In what many consider a surprise move, Wolters Klewer has acquired Twinfield, the Dutch based SaaS accounting vendor that manages over 80,000 organisations.
The terms of the deal were not disclosed so I guess we'll have to wait for W-K to file accounts later in the year. According to the blurbs:
This is the first major acquisition of a European SaaS apps vendor so is of special interest and especially for those interested in figuring out where to place their bets when acquiring SaaS technology.
In this case, the marriage looks good. On the one hand W-K needed to find a SaaS solution to expand its footprint in countries where SaaS is increasingly accepted as a viable alternative to on premise solutions. From Twinfield's perspective, W-K brings a great deal of experience in the professional accounting markets plus the fact that at many levels, Twinfield is non-competitive. "Even though Twinfield has successfully established itself, we need more feet on the ground. Wolters-Kluwer have those people available," said André Kwakarnaat, founder of Twinfield.
Henri van Engelen, MD of Wolters Kluwer tax & accounting Europe, said to me: "Online is clearly a primary need for us as we pursue expansion opportunities. In some territories, online has become mandatory for competitive reasons.
During our conversation, both Kwakarnaat and Engelin were keen to stress the non-compete nature of the two solutions but that isn't entirely correct. In the UK for example, the requirement to file electronically, which in turn introduces the spectre of iXBRL is something Twinfield can readily achieve. CCH, a W-K company in the UK that serves practising accountants has its own CCH iXBRL Review and Tag solution.
It will be interesting to see which of Twinfield and CCH win in the inevitable technology battle. What else does this latest development mean? Colleagues have speculated for a while that some form of consolidation in the SaaS accounting market was in the wind. I always take those rumours with a pinch of salt until I see cheques being triumphantly waved in the air. Indeed, it is perfectly feasible to envisage not one but several vendors finding space in this marketplace.
It will be just as interesting to discover how W-K navigates the on-premise and SaaS worlds. The two can co-exist relatively happily. For example, many of Workbooks.com customers use Sage Line 50 for the back end. For those customers, the transactional accounting engine is something they have to do. I see lots of opportunity for reshaping accounting, de-emphasising the statutory and compliance roles in favour of value add back to the business through the provision of data driven advisory services. But all that may be pie in the sky for the time being. One colleague who recently attended a CCG conference said this:
I understand that. Earlier this week, I presented on the topic of no-nonsense cloud accounting at a CIMA seminar. The Q&A questions almost wholly fell into one bucket: 'security.' It is a legitimate concern but it is way overblown and only of use to those pundits willing to pimp some vendor's latest diet of doom and gloom. Hundreds of thousands of companies around the world have been trusting their most sensitive data - payroll and HR administration to ADP for many year. What's so special about entries made in a general ledger? Nothing.
Salesforce.com claims to run your business and everything it offers is in the public cloud.
In other discussions, the same theme recurs. It is clear the vendors have yet to make a convincing case on this point but with the W-K brand behind Twinfield, they might have a very good shot at by-passing those concerns. Of course the question on everyone's mind right now - what the heck is Sage going to do?
