Using a Point of Sale solution along with Xero is perfect for anyone running a retail business. Lots of retailers have stores in more than one location, so having your financial information online means you can access it from anywhere, anytime.

Our new Network Partner Vend, is a stunning new POS system, giving retailers an innovative way to run their retail stores. Vend works with the equipment you already use for your point-of-sale, including your barcode scanner, cash drawer and receipt printer. Vend helps you manage your inventory by making it possible to automatically re-order products based on specified stock levels. If you’ve got several stores, Vend has got you covered as it provides full support for multi-location stock control.

Take a look at this video introduction below:

Vend works seamlessly with Xero, so there’s no more manual double entry of sales data. Daily sales totals are automatically entered into Xero for reconciliation with your bank account, and you can even set up individual invoices and statements for customers who have an account with you. Have a look here to find out more about the Vend integration with Xero.

We’re really excited about the possibilities opening up for small businesses as more online solutions work together. Let us know what solutions you’d like Xero to connect on our UserVoice forum.

The beauty of Xero is that we update the software for you. Automatically. For free.

People still using desktop accounting systems are facing steep fees, only to endure the frustration of installing and upgrading their system. Since you need to upgrade anyway, it’s the perfect reason to switch to Xero right now – and never go through another upgrade ever again.

Here’s a quick video that shows an overview of all the updates we’re doing for you.

You may notice a couple new things we added since our last update:

• File Now – it’s important to keep a record of the GST Return, as you filed it with IRD. To do that, simply press the File Now button when you’re happy with the numbers. Similar to publishing other reports, this records a snapshot of the return and associated reports within Xero, which matches up with the numbers you copied onto your GST form.

• Updating Bank Rules – we realise a lot of you are using Bank Rules. In fact, some of you have hundreds of them! That’s awesome. Expecting you to manually update them all would be pretty uncool. So, at the same time as updating the rates on your Chart of Accounts, Contacts, Price List Items and Repeating Transactions, we’re now doing the same thing for Bank Rules.

There’s a lot we’re doing to make the transition to 15% GST easy for you – if you’re interested, here’s a detailed explanation in the Help Centre of everything that’s happening.

Stay tuned for more updates from us over the next few weeks and be sure to check the IRD website for more information. If you’re an accountant we recommend you join us on 8 September for our dedicated GST webinar with guest presenter GST Advisory Panel Chair, Frank Owen.

Please talk with your friends and colleagues about the upcoming GST change. Ask them how they’re planning on handling it. If they’re not on Xero, let them know how easy it can be.

It’d be nice to know the people doing your books (if not in-house) are credible, work to a recognised standard and you have some redress if something goes wrong.

In many countries such as Australia, bookkeeping is now recognised as a true profession. In New Zealand bookkeepers don’t have this status which is why we’re thrilled to hear about the newly established New Zealand Bookkeeping Association Inc (NZBAI) which represents suitably experienced and qualified bookkeepers. At Xero it’s important to be able to work with professional bodies as we develop Xero further and our customer pool widens.

One of the driving forces behind setting up NZBAI is Xero Partner and Trainer, Melanie Morris.

“With the shift in technology we aim to build the relationships between bookkeepers and accountants by providing collaboration on data and acting as interpreters between the client and accountant for the benefit of everyone.” Melanie Morris

Through NZBAI, bookkeepers can look forward to support across a broad range of  issues including indemnity insurance. Education is also a strong focus and in time once standards are developed and approved, bookkeepers will be able to complete a certification process.

For small businesses that use bookkeeping services this will lead to better protection. Certification should make choosing a bookkeeper less hit and miss.

I’ve made a few things now, usually all from the same pattern only deviating slightly from blue and white to add an orange stripe or button to leave my mark!

Except for the very first thing I knitted. This was for Hamish’s son way back in Xero’s early days when we had pink in our brand (his father does wear pink so I figured it was OK!).

Since then I’ve stuck to blue and white and in the last 3 and a half years have knitted up 8 things!

Last week I had the rare opportunity to see my latest knitting being modeled, Owen’s daughter Sophie came to visit the office in her new Xero cardigan – what a cutie!

For several years running, Xero has been a sponsor of Summer of Tech, where university students get matched up with tech companies looking for interns. The program has grown over the years, and now includes design students, as well as comp-sci and engineering students.

While the program helps us cherry pick rising talent, we also hope to offer some inspiration for a whole new generation of students entering the work force.

