We spoke with Laurie about recent developments in the SMB space and how cloud financial applications are impacting that market.
INTACCT: What do you see as the most intriguing developments today in the SMB technology space?
MCCABE: First, the cloud is becoming the new normal for a lot of SMBs when looking at solutions. Even just two or three years ago it was an uphill struggle to get people to consider moving to the cloud, but now it has become more mainstream. The fear factor has begun to subside. Second, the rate and pace of mobile adoption and spending on devices has been skyrocketing. Companies are starting to do more with mobile business applications, such as enabling mobile payments and field service and mobile CRM. Third, although social media is still a pretty chaotic area, small businesses see that they need to get their feet wet and interact with their customers on the social sites where they hang out. Business intelligence, collaboration, and managed services are other areas we see gaining more attention from smaller companies.
INTACCT: Are SMBs integrating cloud, social, and mobile yet?
MCCABE: Most companies are not doing this in an integrated fashion yet. Time is a big limiting factor, as are expertise and budget. But SMBs want to integrate key business processes so that they can reduce redundant data entry, streamline processes, and operate more efficiently. The filter should be looking at this through the business lens. The technology should just support and enable those goals. This creates a big opportunity for service providers who can help them assess this and then implement solutions to integrate in key areas.
INTACCT: Are cloud solutions more innovative today than on-premise solutions, since the cloud is where the market is focusing?
MCCABE: Cloud solutions are typically developed on a modern architecture and they are also usually on a much more frequent upgrade cycle, which enables easier upgrades for customers. That means companies are usually on the latest version. And the vast majority of new applications are being developed as cloud applications. Yet from a functionality standpoint, there are solution vendors that have been around forever, like SAP, that have developed many vertical editions, thousands of partners, and deep expertise. So one can make the case that these legacy packaged applications ultimately have more functionality. But functionality is just one criterion to examine. For SMBs, ease of deployment, ease of use, and responsive 24/7 support are critical. As always, it totally depends on an individual company’s requirements and constraints when it comes to determining which solution is the best fit.
INTACCT: Let's move onto financial software. What percentage of the companies in the SMB market are using cloud-based financial apps today?
MCCABE: We did a survey at the end of 2011 and found that about seven percent of small businesses purchased cloud accounting or ERP systems in the last 24 months--and 13 percent plan to purchase a cloud solution in the next 12 months. Accounting has been a laggard area in cloud adoption, but this is a significant jump signaling that businesses are getting over the hump. There are a lot of excellent cloud financial solutions on the market right now. You have the pure cloud offerings from companies like Intacct and then you have cloud offerings from traditional ERP and accounting vendors. There are also many cloud solutions at the low end such as Freshbooks that have designed for very small businesses – those with an owner and no employees. The big challenge for cloud vendors is, however, that accounting is one of those applications where if it's not broken, people may not want to fix it. Yet, as existing software becomes obsolete inside a company, executives will look to the cloud since it simplifies deployment and management.
INTACCT: Beyond simplification and cost savings, what else is game-changing about cloud financials?
MCCABE: What really has been underestimated is that the cloud makes it so much easier to collaborate and do things in real time. The smaller the business, the more likely that cost savings will be a primary driver. But I find that companies are thinking more about the soft benefits such as real-time visibility into their data. Another big game-changer is that since cloud vendors are hosting the same solution for thousands of customers, once a problem is flagged and they fix it for one customer, they have most likely fixed it for all customers.
INTACCT: Now a few final questions that are just for fun…
What do you like most about your job?
MCCABE: There’s always something interesting and different happening because there is always something new in the business and tech space. It’s never boring. A lot of the large vendors that are just starting to get into the SMB market in a significant way don’t know a lot about SMB requirements, so it’s fun to help them understand what smaller companies need.
What's your ideal way to spend a day off?
MCCABE: It would be doing something outside. Here in New England it depends on the weather, but I may want to ski in the winter or in the summer I love to hike, bike, go to the beach, or go out on the boat.
How about your favorite TV show?
MCCABE: I like 30 Rock a lot, but my favorite is the Daily Show.
If you would like to connect with Laurie, you can follow her on Twitter (@lauriemccabe) or follow her blog at SMB Group. Do you have interesting industry insights you’d like to share? Do you know someone that we should interview? Send us your suggestions for consideration.
Previous Industry Insights Conversations:
May 17 – Daniel Hood
May 9 – Jeff Kaplan
May 2 – Mike Vizard