JavaScript disabled. Please enable JavaScript to use My News, My Clippings, My Comments and user settings.

If you have trouble accessing our login form below, you can go to our login page.

If you have trouble accessing our login form below, you can go to our login page.

Backlash against MYOB

Date

Sholto Macpherson

Backwards integration, speed and demand on memory are points of contention.

AccountRight

AccountRight

The new private equity owner of Australian accounting software MYOB faces a wide-scale backlash after it released a hurried and bug-ridden upgrade that insiders now say has put the future of the popular platform at risk.

Hundreds of MYOB's partner accountants are now refusing to recommend this year's AccountRight upgrade because, they say, it is too slow, contains a number of bugs and may break existing application integrations.

The rollout follows the $1.2 billion acquisition of MYOB by private equity raiders Bain Capital last year. MYOB has annual sales revenue of about $200 million a year, of which AccountRight contributes less than half.

"It's been a frightful experience for a lot of people that have done the migration. Pretty much every consultant I know has told people not to upgrade," said a third-party developer who requested anonymity because he claimed MYOB was phoning outspoken partners and threatening to terminate their partner agreements if they talked to the media.

"A heavy majority (of consultants) are saying to their clients not to install the current release until it settles down," said Rod Collins, moderator of a private email list for 400 MYOB accounting consultants and developers.

However, some accountants have also used the AccountRight 2011 software without problems. "There will be some people who will wonder what all the fuss was about," he added.

MYOB said bugs were expected in a major release and that it had released two service packs to patch the software since the November launch.

"It would be fair to say the bulk of our partner community want the service packs to be released and to be comfortable with the performance of the product before they upgrade to the new platform," said Julian Smith, general manager for corporate affairs, MYOB Australia and New Zealand.

MYOB partners have suggested that the damage to the software vendor's reputation may turn customers to rival accounting platforms.

"MYOB are going to have to pull a rabbit out of the hat to regain the customer support and loyalty that have been severely impacted by the poor quality of this release," said MYOB professional partner Cassandra Scott.

MYOB has relied heavily on businesses upgrading their software each year to receive the latest payroll tax tables from the Australian Taxation Office, but it has for the first time provided FY2013 tax tables for last year's software as a free upgrade to those on the MYOB Cover maintenance contract.

MYOB partners were concerned about the vendor's ability to service a $575 million loan that formed part of the $1.2 billion buyout by Bain Capital. If the loan were charged at the market rate of 7 per cent the annual interest would be $40 million, said Michael McCarthy, chief market strategist at CNC Markets.

"The question is how much how much excess cash flow do they have to service the debt?" he said.

MYOB's Smith said the vendor was highly profitable with a diverse income base and that AccountRight belonged to the business software division which brought in a little more than half the vendor's income. AccountRight was but a fraction of the total, he said. The fact that many of MYOB's small business customers were struggling in a tough economy was more concerning, he said.

"The health of the Australian economy has a far bigger impact on MYOB's revenue than the take-up of AccountRight 2011," Smith said.

The software, which was rewritten on a different code base to allow for future cloud migration, was also released without the ability to connect to other business software. MYOB's add-on developers who had connected earlier versions of MYOB to customer databases were telling their clients that the upgrade would break those connections.

"I have had to go to all my existing clients and specifically say to them you shouldn't install AccountRight 2011 otherwise your system may no longer work. So consequently I've lost development revenue and MYOB has lost upgrade revenue," said David Ballantyne, a financial systems developer with over 10 years' experience.

The botched launch of the cloud-ready AccountRight could impact other key software releases later this year, said developers with close knowledge of MYOB's beta programs. Although MYOB maintained that release schedule for cloud software version was on track, none of the eight veteran MYOB consultants and developers contacted by IT Pro had received any news of beta testing for the cloud software.

Sholto Macpherson is the editor of BoxFreeIT.com.au.

This story has been ammended to correct revenue and upgrade details.

twitter   Follow IT Pro on Twitter

Featured advertisers