In my final year of university, I did an internship at a place called General Magic. It was an amazing experience, kickstarting my career and giving me an extremely valuable insider’s view of what it’s like to be part of a high flying start-up.

As I’ve been reviewing some of this year’s design interns, I thought it’s worth sharing some basics I look for in candidates:

• An online portfolio with plenty of work samples is an absolute must. Without that, you won’t be considered. It should go without saying, the design of your portfolio is as important as the projects presented.
• An online portfolio also shows you know the basics of web production, coding and site deployment. To be an interaction designer you need to know basic nuts & bolts.
• I take notice when people have their own domain. It shows you understand the value of branding.

• The ability to write clearly and concisely. Design is communication. The words you choose show if you’re thinking about users and their frame of reference.

• Participation in social media is good to see, it shows an interest and involvement with tech and culture, plus some insights into your personality.

Specific design skills I look for:

• Information hierarchy and typography – page layouts that establish a clear order of importance.
• Visual style – fine tuned composition, lighting and color balance that triggers an emotional response.
• Simple usability – links, buttons and navigation follow common conventions, they look and behave the way people expect. Experimentation and innovation are nice, as long as the basics are covered.
• Craftsmanship – sweating the details, an obvious sign of passion for the process.

And some worldly advice as you set out on your adventures:

One final piece of advice – do a little research. It’s dead easy to know all about the companies where you want to work and the people you’ll be meeting. It makes a big difference when you express a genuine interest and some understanding of the people and their business.

Best of luck & have fun.

We’re enjoying working with Letstrade as they launch their new Sales Order Processing solution. This is a powerful sales, procurement and inventory solution for small to medium sized businesses. It suits a wide range of businesses including wholesalers, importers/exporters and franchises. The people behind Letstrade are ERP experts with a long history in this space. It’s great to see them take that experience and do some new fun things on the web, like ‘Trade Crumbs’.

Letstrade is in the final stages of development and inviting Xero customers to try it out for free during the beta period. We think Letstrade is a fantastic solution for any business that needs to account for stock movements and it integrates with Xero so you don’t need to worry about the hassle of re-entering data from one solution to another.

Have a look at this video overview:

This is another of the new generation of sophisticated solutions being released that connect with Xero. Exciting times!

Along the way we’ve had some good suggestions from those using it, and we’ve noticed lots of similar questions being asked, so we’ve fine-tuned a few things to help you get more out of the site. Perhaps this will encourage those of you who haven’t jumped in to answer or share ideas about being smart with money, to give it a go.

Next time you visit Xero Answers you might notice the following changes or new things:

• More topics!
  Most questions were ending up in the ‘Using Xero Personal’ category and with almost 200 questions in the site now we could see some clear groups of questions emerging so we’ve added these as new topics. Also makes it a bit easier to browse if you’re interested in the range of questions being asked on a particular topic.
• New ‘Recently Answered’ tab
  Too many good follow-up answers and suggestions from you on earlier questions weren’t being seen by other users on the site so we’ve added this list of questions that have had an answer added recently.
• Browsing through questions
  Browse the whole list of questions by clicking the ‘More’ button at the bottom of the questions on the home page or drill into a topic and page through questions from there.
• Search
  We’ve smartened up the search that goes on behind the ‘Ask’ button when you’ve entered your question or keywords. We found that lots of similar questions were being posted on the site because search results weren’t returning closely matched words and phrases. Now when you search you’ll hopefully get better results as well as some suggested pages from the Xero Personal Help Centre.

Don’t forget to upload a picture to your profile (use the ‘My public profile’ link at the top right of the screen when logged in) – as more of you are able to answer other people’s questions it will be nice to see who’s helping out!

Don’t be shy – this is a place for you to create a great resource for ideas and information about Xero Personal – we’d love to see you! http://answers.xero.com/

Late last year we partnered with TechSoup to provide Xero at a discount to the nonprofit sector in New Zealand and we’re now pleased to announce that this arrangement has been extended to Australia through the DonorTec program. This is provided by Connecting Up Australia, the local partner of US based TechSoup Global, which is a worldwide network of individuals and organisations that believe technology is a powerful enabler for social change.

Connecting Up Australia manages the technology donation program from companies such as Microsoft and Cisco for the benefit of qualified nonprofit organisations around Australia. Xero is now part of the line up of leading technology products and resources being offered to the nonprofit and charity sector.

In Australia the nonprofit and charity sector includes in excess of 700,000 organisations. Connecting Up CEO Doug Jacquier says over the past three years, the DonorTec program has saved Australian charities and nonprofits more than $80 million on their IT costs.

