Accounting, Bookkeeping, Future, Technology

XeroConSouth2016 – the review no-one will write

The rules of Blogging state that positive articles get more Reads, Likes, Tweets and Shares than critiques (unless you’re Matt Barrie from Freelancer and hitting onto a meme that connects like his crack at the Sydney lock-out laws #NannyState).

A purely positive article on #XeroConSouth2016, laced with platitudes and compliments, would be an easy article to write and would probably get me a decent readership…and perhaps even a retweet from Rod to his 34k followers…but as many of you will know by now, that’s just not my style…when you’re an independent nobody, who pay’s their own way to a conference, you earn the right to go beyond the fluff, whether anyone reads or believes your stuff or not…so here goes:

XeroConSouth2016

There was a lot to like about XeroCon – if I write everything positive I had as takeaways, this article would be far too long. So I start by reiterating that the balance of my opinion on XeroCon and Xero, cannot be judged on the proportional word count herein – I’m just trying to get across the points I feel few others will raise…

The New (older) Xero

The ostentatiousness, many have come to expect from Xero, seems to have been tempered. Sure there was still a DJ, VR store, playground and the odd jibe at MYOB, but the key theme across the event was Community, cultivating a sense of belonging with and to the brand.

Opening with Trent and Anna – the MDs of Australia and New Zealand was not out of the standard playbook. I’ve been to a lot of conferences and I think its fair to say an opening address by the CEO/Founder is pretty common. We’ve come to expect Rod front and centre of Xero events too.

My take is Trent and Anna were strategically sent out as they are likeable, humble, approachable people. Their job (to quote Simon Sinek) was to start with the WHY. Disarm the audience, tone down the ego, make it about small business and their advisors (the crowd). And this new found maturity and humbleness continued, almost unfettered, throughout the event. A perfect example was when Rod Drury spoke of the product being 10 years old and even admitted “wanting to throw-up in the corner” when he sees some of Xero’s screens.

Why do I think they did this:

With more than 2,000 people in the crowd, and with Cloud Accounting Adoption rates above 25%, Xero has evolved their tone from appealing to the Innovators and Early Adaptors (the Xelots – see what I did there? I just created a new portmanteau – Xero Zealots), to appealing to the masses.

The Xero Team

Companies are the sum total of their people and the culture that they cultivate – processes and products are the by-product of these. When you are exposed to them, one can only respect the Xero team. From Rod and Andy at the top through senior managers like Trent & Anna, onto lieutenants like Rob Stone and beyond – one finds talented, intelligent, respectful people throughout the organisation.

It says a lot for the company culture that Product Owner Peter Harvey is in fact himself a Xero bronze partner, with 6 NFP clients. The ingrained empathy extends to Xero embracing the likes of James Solomons and Mel Power, extending to Steph Hinds (do I have to hashtag #StephSocial now?) and Greg Sheehan – real people in real businesses, not just full-time staff, who once-were… a real credit to Xero!

Yuck, those two paragraphs make me feel icky…I promised this wasn’t a love-fest…OK I need something barbed. Here goes: over the years, the departures from Xero have raised eyebrows and rumours…but I have to say, the fact so many of the dearly departed hang-on from the outside, within the ecosystem and on social media (some seeking credit for what “they built”) is a little amusing to witness and obviously a credit to the culture/company they miss…cheeky enough? At least some of you will know what I mean…

Gender Diversity

At the recent AGM I asked the “elephant in the room” question – where was the gender diversity at the front of the room – one female amongst a stage full of male C level managers and directors? XeroCon was very notably gender balanced…perhaps even pro-discriminatory …from a female MC, LJ the truckie’s story and Anna sharing the opening address, a raft of female presenters and a special mention to the female staff by Rod during his keynote.

