THE MACHINATIONS of the UK accountancy software world are rather more complex than may initially appear, and is demonstrated by Thomson Reuters’s decision to end its corporation tax software tie-up with Sage.
The decisions was taken a year ago, with a run-off period to allow Sage to construct its own offering, and confidentiality agreements meant neither party could discuss the decision externally.
It leaves around 2,000 Sage clients in the SME space with a decision to make – one Sage (HQ pictured) believe will see three-quarters stay with them. Accounting practices will be of great influence – as they are often the ones undertaking the tax work on behalf of clients.
Attention on retention
With Sage typically looking at a 94% retention rate, their estimate for the new tax product suggests they don’t expect it to be a walk in the park to get clients to seamlessly shift across onto their shiny new proprietary software.
Under the bonnet, Sage’s latest corporation tax offering – aptly named Sage Corporation Tax – bears no relation to the Powered by ONESOURCE product that went before it, licenced from Thomson Reuters’ Digita.
The product has been built “from the ground up”, according to Paul Tooth, managing director of Sage accountants’ division UK & Ireland, and ergo, he says, “is sleeker, more stable and capable” than the ONESOURCE offering which, built on spreadsheets, was “creaking at the seams”.
The new product’s functionality includes the completion of the CT600E charities schedule; the ability to deal with multiple trades and; the inclusion of enhanced reporting and administration.
To ensure a smooth transition for clients, Sage will be providing a support package to all existing customers, comprising a series of customer events throughout the UK, telephone consultations, a telephone support line, training webinars, transition support packs and assistance with installations. All customers will receive transition information well in advance of their current licence expiry.
Easy Digita transition
But, naturally, Digita (the brand for Thomson Reuters’ tax products) has something to say on that. For its part, it ended the relationship with Sage after concluding its energies and resources were better focused on its own products, without maintaining a service for a competitor.
Instead, Digita says, a painless, trouble-free transition for existing Sage-branded ONESOURCE clients will be available, whether practitioners or direct SME clients, with no need for data conversion and no retraining.
Digita’s offerings to practices and SMEs will provide all the same features and an identical user experience, plus enhanced management reporting, allowing them to continue using software they are familiar with, says Digita’s managing director Andrew Flanagan.
Also watching the fun and games between Thomson Reuters and Sage is another rival: Iris. The third player in the market is, it’s fair to say, smelling blood – and a greater market share in the £165m compliance sector.
Iris: smelling blood
Iris chief executive Phill Robinson says this latest development would see customers “lose trust” in Sage after “this latest mis-step” – citing Sage’s IXBRL deadline woes and being behind on auto-enrolment. The split from Thomson Reuters, on top of Sage’s previous issues, could persuade clients to switch.
Only a small number of Iris customers use ONESOURCE, says Robinson, and so it would represent a significant number of entirely new clients for the software provider.
“It’s very much an opportunity for Iris. There’s a broad range of customers available, they’re in Iris’s sweet spot and we feel they’ve been let down,” he says.
While the market competition leaves Sage with a serious challenge in hitting its 75% target, crucially Sage says there will be no price rises, while clients are under no immediate pressure to make a decision, with a year’s grace afforded to them.
“Sage has made a seven figure investment in a new solution that has usability at its heart and is designed to save time when generating corporation tax returns for clients,” says Tooth. “We’ve made it easier to learn and easier to use.”