showed 81 percent of small business owners hadn’t adopted cloud computing, along with 77 percent of accountants. But about 60 percent said they would likely shift to the cloud and that proportion was even bigger among accountants and owners aged 18-34.

“We’re seeing an emerging generation gap, it’s the younger accountants and small business owners who have the largest uptake of cloud accounting services,” Armstrong said. “Seventy-two percent of owners aged 17-34 indicate a willingness to offload accountants who are reluctant to embrace the cloud.”

That made cloud adoption a matter of urgency, she said. “Things are speeding up and compounding. If you think you can worry about it in three to five years’ time, you can’t or you’ll be left behind.”

The company’s own domestic growth was also speeding up, off the back of expansion among newly-established firms. Its local partner base now numbers more than 2500, with more than 40 partner applications coming in each month.

The number of new companies, or ‘starter’ partners, had grown to 672, with a 20 percent lift in the next tier up, silver partners.

“These are brand new firms starting out in the cloud, often working from home and they don’t have a big client base. They have a mobile phone and a laptop and are ready to go. “They’re leaving big firms and saying, ‘I can do this without big infrastrucure.'”

Yesterday the company announced it would be launching a cloud service for the rural sector, Farming in the Cloud.

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Amanda Sachtleben is an Auckland writer and social media type, who's also Idealog's former tech editor and business journalist.

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