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The future of practice management suites for accounting firms? I believe they will be free. Who loses & who wins...

One of the most interesting learnings I have had recently has been that some vendors are already providing PTA software (Practice management, Tax (i.e. allforms) and Accounting) for free.

I think we will look back in a few years and view this as either a fantastically successful strategy for the suppliers who provide both solutions i.e. PTA and SME (Small Medium Enterprise) software, or one that does a disservice to both the SME market and accounting firms by restricting development through complacency leading inevitably to stymied innovation.

Software applications are written with a simple ratio;


Changing any one of these 3 elements has a direct influence on the others and in the search for market share, all PTA tools have aimed for for the 'Goldilocks' zone: not too much, not too little, just right.  

The PTA market has been in decline for a number of years with fewer accounting firms being established and more firms consolidating putting pressure on pricing, service & functionality.  The saviour for some of them has been the SME market.  Prior to the advent of SME software, particularly the huge growth in cloud delivery, the only avenue for revenue growth for PTA vendors, was to try and secure more accounting firms or offer a broader suite of products / functionality to existing clients and be as close as possible to a one-stop-shop as they could be. 
With the practical usage of practice management revolving around a handful of core reports and rarely the bells & whistles offered, it won't be a surprise that a stripped down (and free) form of PTA will garner a new audience to the detriment of the ratio above; no revenue = no service = no functionality = potentially no vendor....or a takeover with only the SME business being wanted. 

Who will lose?  The battle-lines have started to be drawn and it will be fascinating to see who is still standing in a few years time.  I see the vendors that will lose out being the ones who have not responded sufficiently to this change in the market or will get acquired as a group and the PTA business split off or shelved. Australia is a very crowded market for PTA vendors: I could think of 6 vendors with at least 8 different suites.  4 of these 8 have SME suites and there are at least 3 vendors of SME software that currently do not have PTA.  

Confusing isn't it...?  Consolidation is on the cards

Who will win?  Whilst these vendors fight over what to do, it is apparent to me the independent software vendors that take advantage of these PTA vendors taking their eyes off the ball and who offer specialised software will be the absolute winners for themselves and for the organisations that use them.  These vendors do not have to be all things to all people; their mantra is look at a problem area, improve on the process, sell the solution.  Independent vendors do not need to be in the heart of the battle for PTA or SME and can exercise their strengths in areas such as workflow, FBT, Company Tax, Annual Reporting, Indirect Taxes, Transfer Pricing, R&D and others.  

Accounting firms that use independent software create bespoke services to better serve their clients through better data analysis and business advice.  As they are industry proven solutions, they dramatically cut processing time, increase accuracy, productivity, revenue and reduce risk to business.  

Savvy firms and companies will be the absolute winners with minimal impact.

Let the games commence!


Alan FitzGerald