Australia’s ultra-competitive cloud accounting industry is muscling up to secure market share within small business.
This week MYOB restructured its business internally to “better align” as rival players like Xero and Intuit honing their Australian focus.
MYOB boss Tim Reed told Business Insider the company has run separate product, engineering and marketing teams for small businesses, enterprises and accounting practices and the restructure will align those teams.
“What we’ve done is go through and take all of the product resources, the product managers who work out what needs to be built, the user experience who design the software interfaces and the engineers who build it and then combining them into one engineering and experience team,” he said.
“If you look at the history of our category, we’ve had quite separate products for each of those different constituents, but we believe, going forward, in an online world, what the clients are looking for is a seamless experience which represents their particular role or function.”
The realignment has resulted in about 15 redundancies, but the company currently has 50 positions open and Reed said they are working to transfer employees into new roles where appropriate.
“Whenever you restructure there are some places where you have two functions in one division that then come together and there’s only a need for one of those people going forward,” he said. “Our hope is in doing the restructuring that as many of those people who had roles where their position has been made redundant will be appropriate for one of the open jobs that we have at the moment.”
Reed would not specify which roles were made redundant, saying they “are varied across the business”.
He said despite the redundancies and restructuring the company’s total headcount is growing, up from 800 almost three years ago to about 1200 people today.
The restructure also includes a number of management changes. Current GM of enterprise and connected services, Andrew Birch, will become GM of industry solutions – a newly created role which will be in charge of the company’s cloud solutions. Kevin Rawlings, previously MYOB’s national client relations manager will become GM of practice solutions and Adam Ferguson, who is currently GM of the accountants division, will become GM of engineering and experience – the newly formed division.
MYOB hopes the changes, which take effect from December 1, will help its customers move more seamlessly between its products.
Last week it was reported MYOB had appointed a number of global banks, including Bank of America Merrill Lynch, Citigroup, Goldman Sachs and UBS to run point on a potential float.
In September Reed said an IPO is a possibility when he stated, “We have greater flexibility in debt arrangements, we have lowered the cost of our debt and have built in the flexibility for a possible market listing in the future.”
Today he said “We’ve certainly made no statement about the fact that we’ll be making an IPO – those are rumours that are in the press.”
The float, which is expected to happen next year, could attract a valuation for MYOB’s private equity owners Bain Capital of between $2.5 billion and $3 billion.
“Bain are a private equity firm and at some point in time they will look to exit the business. Whether that’s through a trade sale, whether it’s through a sale to another private equity firm or whether it’s through another IPO is something we haven’t determined at a board level,” Reed said today.
“I certainly can’t comment on the confidential workings of a board.”
Reed is confident with 21% year-on-year growth MYOB is in a good position to be a competitive force in cloud accounting.
“I think the market is in a really exciting space,” he said. “We’re going to continue to see growth in the industry overall and there are a number of competitors vying to take a part of that category growth.”
But on whether cloud accounting wars are becoming increasingly aggressive, Reed said he didn’t think so.
“It’s always been a competitive industry. I’ve been in it 12 years and if I think back to some of the end of year promotions and things that Reckon used to do, eight, 10 years ago, I think they were more aggressive than frankly any of the behaviour I’m seeing right now in the category so I don’t think that’s changed – it’s always been a competitive industry,” he said.
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