At the Xerocon event in London this week, Xero revealed its future strategy for accounting. It will comprise three waves: cloud accounting, business apps and services in the cloud, and to be the most trusted and insightful small business platform on the market.
We asked Xero CEO Steve Vamos how the company intends to roll out this strategy to win over accountants in a global market.
“We now have 3.3-million subscribers, up from 1.8-million when we’re last year,” says Vamos. “We have now got 4,500+ Xeros (employees) around the world, up from 2,500. Over the last three years or so, most of our metrics have pretty close to doubled: revenue, investments, and other areas of the business. We’ve been fortunate to have that kind of momentum, which means that we’ve been able to do what we’re here to do, which is to execute our strategy.
“There’s a trade-off between a feature today and an investment for the future. We’re striking a balance between this and that’s the right call to make. There are three waves of evolution, and I want to make it clear that wave one, which is cloud accounting, is not done in a lot of small businesses and is still where the majority of our investment is. That is in practice tools like tax and compliance, bank feeds, bank reconciliation, and core Xero features.
“The second wave is applications and services. It’s about getting small business customers to get payments implemented online, so they get paid faster. It’s about giving them tools to manage their employees more effectively. It’s about the integration of other key functions of small business (like inventory) and these are reflected in the Xero app store, the app ecosystem, and our acquisitions and partnerships.
“The third is trusted insights and that evolves all the time. It’s the data play if you want to call it and that’s growing. Today, we’re leveraging data in everything we do to try and make Xero smarter and make the lives of our partners and our customers easier. But we’ve got a long way to go to create this notion of Xero as your advisor in the cloud, the advisor to the advisor, and I position it that way deliberately because I believe that no matter how good technology gets, people operate small businesses do what they do rather than question how they do what they do.
“The human element of advice is very compelling and a key part of the future. I believe that the opportunity to commercialise small business advisory and coaching, which many of our smart partners are doing today. They’re moving from ‘pay me to do your tax return’ to ‘pay me a monthly fee to sit down with you and advise you on how the month went’. They look at Xero and pick up the areas where you need to think about doing things differently. That’s already happening and I think there’s going to be a big future there because small business people get less coaching than a child trying to learn to play a musical instrument.
“These three waves create our broad investment story, from wave one to three. We believe this is the future of cloud accounting.”