“We are constantly being asked about adding quality accounting products to the offerings available via DonorTec.  So, after pioneering our relationship with Xero via TechSoup New Zealand, we are delighted to now be able to offer uniquely discounted Xero online accounting services in Australia via the DonorTec program. With a rapidly growing customer base in small business, we recommend Australian nonprofits take a serious look at Xero when next assessing their accounting needs.”

Eligible organisations registered with DonorTec just need to login to DonorTec and click the Xero sign-up link to get a 25% discount on their first organisation subscription.

We’re pleased to announce that Xero’s Partner Certification classroom course now qualifies for 5.5 hours NZICA Continuing Professional Development. NZICA is also in the process of assessing our Re-Certification – both of  these are key steps to becoming a Xero Partner and maintaining Partner status.

This recognition by NZICA validates the calibre of our training – not only the course content, which is a thorough overview of Xero functionality for accountants in practice, but also the quality of our delivery.

We have a great team of qualified trainers on board like Melanie Morris, Donna Wylie and Mike Hadwin – all of whom are technical experts in Xero and passionate about ensuring great learning outcomes.

”The Xero training course I attended was conducted in a professional manner, with clarity, and attention to learners’ needs. NZICA CPD looks for an adaptive, active learning style in training presentations and Xero offers this”, says Joe Grayland, NZICA’s Director of Professional Development.

All NZICA members are entitled to a 20% discount when they undertake Xero Partner Certification and Re-Certification (classroom) courses. You can find a course near to you and register here.

GeoOp (Geographic Operations) is our latest Network Partner and works as a job dispatch system for small to medium sized businesses that have mobile workforces. If you are a  tradesperson, vehicle driver, in the IT services industry or have people on the road then GeoOp is perfect for you.

GeoOp brings the same instant clarity to your operations that Xero does for your business performance and profitability. It allows you to instantly get a broad overview of all your jobs and mobile staff, or with a few clicks of the mouse you can drill down and see in real time exact details – something that normally takes days to filter back to the office.

GeoOp’s integration with Xero allows you to send job information, either for individual jobs or as batch invoices, so you can easily invoice your customers in Xero. The entire process takes less than a minute, saving you time and the hassle of re-entering your data from one system into another. Your administration team can send out an invoice to your client as soon as the job has been completed.

For more about Xero and GeoOp and how to get started have a look here, or watch the video below for an overview of GeoOp.

Through speaking with Catherine it was obvious that both her personal outlook on the profession and the culture and feel of Urban Ledgers as a firm are yet further examples of progressive, forward thinking that sees nothing but opportunity in the growing modernisation of accountancy, with smart use of new technologies to drive up client service and satisfaction while at the same time squeezing internal costs and inefficiency.

In my role at Xero I concede that I operate in something of an unreality bubble; clearly the majority of UK firms are not funky, progressive or online whereas all the Xero Partners I hang around seem to be. Naturally.

But what I got from talking with Catherine I regularly get from other Xero firms, and this can range from modest ambitions to gently modernise a dusty regional practice, through to big scale and global domination where ambitions are measured in the acquisition of thousands of new clients.

My experience and based upon countless conversations over the year since I joined Xero tells me that making this change work as a practice is not as simple as just introducing Xero – there’s TONS of other hard stuff – but the most consistent denominator they all share is that online is the key enabler.

There’s some amazingly dedicated and talented people behind the scenes who make this all possible – analysts, developers, designers, document writers, database dudes…  In fact, an army of people working to help you worry less about accounting and more about what makes you get up in the morning – running your own business. So here’s to another 55 releases!

For our NZ customers this release marks our first step to help you prepare for the upcoming GST rate change. Today we simply included the new 15% tax rates but we’ve written up an overview of what to expect over the next few weeks in Help Center.

If you’re in the UK you’ll love the ability to make manual adjustments to VAT. This has been on our to-do list for a while so we’re especially pleased to be able to get this out into the wild. In fact, we’re so pleased we made a video about it.

No matter what region you’re in there’s also a few other things to enjoy:

• Spend/Receive Money Updates – more editing options on unreconciled spend and receive monies, and reconciled transactions
• Report Updates – with the Journal Report we’ve introduced a new parameter to show only manually posted journals and Reconciliation Reports now include the Journal Report
• Ledger Plan – a new offering for organizations which need end-of year reporting primarily

You can see a full list of all the changes in our release notes.

