Xero has outgrown its own software, Drury says

What it's using now.

Here's an interesting sidenote to the accounting software wars: Xero doesn't use its own product.

Last night, Xero boss Rod Drury posted some pile-of-paper Twitter snaps as he processed expenses.

That got my lizard brain thinking: What software does Xero use for accounting?

Rod's reply: "Netsuite. Had to move a couple of years ago as we aren't our target market."

That is true. Xero's target market is small business. And, as the company has doubled staff, then doubled again over the past few years to more than 1000, it's moved beyond both New Zealand and US definitions of small business.

"[We're] a few years away from Xero being ideal for 1400 people but we will solve this," Mr Drury said.

Investors, analysts and tea leaf readers will find it interesting that Xero's founder is looking to move up the food chain at some point (his more usually canvassed strategy – which I'm sure we'll continue to see – is centred on adding more features for small business customers, and its recent US-only iPad app was aimed at freelancers).

Netsuite makes sense in the meantime. It's cloud-only, in line with Xero's philosophy, and not a competitor in the markets where Mr Drury's company plays today.

And no, in case you're wondering, he's not interested in buying the US-listed company[ NYSE:N], which has a market cap of just over $US5 billion.

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