I attended the two days of Xero’s annual conference on 4 and 5 September. I did not make it to the wrap party so can’t comment on that.
There was less hype this year compared to last year. It seemed a bit calmer and reflects, I believe, the growing maturity of Xero as a business. I think it also reflects the impact of Steve Vamos as CEO in the last 18 months since he took over from founder Rod Drury. Rod was there and attracted a lot of attention as expected but Xero is clearly no longer just about him.
The conference was a mix of plenary sessions where all 3,000+ attendees where in the main auditorium, concurrent breakout sessions, and an exhibition of primarily Xero add on partners. Overall it was well run and I enjoyed it. There was a skateboard half pipe in action and you could design your own skateboard deck with input from the artist in residence. That was not for me but I did indulge in the pineapple donuts hanging on a yellow wall.
A community and a platform
The conference theme was “communities of purpose” and there were countless references to the Xero community / communities. With a reported 1.8m subscribers and 800 app partners globally and 5,000 firms in Australia using Xero Tax it is now a pretty big community too! Steve Vamos said 10 new app partners are being added each month. No mention of how many exit – it seems to me that the demise of some of them is inevitable. In some segments there are quite a lot of options and I just can’t see the market being big enough to support them all. There was also a lot of talk about Xero as a platform and wanting to make things simple, seamless, smarter.
It seems clear that the Xero vision includes collecting and using a very big bucket of data. This has probably been apparent for a while, but it is now abundantly clear that being able to capture and use lots of data is going to be a part of how Xero sees itself adding value. One obvious application is for the businesses to be able to benchmark their performance against others in the same sector. There is some of this going on now but Xero (and MYOB and Intuit) will have so much data they should be able to do this relatively easily. Presumably they will want to charge for this. For now we can see some general insights from the data here:
https://www.xero.com/small-business-insights/
And here is an explanation that explains the insights are based on “anonymised, aggregated data drawn from hundreds of thousands of our subscribers”:
https://www.xero.com/small-business-insights/about/
Product Announcements
There were a number of small product announcements made but nothing I would say was massive. One that caught the eye of quite a few people was an improved integration with Stripe to allow for auto monthly invoicing and payments and an improved data feed to make reconciliation of receipts much easier. There is some overlap here with the functionality of Practice Ignition, one of Xero’s popular partnerships. When I looked at the reviews of the current Stripe integration with Xero they weren’t that flash so they will need to have lifted their game as part of the new functionality if they are to have happy users.
XPM is being tweaked in a few places but again nothing massive. I find it a bit puzzling that Xero are not investing more in XPM. One criticism of XPM that I regularly hear is that reporting from it is poor. Xero have announced changes in this area and when I spoke with the XPM product manager he acknowledged this has been something he gets asked about a lot. So by the end of 2019 we should see some reporting improvements in XPM.
Speaking of practice management applications (which XPM is) Xero announced a formal partnership with GreatSoft and reminded us of their partnership with Wolters Kluwer iFirm. Both GreatSoft and Wolter Kluwer have cloud based practice management applications which integrate with Xero Tax and Accounts. Xero has made the decision to focus on the smaller firms with XPM and leave larger firms to choose one of these two options.
There was also a very basic cashflow forecasting tool announced which I think looks just 30 days out. In the short term this is not going to trouble the big providers such as Spotlight Reporting, Fathom, Futrli, Cashflow Story or Castaway. It looked to be very basic but if it encourages business owners to be more mindful of cashflow then it can only be a good thing.
E-invoicing is something we are going to hear a lot more about and Xero, like MYOB, appear to be working on building the number of other businesses who can invoice directly into a customer’s accounting system. The irony here perhaps is that if this gets up and running in a big way (and it seems inevitable that it will) then Hubdocs, which Xero bought a while back, could potentially be irrelevant.
Conclusion
The shift from a cloud accounting application to a platform at the centre of the SME business community is well underway. Xero as a business is maturing. As an accounting firm coach and mentor I would like to see more effort going into sorting out XPM but some small improvements in that will be nonetheless welcome. And I’m still a bit confused about where HQ is going.
Xerocon 2020 was announced for 9 and 10 September in Sydney and I dare say there will be a huge attendance there.