It’s very distressing that organizations that should be doing so much good in the community are put at risk because of the dishonesty of a few.  Unfortunately we see this occur far too frequently.

Desktop accounting software, where just a few people have control of financial records, makes it very easy and tempting for fraud to occur.  It’s relatively easy to cook the books or just not provide them.  It could be months later when fraud is discovered.

Online accounting is the ideal control for reducing the temptation and ability for fraud in community organizations.  Here are some of the ways.

1. Multiple people can see the books at any time. Xero even has a read only view for trustees to sort through the numbers.
2. Direct bank feeds allow anyone authorized to see the bank balance, without needing access to online banking.
3. Expense claims and Accounts Payable have to be approved.  There is workflow and multiple user roles to ensure proper segregation of duties.
4. Reports are easy to generate and can be done and circulated within days of the end of month

The benefits in terms of cost and continuity (if your treasurer resigns you can simply give the new person access with no downtime) are obvious enough. Simply for good governance reasons, online accounting is compelling.

“Xero has totally ‘revitalised’ our school accounting and financial practices! We can now make better decisions based-on accurate, up-to-date information. The biggest surprise is how easily staff have made the transition – they have found it straightforward and intuitive! Now we are spending less time but getting better outcomes. Changing to Xero is one of the best decision we have made.”

Roy Sye Principal – Tamatea Intermediate School, Napier

Our team was just stoked to get that message. Thank you Roy. One of the verticals we plan to target next year is the school market. We’ve been working with our accounting partners to understand specific school requirements. (You can join the conversation at on Linked In: Accounting for Schools)

Update August 16: Here’s another note just in …

“Xero has made a significant difference to our school in a very short time. With the introduction of Xero have reviewed our internal financial systems and we now have efficient and highly effective systems in place. Staff have found it very very easy to use and understand, very easy to navigate around and have said it requires less work on their part while giving us very up to date financial information. In a word we believe it is brilliant!”

Rohan Pearse – Mayfair school

The reason we’re so interested in schools include.

1. Our accounting partners have asked us to.  If you’re an accountant with school age kids and the board of trustee’s ask you what you do – the standard answer is “fireman!”.  Accountants do not want to get dragged into the pain that has been school accounts.
2. Cloud based accounting can save tens of millions in Education spend.  No servers, no customization, remote working and auditing etc etc. As taxpayers and parents that is important to us.
3. Schools are more complex than most small businesses in few key areas.  If we can solve reporting for schools we know we have fulfilled our vision of a relational accounting system. What does that mean I hear you ask?

At Xero we love databases. One of the things that has bugged us for years is that accounting systems are inherently hierarchical. That means that the Chart of Accounts is a nested tree structure. The problem with a tree is that you can only report one way and you end up repeating parts of the tree structure in the chart. This leads to very long Charts of Accounts. Some schools have more than 600 or even a 1000+ accounts to capture all of their reporting requirements. New requirement – add some more codes. After a few years it’s a mess.

In addition the ladies in the office need to develop special rules around what goes where. The system becomes so unwieldy that all the effort is in putting things in the right place and reporting becomes expensive and hard. Even worse, reporting gets delivered months later and is hard to understand. School stakeholders don’t have the information they need and are running blind.

Relational databases solve this problem, they allow multiple dimensions to be modeled. In Xero we’ve implemented these as Tracking categories. You can read more about Tracking here. http://help.xero.com/#Settings_Tracking.

So far we’ve kept Tracking pretty simple in Xero for our small business customers. But schools need another few levels for detailed school reporting. We have this work on the plan for later this year. Right now our critical path in this area is end of year reporting, which allows flexible reporting based on Tracking codes. Once this is complete then we can extend tracking to where we want to take it for schools. Already we’ve added other features like Fixed Asset importing that are also important for school administrators.

It’s important to note that we are not building a School Management System (SMS). Rather, we are putting school specific requirements into our accounting engine and working with API partners like Assembly who are building a web based SMS that will link seamlessly with Xero. What we are doing for schools will allow larger businesses to get the benefits of Xero as well as discussed previously.

We’re seeing some great new School specific partners like Eclypse, Ben and Bruce at Accounting for Schools and Clyde at William Buck. They’ve been very vocal in making sure we meet schools requirements next year.

But we’re delighted that Schools are already seeing the benefits of online accounting with what we have available today. We’ve still go a lot to do but off to a flying start. Don’t forget to join us on LinkedIn to get your requirements in.

