Xero vs MYOB – A comparison
[UPDATE 13 July 09: I review Xero again 3 months post-implementation.]
[UPDATE 12 October 09: MYOB vs Xero 6 months post-implementation]
OK, I can see some of you asking what has accounting packages got to do with language and culture? Well, for starters accountants speak a different language. To understand them is no easy task. I spent some time in a Big 4 accounting firm, so I can now act as an interpreter for some of my poor business friends who have no idea what their accountants are going on about.
Anyway, I have decided to switch over from MYOB to Xero starting 1 April. Why? Especially given Xero costs $49 + GST per month, and MYOB is essentially free, after you pay the upfront cost of buying the software (much like buying MS Office and other software). Given the need to tighten spending, why spend money on paying a fixed fee forever, plus the cost of swapping over?
Accounting software by definition is pretty sticky. Business owners typically find it too cumbersome to swap. Because your staff would have to relearn a new system, and you can imagine the hassles involved with just switching say, photocopier suppliers, let alone a critical system integral to the running of the business.
Thinking of the hassles involved sends shivers down the spine of most business owners. So why did I decide to do this? For the following reasons (in no particular order):
1) Staff can access Xero from anywhere.
Right now, MYOB is hosted on a file server at the office. Major hassles because you can’t get to it from outside the office without setting up a remote connection, which is slow even with naked broadband at home. It’s a major hassle if something happens and the PC connection is lost, as I would then have to physically be at the office to fix this.
2) Instant and easy access, with no backups required
Getting into MYOB is quite a hassle. You have to look for the filename, and when you have an unfamiliar staff member, you have to explain where the file is etc. Xero is pretty intuitive. It’s idiot-proof. If you forget the site URL, you can just google it. We don’t have to run backups and wait 15 seconds and specify a “save as” location. We also do not have to worry about backing up this information remotely anymore.
3) Interface looks pretty
This is not a key reason, but high usability and visual aesthetics are important in order to generate buy-in from staff with no accounting background. Most people panic from the moment they open MYOB because it’s not designed for non-accountants. My initial feeing is that using Xero is like playing a game. Using MYOB is like washing dishes; you don’t like it, but you have to do it.
4) Integrated with ipayroll
Makes it easier than having to make sure the accounts person import / export journals correctly. If only ipayroll can learn some lessons from Xero and update their interface. Ipayroll is just plain ugly, but at least it works, and it’s online. We already ditched MYOB Payroll.
5) Xero is an amazing business
They employed an “agile design and development” process to build their business. I like their story. Doubled their client base in the last 6 months. Cool!
6) I can access Xero from my Iphone.
This is a stupid reason I know, but basically with this last accounting portion now on my phone, I can pretty much access 90% of the information I need to operate the business using a phone. How cool is that?
7) Bank transactions automatically flow into Xero
It’s great because we don’t have to wait for bank statements or download them from the bank. Bank reconciliations can be performed with ease and it’s so much easier to stay on top of things.
At the cutting edge
Xero boss Rod Drury blogs about technology and implications for business eg check out his write up on provoking customers. They even have a twitter account! My bet is the senior guys at MYOB have no clue what twitter is, let alone what it does! Why is this important? You want your technology provider to know more about technology than you. Betting on the right horse increases your chances of success. You wouldn’t want your GP to not know the difference between a pharmacist and a pharmacologist.
When I find time, I will write about the transition experience from MYOB to Xero. [Jul 09 update: Xero implementation experience]
Dsclosure: I have no investment interest in Xero or MYOB. My company has been a loyal client of MYOB for years, but the time has come to switch.
[UPDATE 13 July 09: I review Xero again 3 months post-implementation.]
[UPDATE 12 October 09: MYOB vs Xero 6 months post-implementation]
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Woohoo! Welcome to the team.
Rod
Thanks Rod. Great work with raising the $23.2m!
I was reading about how Encyclopaedia Britannica laughed off Encarta and the most prestigious encyclopaedia in the world got killed by a CD ROM. And now Wikipedia has just done the same to Encarta. Who would’ve thought that?
In the same way, I think Xero users will outnumber MYOB in the coming year or two.
I thing both companies have a lot to offer.
I love the look of xero and I think the bank feed is fantastic.
As yet I won’t be moving to xero as we use advanced features available in MYOB Premier which are not available in online applications as yet.
We do have some clients on xero and they love it too.
I even like MYOB’s BBO which is similar to xero.
Most of all I like http://www.mint.com which I think is US Based and goes that step further. US applications offer immediate bank feed signup which I hope xero and myob manage to implement.
With all the achievements xero have made recently I expect some pretty fantastic things over the coming 2 years and can’t wait.
I agree, MYOB don’t appear to be up with things like twitter and that concerns me.
Our team use vpn and have no problem with the speed but I do see that internet based applications seem to be the way forward on the internet. Not only that, Open Source is becoming popular too.
CashManager has a free option on their accounts program and they will be releasing an online version soon too.
