Microsoft Office Accounting to challenge payroll providers

Notes from across the pond...

The Payroll for Microsoft Office Accounting module - one of the less obvious features of Microsoft's new bookkeeping application - could be just as disruptive to the business software industry, according to a report on our sister site, AccountingWEB.co.uk.

Microsoft offers a 30 day free trial and thereafter the service cost starts at $13.95 a month.

UK accounting solution provider Digita's managing director Jeremy Rhill, who has worked closely with Microsoft for many years, was at the November 2007 launch in the UK and demonstrated how his firm's tax and practice applications could import data from Microsoft Office Accounting for management and year end accounts, personal and corporation tax calculations.

In the same way that Sage, Iris, Intuit and MYOB use their relationships with accountants to court small businesses, Microsoft recognises that payroll and bookkeeping go hand in hand, especially with online payroll filing looming, Rhill said.

"Digita has no plans to get directly involved in the payroll market, but we're happy for Microsoft to do so," he added. Microsoft's payroll plans include developing a solution for bureaux linked into the Office Live online environment, where accountants and clients could share data and documents.

Microsoft has a lot of payroll expertise in its Dynamics business applications wing, and the payroll module was a mature product that reflected that expertise, he added. And as part of the Microsoft Office family, the new payroll and accounting modules are part of a core product for the company.

"The reality is that if Microsoft parks a tank on your lawn, you're going to be concerned," said Rhill, who added that the two companies would appear at joint events such as the Digita conference to explain the Office Accounting strategy in the coming months.

While there will be discomfort across the industry, not all payroll developers see Microsoft Office Accounting as the end of their opportunities. George McHamish of Moneysoft countered that his payroll application - winner of the recent Software Satisfaction Award - costs less than half the price of Microsoft's, and was not tied to any specific accounting application.

"It's a worry when a new competitor arrives, but we already compete with Sage, which is a huge company compared to us. So another competitor like that doesn't worry us," said McHamish.

Another developer, who did not wish to be named, wasn't overly worried about the Microsoft challenge, but was not happy about it. "Microsoft collects millions of pounds in licence fees from companies like us and then they move into our market. It encourages you to start thinking about alternatives such as Linux."

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