We’ve been exploring some design enhancements to our mobile version of Xero. Our plan is to build it in HTML5 using Sencha. We also plan to make device specific versions available for Android and iPhone that will offer some additional functionality.

Obviously the form factor and touch interaction of phones is radically different to standard web design, so I’ve had to adapt my design process slightly.

I found a really excellent prototyping tool called LiveView (it’s free) that let’s you display whatever is on your Mac screen on your iPhone. It even lets you tap on the phone to trigger mouse clicks on the Mac. That way I can simulate real app navigation and interaction.

It’s so effective that I managed to fool Craig, our CTO, into thinking I’d actually built a working version of the app.

Considering the uproar about iPhones and Flash, it’s pretty ironic that I’m using Flash to design our iPhone app and thanks to LiveView, technically speaking, I’ve got Flash running on the iPhone. In all the bashing Apple has dished out regarding Flash (most of which I agree with), I wish there was some acknowledgement about the influence Flash has had on the design language and interaction experience of the iPhone. The iPhone’s animated interfaces and massive success with casual games owes a huge debt of gratitude to the extensive history and evolution of Flash mini games from the likes of Orisinal, Miniclip and the early generation of animated interaction design experiments by Praystation.

Also, thanks for your feedback on our direction with the mobile version of Xero Personal.

In the ‘old world of business’ – as a side observation; five years ago that phrase used to be wishful marketing-think, but not so much these days – the costs of distributing products (even software) were so huge that unless your market share was a healthy double digit percentage then your market share was soon to become no digit percentage. The internet has blown that reality to smithereens.

The Long Tail principle gives support to new market entrants whose costs start low and scale with the success, or not, of their fledgling venture. But, interestingly, it does a quick 180 degree turn if you’re a big, established player because while any measure of market share for a tightly cost constrained 5-man start-up is 100% pure upside, anything other than a strong podium finish for a big established player is corporate Kryptonite.

Big incumbents dripping in overhead will ultimately be forced to respond to shifts in market demand and bring new products to market. Some observers counter criticism of large players’ laggardly tendencies by noting that they are well protected from the ill effects of failure by virtue of large cash reserves, brand and recurring maintenance revenues, and these will enable them to simply power new products through slippery patches of market acceptance when they finally get around to it.

However, it seems it’s not that simple and the roll call over the last couple of years is telling.

Microsoft showcased and then promptly strangled before launch a range of new tablet PC devices shortly after Apple announced (announced, not launched) its iPad. The once heralded but ultimately botched Google Wave lasted barely ten months in market before it was relieved of its duties last week, and after its ill-fated homage to Keystone Kops style SaaS, Sage canned its SageLive product to save it from any further embarrassment last year after some tentative market testing. And even when you get it right, it’s still pant-wettingly volatile; analysis shows that more than 50% of Apple’s latest quarterly revenues were derived from products that didn’t exist three years ago.

Wow.

So, while big incumbents undoubtedly have the security blankets of healthy cash incomes, brand, and large customer bases exhibiting the symptoms of Stockholm Syndrome – often wilfully misread as customer loyalty – the required and precise musculature to knock-it-out-of-the-park innovate with assured success is often, aside from a couple of truly exceptional cases, completely lacking.

And that levels the playing field somewhat.

And it’s all about Widgets. Look at the screen of the Streak. You see information.

I first saw the Dell Streak about 3 months ago and I pretty much laughed it was so big. You can’t be serious that thing is a phone.  It’s huge. But since then I’ve had an iPad and I’ve got used to tablet computing.  I like the space on the screen.  When I do calls it’s often in the car on Bluetooth or I can easily use a Bluetooth headset or the speaker phone so big doesn’t worry me so much anymore, if you get screen space.

The big difference is how the Android Operating System uses widgets. That is, each app can have its own dashboard that can be displayed directly on the desktop(s), which can be easily scrolled through. This is fundamentally different to how iOS works on Apple devices. iOS is an app centric interface. You have to launch each app to use it. I didn’t realize how broken and limiting this is until I played with Android. With Android you just view widgets. Clocks, Stocks, FaceBook feeds, your CRM system, Tasks, your bank balance – whatever YOU want. Anything you want to drill into you can, which then launches the application. That truly is information at your finger tips, being able to see at a glance the key information YOU need without having to think about applications.

Already there is talk of iOS5 and a smaller iPad device. iOS5 has to have widgets, and Apple has to get there soon. Widgets are such a better metaphor than apps that the iPhone seems kinda pointless without them. And if you are going to have one mobile device, this bigger form factor is better. Maybe Dell were right with this sized device.

