Microsoft helps Xero zero in on small businesses


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Microsoft helps Xero zero in on small businesses

  1. 1. Xero Solution Overview Microsoft helps Xero zero in on small businesses “Microsoft technologies have a history of being able to deliver Xero is an online accounting system designed specifically for scalable solutions to some of small and medium sized businesses. It connects business the largest web applications in owners, staff, bookkeepers, accountants and other financial the world. That experience advisors to the same financial system over the Internet. gave us confidence to build our application without having to worry about its ability to scale Born out of the frustration felt by New Zealand software as we grow our customer entrepreneur Rod Drury and specialist small business base.” accountant Hamish Edwards at being unable to find a simple and affordable accounting product for small and medium Rod Drury businesses, Xero has captured its target market’s CEO imagination. Xero Microsoft has been an integral part of the Xero story from Customer Profile inception, providing support and tools to help get Xero to Xero has built an online accounting market quickly and provide support during its critical start-up system designed specifically for phase. Less than one year after development began, the small to medium sized businesses. Based in Wellington and listed on company had almost 30 employees, more than 100 customers the New Zealand Stock Exchange, and had listed on the New Zealand Stock Exchange. Xero is run by a team of highly accomplished business, technology Fast Growth from Day One and design professionals with a passion for improving how small and medium businesses manage Xero’s founders Rod Drury and Hamish Edwards identified the their finances. business opportunity in 2003 but it wasn’t until 2006, encouraged by growing internet access, advanced web development techniques and Web Site increasing acceptance of the internet in business, that the idea came to fruition. Industry Xero’s Beta Programme began in November 2006, just five months Accounting and Legal Services Software Development after development started, involving Wellington-based small and medium sized businesses and their accountants. Following a Scenario successful limited public release that began in April 2007, the ASP Model software will be released to the general market later this year. Business-to-customer Communication and Collaboration Small businesses live or die by their ability to manage cash flow on a End-user Productivity Reliability daily basis. Doing this often requires outside expertise, such as an Scalability accountant or business advisor. Typically the exchange of critical financial data is done via email or disc, methods prone to data loss or Customer Size version control issues. Compounding these problems are high up- Small front costs for most installed accounting systems and the associated demands on staff time to keep up with software changes. As it is accessed over the Internet, Xero allows smaller businesses to understand their financial position and share data with advisors. 1
  2. 2. Software as a Service works for small businesses Business Situation The revolutionary feature for small and medium businesses is Xero’s Xero needed a reliable platform to host its online accounting software ‘pay as you go’ model. There are no upfront costs or installation on that could grow with the required; customers simply login and pay as they use the service. company’s growth plans. It also This software model is called ‘Software as a Service’ (SaaS). The needed tools to help get to market SaaS model that Xero has adopted provides an innovative means of quickly, and advice and licensing that supported it during the supplying solutions to a large fragmented market such as small and company’s establishment phase. medium enterprises (SMEs). SMEs no longer need to invest up front in expensive installed accounting software, which requires training, Solution Summary management and upgrades. The pay-as-you-go model that Xero A SQL Server 2005 database employs means customers only need to pay a small monthy fee for handles the complex accounting their accounting system – a more attractive payment model for data, while ASP.NET 2.0 provides the web-based front-end. Various SMEs, which generally have limited cashflow, than a comparatively Visual Studio tools were used by expensive installed piece of software. Xero’s developers to get a sophisticated product to market Support for global growth quickly. Xero’s founders are unashamedly bullish about their plans to create a Value to Business Reduced start-up costs world class business. Xero’s CEO Rod Drury says that Microsoft • • Rapid product development demonstrated that it understands SaaS and the technologies and • Reliable hosting platform challenges that surround deploying SaaS applications. “Having the • Integration with familiar ability to tap into that understanding to overcome future technology Microsoft Office applications hurdles is important to Xero. Microsoft also have an expansive view • Remote access for travelling staff of where this is going next with their Software and Services vision. • Multi-purpose publishing of support documentation “Microsoft technologies have a history of being able to deliver scalable solutions to some of the largest web applications in the Value to IT world. That experience gave us the confidence to build our • Scalable for global expansion application without having to worry about its ability to scale as we • Support for developers • Upgrade rights to the latest grow our customer base.” versions of software • Flexible usage-based licensing Microsoft provided tools that enhanced Xero’s developers’ productivity and an integrated set of technologies that met Xero’s Microsoft Technology need for security, reliability, scalability, affordability and ease of use. • 2007 Microsoft Office System • ASP.NET 2.0 • Internet Information Server Selecting the right technology solution for Xero 6.0 • SaaS OnRamp programme Xero Chief Technology Officer Craig Walker says Xero looked at many • SQL Server 2005 other technologies, especially Ruby On Rails. “Rails has been the • Visual Studio .NET 2005 • Visual Studio Team technology of choice for many Web 2.0 start-ups and we wanted to Foundation Server understand what Rails provided. We liked some aspects of Rails but • Windows Server 2003 did not think it was quite there for a mission critical application such • Open XML as Xero. However, by looking at other approaches we were able to better exploit the power of Microsoft technologies to deliver a SaaS application.” At the core of Xero is a relational multi-tenanted SQL Server 2005 database that handles the load and complexity of accounting data with ease. This shared infrastructure approach, where a single instance of the application serves every customer, leads to simpler management and greater capacity for economies of scale. For more information about Microsoft products Authorisation and security policies ensure that each customer's data and services, please call the Microsoft Sales Information Centre on (09) 3575576. To is kept safe from that of other customers. access information over the World Wide Web, go to: ASP.NET 2.0 has been used as the application platform which offers the power, flexibility and security to build complex web-based front- ends with ease. Web technologies that allow rich interaction, such as ©2007 Microsoft Corporation. All rights Ajax, are used to deliver state-of-the-art user interfaces, and reserved. 2