Just being a spectator is fascinating stuff. Market share movements shall be interesting over the coming years.
I’m sure your migration will be fine, once you use one program you can pretty much use them all.
Happy accounting.
Why you would not go to Xero…
1. No inventory or stock control
2. No purchase ordering system
3. No ability to work in multiple currencies
4. Cost (otherwise know as recurring revenue for the folks at Xero). At $50 a month plus GST your average 3 year accounting package is going to cost you $1800 with Xero with no protection against increased costs in future months/years.
5. What happens if they go bust? Contrary to what Kenneth says – they did not have the greatest of years last year according to published data.
Make no mistake, I like the idea of Xero, but they need to get a bit more built into the product yet and reduce the service cost. The fact that there is no concept of invent0ry in the system means that realistically this offering is a great service for a one person service type company, but for a retailer or manufacturer this is not the best choice.
Gordon
You are absolutely right. There are certain features like stock that are not there yet, but I believe are soon to come.
Euroasia is not a one-man band, but yet we decided on balance, Xero works better for us than MYOB.
Having said that, I think Xero works better for service businesses, but no so well for manufacturers.
These days, I reckon the likelihood of Xero going bust can’t be much higher than MYOB going bust.
Good question though. Rod, what happens to all our data if Xero goes bust?
Hi Ken / Gordon
xero have information on their support site regarding security and data. When I first looked at the product that was one thing I checked.
As all online applications go there must be security and exportability and a backup plan.
While I couldn’t find anything on the backup plan, I was confident in their security and advise clients to run an export of their data as often as they feel comfortable.
Rod may be able to answer the query re backup.
Most applications do have an exit plan and to be honest I’m not worried about either MYOB or Xero going under.
Hi all
Thought I would jump in and just cover off some points.
As has been suggested security and recoverability are very important to us and we believe is actually a huge benefit of SaaS products compared to desktop products (how often do you back up your PC?).
We run an enterprise style database backup solution: real-time transaction log backups, nightly incremental backups and weekly full backups. All are stored off site and in multiple locations for complete recoverability.
As far as exportability goes we’ve always offered different types of report exports and have recently added the ability to export all data to specific formats (such as MYOB AO) for both compliance use and for backup purposes.
It is your data – and we do everything we can to protect it.
Craig
CTO
Thanks Craig for clarifying. At our company, we run automatic backups every night to an overseas server, and increasingly migrating more internal documents to Google Docs. With MYOB, you do have to remember to click backup, and sometimes your staff may feel inclined to skip that step because of the time it takes to complete the process.
I think Gordon’s question is how would a client retrieve data from Xero in the event of Xero ceasing to exist, however unlikely that scenario is?
Sorry peoples, I said “most applications DO NOT have an exit plan…”
Where as I was meaning to say “most application DO HAVE AN EXIT PLAN”.
Unlike Mrs Christmas
Hi
some great comments back. Thanks and its good to hear how serious Xero about protecting data.
Interesting that no-one (customers or providers) has commented on the cost? I wonder if therefore the cost is not an issue for others ?
From my own point of view it is the cost combined with the lack of functionality which are the barriers to adopting this service. And I would dearly like to use this service or something similar as it would solve a lot of issues we have in our business.
Unfortunately Xero tell me that although there are new functions coming to cover the issues I raised (such as multicurrency) these functions will be additional addons for which there will be extra charges.
So I dont see us adopting the service anytime soon.
Gordon
Gordon – just thought I’d dig my oar in. As well as spending a huge amount of time watching and analysing Xero, I’m also a SaaS accounting commentator generally – check out my series of reviews and analysis pieces on cloudave.com/tag/accy2. There’s a bunch of SaaS accounting products out there – many of which do the stock control that seems to be such a deal breaker for you…
Hi there
Just thought I’d share my own personal views here, having used several other accounting packages and having switched to Xero. Yes, there are things it is missing, but even in the short time we have been using it several new features have been added and more have been promised.
Cost is higher if you look just at purchase price but we have found both our admin costs and accountant costs to be lower, largely due to the real-time importing of bank statements and ease of use. As a non-accountant I love that it’s reasonably fool-proof (and my accountant can log in and check in just a few minutes). And because the statements are imported every day, our financial reporting is much more timely. I should add that I have also put our family accounts on Xero (for an extra $10 a month)and that has made a huge difference too.
There are things I wish were there – for instance, I find using filters to track certain categories clunky as it includes all transactions not assigned to a tracked category instead of excluding them – but on balance, I wouldn’t go back to any of the other systems I have used.
We love XERO, we struggled for months with MYOB as a new business and then moved to XERO relatively easily and now just totally love the product.
Can’t stop telling other people how great/easy/friendly/fast/efficient XERO is.
It’s almost viral.
Cannot see MYOB lasting much further past 31.12.2010 personally…
Thank your for the information. As an accountant, I always value people who add value to the information available to educate consumers especially with this accounting system. I particularly liked your advice on Xero.