Rod’s Keynote


Rod Drury’s keynote on day 2 was one of the best, most strategically structured presentations I’ve seen. Sure he talked up the “clean” Xero engine as THE platform for SMBs and their advisors, but he did so much more than that. Here’s my interpretation:

  • Accounting is awesome…Friar Pacioli invented an amazing and artful thing with double entry accounting and should be revered at the level of Euclid, Galileo, Newton, Darwin, Michelangelo, Einstein…
  • Accountants and Bookkeepers are so smart and so awesome for being the minority who get it. And as the ones who appreciate the beauty of double entry accounting (like only Xero does) and for what you do for small business (like helping them with their software, bank recs and correcting their account allocation) you are so important…
  • Only Xero is going to make accountants and Bookkeepers life’s better – by streamlining and automating data collection AND by using Machine Learning, Xero will remove the need for small businesses to code transactions and that will stop those SMB operators from making all those silly coding errors…
  • So Bookkeepers and Accountants, this is all for you – you won’t have to help small business with data entry, nor bank rec, nor transaction recoding…and anyone in the audience starting to wonder what you’ll do with you day wonder no more, ‘cause the future is about advice…someone needs to support SMBs in their use of the software and show them how to read their numbers and improve their debtors, what add-ons they need etc…
  • And to help you with this, Xero are building an AI chatbot on FB Messenger called HeyXero (and voice recognition with Alexa on Amazon), which will automate software support as well as spell out for an SMB their numbers in plain, conversational English and offer advice on things like how to improve debtors…see, you can even put this on your website to help your clients…

In summary, Rod somehow managed through structure, charisma and some dare I say Jedi mind-tricks (Rod often states opinions as facts, something I know I can be accused of myself…), to talk about a future that should scare the life out of many bookkeepers and accountants, in a way that was pretty much all about them and Xero looking after their interests! Youtube it, you’ll see what I mean…not having a go, I’m in awe – he showed an uncertain future for some in the room, without having people running for the exits screaming!

Would I go as far as to say Xero are convincing bus-drivers to help them sell driverless buses to their employers, probably not, maybe more like leveraging taxi drivers to grow Uber (before Uber rolls out driverless cars stage 2 – at least taxi drivers can be Uber drivers, for now) – the fact is the future for bookkeepers and accountants is coming fast and only the agile will survive!

Monetising Conferences

Wow, that’s impressive…over 2,000 people outlaid close to $1,000 for a ticket…plus 91 exhibitors…XeroCon now a profit centre? Perhaps? They are hell-bent on breaking even on current cash balances afterall!

The Ecosystem

I have too much to say about the ecosystem, its probably going to need a couple of stand-alone articles on the concerns I (and others) have and my thoughts on where its all heading.

In short, I sense among the add-on vendors, its not the beer and skittles, utopic optimism of the past. There are ructions brewing with growing concerns over trust. About the “top 20” allegedly being ask to pay for API access whilst others have their API blocked because they are seen to compete…then there’s the worries over where the horizontal and verticals lines fall – as an obvious example, whilst reporting was the most represented add-on in the exhibition hall and Spotlight won app partner of the year, between Microsoft Power BI and fantastic new, core Xero custom reporting features, I think one has to start to ask where the future of stand-alone reporting tools lie?

Then there’s Xero formally announcing Expense capture is coming, only a week after Expensify open a Melbourne office…

BUT for me, a telling illustration of where the ecosystem is at, was the absence of some mainstays of past Xero events. I won’t name names, but a few historically high profile Xero Ecosystem “partners” from Verticals/Horizontals such as Trades, Stock and Debtors were NOT among the 91 exhibitors nor session presenters.

Conversely, who WAS there says a lot for how credible Xero now is and where they now play: CBA, NAB, Amazon…

Platform

The “Platform” was a recurring theme of #XeroConSouth. And most of it, including what Andy Lark in particular had to say, I completely agree with and love, BUT…there’s one aspect to the “Platform” Xero are still missing, that I’m still waiting for an announcement on.

