Adoption of modern small business accounting systems is stalled

Results of a new research report published in CPA Trendlines, conducted by accounting technology consultancy Software Advice, confirm what I already suspected: the mass migration of small business accounting systems from desktop to cloud is not going as predicted. Small business clients are raising objections and remain unconvinced of the benefits or switching. The objections are based on inaccurate information but apparently accountants are ineffective in setting the facts straight. While most people have accepted that virtually every other part of their technical lives use cloud-based servers (online backup, all social media, all large business systems, CRM platforms, OneDrive, iCloud, Google Drive, banking, taxes, etc), this acceptance does not extend to small business accounting.

I suspect (but have no proof) that there is resistance among small business owners to committing to the subscription cost (typically about $40 per month) and perhaps an underlying belief that their data is being mined for marketing purposes. Additionally, I don’t see any evidence that small business owners are aware of the benefits of these systems in terms of improved security, lower costs, time savings, faster linking/updating  with bank accounts, etc. that easily offset the cost for even the smallest businesses. I don’t think that accountants are effective in communicating the tangible benefits of a modern accounting system.

The two “biggies” of online accounting in term of market share are QuickBooks and Vend. QuickBooks is available as either desktop or online. Vend is for retail businesses and is only available online. There are many other great systems with smaller market share.

I wrote this comment on a forum for CPAs:

“A closer look at this article on the research report from Software Advice reveals that it is not the platform so much that clients object to but rather apparent misperceptions of the systems. If you look at the reasons cited for not adopting a system, it’s fair to say that they are simply not accurate; security, cost, training can easily be demonstrated to be more favorable than desktop accounting systems (specifically QB). For example, it is not logical for a well-informed business person to believe that cyber-security risks are greater than the security risks of a desktop system. Yet apparently that believe is held. So that brings my point full circle to the starting point where I would have expected that accountants could easily show why cloud is better on any imaginable metric. My gut feeling is that there is something missing from this story; perhaps an underlying psychological resistance to explain why clients avoid subscription-based software purchases. Maybe we need a research report by a psychologist. Meanwhile, accountants should be questioning the earlier market predictions of small business mass migration to cloud-based software in the short-term upon which our business plans might be based. The immediate practical issue for me: do I need to go back and re-certify for the new desktop version of QB? It wasn’t part of my business plan.”

I would sum it up this way: In the past year I haven’t ever run across a situation in person or via third party report where a small business adopted a could-based accounting system and then regretted doing so. I have run across many situations where businesses ignored their accountant’s advice to switch to a cloud-based accounting system. The factual information accountants have about small business accounting systems differs from market perception by small business owners and we have to live with that, at least for now.


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