As Xero are preparing to celebrate their 10th Birthday, and Xerocon South and Xerocon San Francisco on the horizon, Daniel Jordan reflects on his personal experience of the cloud accounting giant. If you missed part 1,read it here.
In part one of this series I took a look at Xero’s ‘beautiful accounting software’ concept. However Xero has substance as well as style, and in this second part I want to take a look at another key part of their business model that made their product so disruptive.
Some time ago I can clearly remember sitting with business consultants tasked with increasing the revenue of a company at which I was working. Their idea was that if you struggle to clearly report on a business, you can’t put in place the right strategy to improve it. Great. So how do you actually report clearly?
The idea at the time was to siphon all the data from various parts of a business into one massive database; that everything fed into and out of this enormous database and from there business decisions could be made. SQL usually got mentioned about here. Then OLAP cubes. Then everyone needed a coffee (or stronger).
It was a noble idea. But for small businesses, even for large businesses, the concept – let alone the actual realisation – proved to be incredibly complex.
It turns out that we were right in principle, but just going about things the wrong way. The idea was not to have everything in one place, but instead subcontract things out to different services, and they can give out and receive the essential data to make that connection possible.
Instead of having one software to rule them all, you can piece together various parts of the puzzle to build an integrated software network that works with your business, picking and choosing the software that fits your particular business model.
This interconnected approach was the spark that really started Xero. Described in Forbes as being Xero’s Eureka moment, the decision to connect software to a company’s bank feed created a product that cut out a tedious but essential part of the day for most businesses.
No need to worry about doing the integration yourself either; because cloud software can communicate with other software using APIs, integrations could be built by third-parties that ‘just worked’ with each other at the click of a button.
Xero’s marketplace of integrations is huge. But as this Marketplace matures, connections are starting to grow between those integrations and the outside world too.
Take Cin7 for instance. Though we started out as simply a Xero plugin, we now have the ability to connect to any big box retailer or supermarket you choose to name. This technology will save time in exactly the same way as Xero’s integrated bank feed removed a lengthy admin process each morning.
Integrations are the reason we can leave those miserable days of desktop software behind – and what we are looking at is a future of connected software that saves time and money, as well as providing strategic insights that make consultants happy.
The reason integrations are possible is largely due to ‘the cloud’ – and in part 3 I will take a look at how Xero played a small but not inconsiderable part in making the cloud palatable to a sceptical public.
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