Apple has kept such tight control of the phone experience. I thought I would value being on the one platform. Today I feel quite different. Already I’ve noticed that notifications are too restrictive.  I feel locked in by my music in iTunes. I feel restricted on a tiny screen. (I also miss the BlackBerry flashing red light.)

Android isn’t perfect. Exchange integration is still not good enough and the UI seems a bit clunky. But having a huge screen phone where you can assemble the information you need to run your day felt a lot closer to information nirvana than where the iPhone is right now.

This is why competition is so good. I really had thought that Apple had won. Not anymore.  Android is much more interesting now. The possibility to craft a mobile information portal, where you can see at a glance the things that matter to you without having to dive in, feels much more magical.

We’re seeing so  much innovation in hardware and software. I hope we see some standards in Widgets between iOS and Android (hopefully HTML5) so that developers don’t have to fragment their energy.

I’m surprised by how much I’ve swung on this. I wasn’t interested in Android at all before. But now I get it. Apple’s control and app centric design don’t make sense anymore.

What do you think?

I was part of the team that organised the second Ignite Wellington (New Zealand) event on Tuesday night, and the guy up the front introducing the speakers.

I’m a senior developer at Xero and enjoy getting involved with events like Ignite and giving something back to the local community. Wellington has a very active tech community, but Ignite is about more than just technology, it’s about all the things that are great about Wellington.

I was truly inspired by some of the topics presented:

David ten Have – Nothing to fear but fear itself

Dave has turned his attentions to the manufacturing and distribution of products, and is the founder of Ponoko – an innovative marketplace and distributed manufacturing service that lets people all over the world create and sell products without needing a factory.

Dave’s talk was brutally honest. He told us about the reality of starting a company from someone who’s there right now in the midst of it, rather than the success story of someone who has long since made it and has joined the start-up “speakers circuit”.

He talked about facing your fears, taking those brief moments of rest when you can, and aiming for greater heights. Inspiring!

Courtney Johnston – Ernest Rutherford

Courtney has an obsession with Ernest Rutherford, the star of New Zealand’s $100 bank note. Her story of about Rutherford’s life showed us what he achieved, and shared some insights into his career and relationships with other researchers – including her story of tracking down a picture of a wall carving. It was great to hear the history of one of NZ’s icons.

Emma McCleary – Wallpaper

I’d never thought of it before: wallpaper sees everything that goes on in your house, and the layers of old wallpaper tell a story about the lives of the people that lived there before you.

Emma’s talk made me think of the history of my family, the people that lived in our house before us, and the stories they could tell.

Nathalie Whitaker – Another List

Nathalie makes lists. She shared with us her list of things she needs help to achieve in the next three years. I was impressed by her vision about how she can enhance the lives of some people if others join in her endeavours.

Her list of cool ideas is up at http://mosquitodiaries.com/. I can’t wait for the adult musical chairs, or the rest home flash mobs!

There were 10 other great talks on topics as diverse as couch surfing, IP law, graffiti knitting and the lies we tell our kids. The videos will be online at here over the next week or so.

There are five categories and we were proud to win the Best Business Application award last year.

This year’s celebration was a very slick and glamorous affair held in the Parliament Banquet Hall again. We didn’t enter but our CTO Craig (pictured left) who accepted our award last year, was called on to hand out certificates and the award to finalists in the Best Business Application category – won this year by StarNow.

It’s great going to these events and seeing how others are building businesses online. What’s rather humbling is the growing number of people who know what Xero is and hearing them say how great they think it is. We were also really chuffed to realize that in four of the five categories, the winners were Xero customers!

The New Zealand Internet Industry Awards website has loads of photos taken on the night and the full list of categories and winners.

P.S. Linda Clarke was a great MC and the mini pavlovas and lemon meringue pies for dessert were delicious (hmmmm, not the first time I’ve mentioned dessert at such an event – I go for more than that, honest)!

We’re starting to notice some implications and new market dynamics as the industry is maturing.

When we first thought about doing Xero, we’d have assumed that three years in, we’d be doing all sorts of value added services over the accounting platform. Even though we’ve shipped more than 45 major updates, we’re now very aware that accounting is a broad minimum feature set – there’s always more to do.  So we’ve stayed focussed on that.

As adoption of online services for small business has gained traction we’ve seen a number of new services arriving that link to Xero. Because these companies connect to Xero they haven’t had to write an accounting engine. They’ve been able to focus on improving specific business processes, often in a very elegant and high value fashion.

