Originally Posted by
maddog
Much of the discussion about the accounting market in New Zealand shows a fundamental misunderstanding - its analysis done by smart, ambitious, accounting savvy people who think most of the market is like them. While some business owners fit that description, most don't.
There is close to 500,000 businesses in New Zealand but most of these are very small - most have no employees and their accounting requirements are very simple. For example the single largest category of small businesses that most accountants handle are rental property owners. There is also a lot of other basic self-employed businesses like taxi drivers and cleaners. There are also plenty of tradies, farmers and owners of small retail outlets. The more sophisticated businesses that are likely to use the full version of Xero perhaps only totals 200,000 in New Zealand and it is this market they are competing with MYOB, Reckon and now Intuit for.
Xero has recognised this and markets a cheaper cashbook product targeted at those very small types of businesses and sold only via accountants.
At the moment there are two dominant accounting systems in New Zealand for these very small businesses - Excel Spreadsheets and BankLink. We all know about spreadsheets - a cheap, easy to use tool, but prone to user errors when used for more complex accounting requirements. I act as Treasurer for a small incorporated society and Excel is ideal for managing its limited accounting requirements. I also own rental properties and use BankLink for managing that business. Again it is ideal.
BankLink (which only delivers via accountants) has a very strong hold on the micro-end of the New Zealand accounting market and has stopped Xero making much headway with its cashbook products. BankLink has been around a lot longer than Xero and from the information it provides I understand it helps accountants handle the accounting requirements of well over 100,000 New Zealand businesses. BankLink is also working very closely with MYOB delivering bank statement data to its new range of online products.
While MYOB, Reckon and now Intuit are important competitors for Xero, don't forget the importance of BankLink, another New Zealand company. It has a low profile in the wider community but is very well known amongst accountants.