MYOB sees online strategy helping fend off rivals after three-year turnaround

MYOB Group, the Australian payment solutions software developer that floated on the ASX this month, says it is confident its move to online products has been nimble enough to protect market share from upstart rivals such as Xero.

The Melbourne-based company has shifted its focus from desktop software to web-based services to head off the challenge from cloud-based rival Xero, which has seen its fastest growth in MYOB's main markets of Australia and New Zealand. The strategy will ensure the company retains its dominance, chief technology officer Simon Raik-Allen told an Institute of IT Professionals event in Wellington yesterday.

To meet the demands of the new environment, MYOB had to throw out its old model of six-monthly or annual updates to its products, become more nimble in the way it services customers, and place greater emphasis in capturing the growing acceptance of web-based software. MYOB is now at the end of its rapid change, with about 67 percent of customers now using its online services since 2011.

"We're somewhere in the zone of change right now," Raik-Allen said. "We're in simplify mode now, bringing down the complexity."

MYOB listed on the ASX this month, raising A$833 million as Bain Capital sold down its stake in the firm. The shares recently traded at A$3.65, the same price the shares were sold at in the initial public offering.

Raik-Allen said the company had tested the online waters in 2001, but decided against pursuing that after a survey of customers showed they were lukewarm about the move.

"Maybe we put too much credibility on that survey," he said.

When Wellington-based Xero started gaining traction, that was one of the factors that forced MYOB's hand in making the change. Xero took out full-page ads in newspapers across Australia and New Zealand heralding the death of MYOB, which seized on them to help motivate staff to embrace change, Raik-Allen said.

MYOB's strategy to fuel future growth is to focus on cloud-based systems, having spent A$100 million over the past three years on research and development to support the shift away from desktop products, according to the company's prospectus.

"MYOB's strategy is to continue to focus on being a leading provider of cloud enabled business management software solutions in Australia and New Zealand," the prospectus said. "MYOB will seek to maximise the benefits of cloud solutions to generate greater penetration and usage of cloud products and grow customer lifetime value and average revenue per paying user."

Raik-Allen said the company is also continuing to bolster its product offering with extensions such as the mobile payments application PayDirect and its recent deal with US firm OnDeck, whose platform helps facilitate small business loans, which will be available to Australian small and medium sized enterprises later this year.

(BusinessDesk)