The incumbent desktop products that have been around for many years have added many features during their time in the market and therefore often provide more than just accounting. For example job costing and payroll features are common in many established desktop accounting products.

One of the reasons these broad but thin desktop applications evolved is because small businesses do not integrate with desktop software products. It’s too expensive to have a consultant come and do it. A good example of this is Customer Relation Management (CRM). You would think that most small businesses should have a CRM system to track leads and customers, but if they have CRM and an accounting system, as soon as they create an invoice you have customer data in two places. So integrated products have been the only real option, even if they provide a pretty average user experience.

The small business web is taking things in another direction. Using web services, the web vendors themselves are integrating their solutions to work well together. This means that small business owners can get ‘best of breed’ solutions that ‘just work’ and are best in class.

If you compare Xero to desktop products there are things we don’t do, things we do much better and new services that are unique, such as live daily bank feeds. But when linked to another specific solution, like Job Costing, Sales Order Management or Payroll, the combined solutions are much better than the previous all in one approach. We’re impressed by the new solutions we’re seeing coming through which are giving small businesses very sophisticated integrated ‘best of breed’ business systems. And these are at a very reasonable price point. They also provide real choice where small businesses can ‘pick a chocolate out of each box’ to find a collection of applications to best meet their requirements.

This has further implications. Currently there is a real gap in the small to mid market accounting software space. Once businesses grow to a few million dollars in turnover the cost jump from commodity desktop accounting software to low end ERP software is high. We’ve heard of many customers who have hung onto desktop software, even unsupported software, because the new versions or next product step-up is tens of thousands of dollars.

The combined, linked, ‘best of breed’ solutions model will provide much better options for businesses as they scale up. We’re already seeing a number of ‘cloud consultants’ appearing that want to help business owners set up these linked solutions. While it’s still early days we believe we’ll see these hybrid solutions delivering value  for just a few thousand dollars per year, in contrast to the current options which cost 10′s of thousands per year. This will be very disruptive to the low end ERP space and great for growing business owners.

Opportunities:

For accountants

Keep an eye on your vendor partner blogs to find new partners and integrations. Normally they produce short videos which give you a feel for what they do. Think about who among your customers might be interested in each new solution. They’ll be glad to hear from you.

For cloud consultants

Becoming familiar with new solutions is an exciting opportunity. Perhaps working with your local accounting firms will lead to introductions through their client base.

For software vendors

Working together with partners you can gain access to high affinity customer groups. Learning to jointly market with partners will be key.

For entrepreneurs

Seeing these fundamental changes occurring in small business technology, opens up new opportunities for vertical and specialist applications, even applications that connect other applications together.

The challenge for us in the small business web is to communicate the benefits of ‘best of breed’ to customers who have been trained over the past 10 years to think that the integrated ‘all-in-one’ approach is best. But we think it’s compelling and hope our partners and other vendors begin to educate the huge small business market that they really can have it all.

What do you think about this ‘best of breed’ model?

Three months ago Justin started Cloudaccountants in Freemans Bay in Auckland, New Zealand. The proposition is almost unique. Growth in client numbers is purely organic. There’s no established client database to convert from desk-top accounting software. Clients are already Xero users or they didn’t use any accounting software, relying on the likes of spreadsheets to do the books.

“Because we’re 100 % Xero there’s no baggage with using a different system, says Justin. “I have yet to convert someone from MYOB, but clients are confident with my experience using Xero, and the efficiencies that can be gained from using such a system. Sure it’s challenging starting from scratch, but building a practice to critical mass using an online system as a core offering, is exciting. It’s where the future lies for the accounting profession.”

Justin’s website is his brochure and several clients have found him by way of Google and through the online Xero advisor directory. On the Cloudaccountants homepage clients can choose from a range of monthly pricing plans which includes the subscription to Xero. For now clients tend to be freelancers who work on contract, including graphic designers and there’s also a steady following among property investors.

A lot of interaction with clients takes place over Skype and Justin will call on clients when needed. Clients who live in other parts of the country are more than happy to be serviced remotely. Justin tested this concept himself when he had his website designed by the team at Mogul, who to this day, he’s never met face-to-face. Some team members at Cloudaccountants also work remotely in preference for a lifestyle away from the city which also allows time for parenting.

Early on Justin was excited about the move to online accounting and sought to hone his Xero skills when he joined the Xero UK sales team for a year. This experience has been valuable as he now engages with his own prospective clients.

