Australian small business accounting company Reckon is shifting its competitive strategy against the industry's top leaders, MYOB and Xero, reports in the Australian Financial Review said Tuesday (Feb. 12).
Reckon, which was recently the target of a failed takeover effort by MYOB, has reportedly decided to pull out of the market of accounting software marketed directly to small businesses. Instead, the company is working with the Institute of Public Accountants to white label its solution, while also refocusing its energy to grow its healthcare practice management and payroll software tools.
According to the publication, the shifts signal Reckon's acknowledgement that it can no longer effectively compete against MYOB and Xero. The company posted a 6 percent decline in 2018 revenue, though underlying profits increased for the full year.
“We've had to move away from a direct competition with the likes of MYOB and Xero,” said Chief Executive Sam Allert in an interview with the publication. “We run our own race and we run a different business to MYOB or Xero, but their model is to throw a lot of money into things like marketing.”
He added, “We have really good products, so it's about being smart and coming up with strategies to enter the market where we can get more penetration.”
Allert also said that Reckon will look to enter new markets with less competition, including the medical and healthcare sector. The company recently signed a deal with the Australian Physiotherapy Association as part of that expansion effort, he noted.
Last year MYOB pulled out of a proposed acquisition of Reckon, which stunted Reckon's subscription revenue growth for the year as potential customers waited to see what would happen with the takeover before committing to new business, reports said.
“There's no question in my mind most corporate transactions [like the MYOB-Reckon deal] should be done in a month or two, not seven or eight — only to then have the deal fall over,” said Allert.