What do Salesforce, Netsuite, Acumatica, even QBo have in common that Xero lacks, particularly when they all use the P word? Salesforce has Heroku and force.com. Netsuite has SuiteApp. Acumatica has xRP. QBo has an SDK and embedded apps (e.g. KeyPay)… Xero has..?

Xero is still missing a development and/or deployment platform. Having an open, and the industry’s best, modern, API is one thing. Being able to develop within and/or deploy within the core system framework is another, one that Xero sadly lack nor have (that I am aware), ever discussed.

Single Sign-On (SSO) & single User Interface (UI) are IMHO the end-user’s holy-grail. Seamless User eXperience, regardless of who develops the feature. One username. One password. A single UI. Seamless.

Sorry, but I sat through the Retail and Hospitality session demoing Xero, Deputy and Vend – with multiple browser tabs, 3 separate UIs and buttons to switch between them…yeah, that’s nice and all, but have you seen how the true platforms handle this sort of thing? The UX of a platform should ultimately be one UI, not 3 “hyperlinked” systems.

Enough on AWS already

The pot-shots on social media of late from the MYOB camp, might be a little OTT. BUT whilst moving all that data is not an easy thing, and services like Alexa are awesome for Xero to tap into, the AWS move is being a tad oversold…for goodness sake, Rackspace (Xero’s previous hosting platform), were the biggest exhibitor at the recent AWS conference…even Rackspace admits they can’t compete with Amazon – come on guys, you had a choice in 3 for PaaS – Azure, Google and Amazon – you chose the same one as basically everyone else…for that you don’t deserve to keep harping on about it…but if you do want to, how about some details for the tech nerds, like when you say you re-platformed for AWS, did you change the db to PostGres RDS or Aurora??

Crowd-sourcing #awesomeness

AT LAST, we see a seriously simple and effective use-case for SMB Cloud Accounting Tech crowd-sourcing. Never have to enter a customer or supplier’s details again, let the crowd do the work for you! Crowd-sourcing contacts + Veda credit checks, yes Rod, that is cool!

Payroll?

The conference did little for us Payroll enthusiasts and our belief that Xero don’t quite appreciate this core business function. Where are ETPs (a core legislative requirement)? Why is KeyPay better integrated than Xero’s own Payroll? Is this one of those examples of where “the international platform” ignores regional relevance?

Why have client number announcements moved to half-year updates?

I think a growth SaaS company, talking client numbers from March 31, at a major conference in September is odd. They’ve also stopped the quarterly cash flow reports. Is this CFO Sankar’s doing? The pairing back of announcements, seems to have coincided with Sankar’s arrival… Why Sankar?

Mid-Market Watch Out

My career has been spent in the mid-market…I’ve seen the writing on the wall in that space for some time. Its at the core of why I parted company with my past 12 month’s back. How can you claim to be the next step up, when the big whales “below you” have much bigger dev teams, better technology, teams working on AI, teams working on Virtual and Augmented Reality, better relationships with banks, better connectivity, better ecosystems AND are cheaper…? There’s only so long your longevity and head start, keeps the wolves at bay.

Rod Drury officially called out the mid-market at XeroCon – whilst I don’t agree exactly with Rod’s chart (below), I do think that where there were 5 market segments, now I see 3 emerging…perhaps ultimately even 2…(noting Oracle bought Netsuite for good reason).

Those small vendors left in the AuNZ mid-market, if Tim Reed & Co are knocking as they say they are, take the money and get out, whilst you still have something to sell!

Summary

Its very hard not to get swept up in the Xero aura. As a shareholder, I see continued capital growth, with contribution from AuNZ market share expansion and abroad. I don’t see disruption from Blockchains imminent, if anything Blockchains will enhance what Xero are doing (another article).

Xero is not a perfect product nor company, but perfection is unattainable at this point. To answer my own question from a previous article, yes, I feel Xero do have the brand to get away with a premium price and low partner margin business model across AuNZ. ‘nough said…

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