  3. 3. Microsoft Silverlight is being considered to provide a richer user experience in future. This customer solution is for informational purposes only. MICROSOFT MAKES NO The solution has been designed to work optimally with Windows WARRANTIES, EXPRESSED OR IMPLIED, IN Server 2003 and Internet Information Server (IIS). As part of its THIS SUMMARY. Microsoft, Windows, SQL Server and .Net are registered trademarks or licencing agreement, Xero has access to the latest versions as they trademarks of Microsoft corporation in the United States and/or other countries. The are released, and Windows Server 2008 and Internet Information names of actual companies and products Server 7 are expected to add incremental improvements to Xero’s mentioned herein may be the trademarks of their respective owners. deployment and hosting experience in time. Rapid development to get to market faster All of Xero’s development work is done using Visual Studio .NET 2005 which provides a fully integrated environment to allow developers to rapidly develop any style of application. Team Foundation Server is used as the source control and team management solution. Team System integrates perfectly with Visual Studio and Xero’s internal software services, such as issue and release management software. Xero is excited about the potential productivity increases from technologies like Visual Studio 2008 and Microsoft .NET 3 (including LINQ and Windows Workflow Foundation). Flexible licencing eases cashflow and startup pressures Running a successful SaaS business requires the software provider to reduce the cost of providing software services so that the marginal cost of adding new customers trends towards zero. This requires a good architecture and a solid platform to deliver the software quickly and cost effectively. “Recent changes in Microsoft’s SaaS licencing meant that we didn’t need to consider riskier open source alternatives. Because we’re building a SaaS product, Microsoft very quickly put us onto a new programme called Microsoft SaaS OnRamp. This licensing scheme makes it very attractive to use Microsoft technologies by lowering the cost significantly for the first year of production, which is always the most important year in any new software business.” SaaS OnRamp helps software companies transition to the new SaaS business model, by providing discounted licences for key Microsoft products in their first year. Xero also took advantage of Microsoft’s Service Provider License Agreement (SPLA) which allows service providers and software vendors hosting software to license Microsoft products on a monthly basis and in turn provide their hosted applications to end customers, regardless of where in the world their end customers are based. The monthly licencing cost is flexible and based on usage, meaning Xero only pays for the services it makes available to its customers each month. This cash flow flexibility lessened the demands on the company’s start-up costs. The licence agreement also gives Xero access to the latest versions of the licensed Microsoft products, allowing it to continually develop its accounting software and incorporate the latest Microsoft features in future. Xero also tapped into Microsoft’s huge resource base by joining the two-year Microsoft Empower programme, which gives software 3
  4. 4. developers access to developer tools, software, technical support, sales and marketing resources as well as phone support from Microsoft’s ISV Global Support Team. These helped Xero lower its development costs, test its software and get to market sooner. Partnering provides trust Xero has become a Microsoft Gold Certified Partner, a feat that required its sytems, process and product to be rigourously tested by Microsoft. Xero is Microsoft's first Independent Software Vendor Partner to be certified as a hosted solution provider in New Zealand. The company also has Gold Partner status in mobility. Craig Walker says Microsoft Gold Partner status was a goal for Xero from day one. “Software as a Service is all about trust. It was key for us to seek external validation of our approach,” he says. “Not only are the benefits huge in terms of licensing, but also the doors that it opens and the credibility that is brings gained with Microsoft, the market and with the wider technology community. The best benefit of being a Microsoft partner is access to an exceptional network of other companies who become suppliers, customers, resellers and partners.” Xero ‘walks the talk’ using technology to run its business Xero operates as a modern Internet enabled business. A fully integrated support system was developed with issues management, wiki-style documentation and customer relationship management tools. This system is accessible from anywhere over the Internet and by using products such as Microsoft Office Live Meeting, customers can be offered training and support regardless of their location. To deliver their user guide in different formats Office 2007 and Open XML were used to build a publishing engine to let the documentation team write a document once and publish it in many formats. Email is a very important part of Xero’s business, and Xero connects its Outlook and Entourage clients using RPC over HTTPS and Windows Mobile to allow frequently travelling staff to securely connect to email, calendar and contacts anywhere and anytime. Going global Xero’s story has attracted attention from around the world – in May 2007 Xero won the International Technium Challenge, a high-profile worldwide business planning competition. Xero is confident it has the foundations needed for its global ambitions. Microsoft’s Chief Financial Officer Chris Liddell says “it is tremendous to see a New Zealand company such as Xero building a business on New Zealand creativity and ingenuity, and with a big aspiration – to become a ‘multi-national’.” 4