Every file in the application is represented as a colored dot, the directory structure as lines and every developer and designer contributing as a little person. Because of the large number of files they’re grouped in to a single dot to save space. There are so many files in Xero it would be impossible to show them in a web-sized video. One second of video time represents one development day, and the video is just under 20 minutes long. (Warning, can be quite mesmerizing!)

What the video doesn’t show is the amount of planning, design, coordination and testing that is required with Xero, or any of the background tasks that run the Xero application, but it should give an idea of the scale of development that’s going on.

In the same way that we’ve seen our accounting partners embrace Xero, we’re seeing similar energy in the Xero Network ecosystem with established Xero Network partners like WorkflowMax doing wonders for many of our joint customers. Gavin George, from WorkflowMax says “Our users really love Xero with the integration between the two systems providing a perfect end-to-end business operational tool for small to medium service focused industries.”

To see start ups like MinuteDock take a category like Time Tracking and stamp their own flavour on it is equally impressive. Who would have picked 12 months ago that time tracking could be made fun again with no sign of their innovation slowing down. If you analysed this success you could point to a few reasons – perhaps it’s the exclusive focus on just Xero customers with an appetite for great usability or maybe it’s because these guys use Xero themselves every day and just built what they needed. There is a lot to be said for eating your own dog food.

One of our new Melbourne based partners, PayCycle started only after seeing the traction that Xero was getting and has become our fourth Payroll partner in Australia. They didn’t need to build an accounting system and could focus on their specialty in payroll.  Paycycle is another beautiful looking application and integrates fully with Xero.

It’s still early days for our API but we now also have hundreds of individual Xero customers that are using our API for themselves to integrate their own in-house software with Xero. A rather vocal bunch (http://xero.uservoice.com), we’re still learning how to get the balance right between the demands of improving our core feature set and extending our API to meet the needs of developers. We are listening though, and we have a heap of improvements on the way.

We have a number of new partners well advanced on stunning new applications that we’re looking forward to sharing with you over the next few weeks. You’ll be seeing a lot more of these …

With the increasing demand from individual customers wanting to use our API we’re also seeing developers like Trineo, 3Bit and Connor Software building great expertise in creating custom solutions  for our customers.

We’re very interested to know what other vertical or specialty applications you’re missing.  Let us know your thoughts.

The formal part of the meeting covered the re-election of Phil and Sam to the Board.  Phil delivered the Chairmans Report summarizing our last year. I presented some insights into our strategy.

We hosted a similar session to Auckland based shareholders and financial advisors this morning. It was great to have a good number of early shareholders we hadn’t met before.

• Chairmans Address 2010 Annual Meeting
• CEO Presentation 2010 Annual Meeting

Again we thank you for your ongoing support.

As our guest on the blog, Chris outlines WikiJob’s experience with Xero.

Before Xero, WikiJob didn’t have an accounting system beyond Excel. We shopped around QuickBooks, MYOB and Sage, but all of them were far too complicated, which meant a steep learning curve. Also, they needed to be installed on Windows which we don’t have.

I was recommended Xero by a friend. I was instantly attracted by the online hosting of Xero – far away in the cloud. Being delivered through the browser means I don’t have to worry about upgrades, backups or compatibility. We always have the latest version, and it works on all our computers, including Mac and Linux. What’s more, because it’s on the web, everybody can use it at the same time to raise invoices and file expenses in a distributed way. Even our accountant who works at her office can access it from afar.

Transition

After sorting out all of WikiJob’s old paperwork and bank statements, the transition was easy. As soon as we’d transferred over our old balances and outstanding invoices we were ready to go.

The benefits

Windows programs tend to break, and losing data is a regular occurrence for many people. We don’t have any of these problems. Because everybody can log in and use it, they can do their work without bothering me. We never had to set up any fancy network stuff or whatever- it all ‘just works’- which means we spend more time doing real work, and less time fighting software.

I admire Xero’s ease of use and focus on productivity. Automated bank reconciliation is a revolution that saves a lot of time. The invoices and statements it produces are first class, and create a great impression amongst our clients. Despite being a product of New Zealand, it has good support for the various UK VAT schemes, and is up to date with the latest developments.

Great vibe

Xero continually strives to improve the product, and has a focus on customer experience and satisfaction. The product’s strength is its simplicity, and extra features are added in such an elegant way that does not baffle the user. When I get in touch with Xero, my emails are responded to with great customer service, and even suggestions I’ve had in the past have made it into the product I now use.