Cloud firm accounts for growth with a €3.5 million investment

17 Dec 2009

Data centre player Data Electronics is among a group of investors that has taken part in a €3.5-million funding round in the fast-growing cloud software firm AccountsIQ.

Data Electronics Investments (DEI), the investment arm of Data Electronics Services (DES), led the round with support from existing investors Enterprise Equity, the AIB Seed Capital Fund and industry veteran Gerry McKeown.

The funding will facilitate AccountsIQ’s continued international expansion and product development plans through to profitability. As part of its investment, DES will provide a Service Continuity Guarantee to underwrite the provision of the AccountsIQ service.

A bit of background

Data Electronics is an indigenous data centre company, with more than 30 years’ experience in the field. In 2002, the company expanded its Dublin city operations by acquiring a 22,000 sq-foot data centre in Kilcarbery Park in west Dublin. And, in recent months, the company opened a second major data centre in Ballycoolin, with more than 40,000 sq feet of data centre space, representing a capital investment of more than €25 million.

The move will eventually double Data Electronics’ workforce to 100 people, while the company will have data centre capacity of more than 100,000 sq feet in the next five years.

AccountsIQ’s chief executive Tony Connolly says the investment will enable the company to grow into emerging markets for cloud computing services.

He says the major contract his company won with the Australian arm of Deloitte to provide small to medium-sized enterprises with online accounting services is a good indicator of the global direction AccountsIQ is heading in.

Up online

The deal transforms accounts software from an office-based application to something that resides online and can be paid for from operational spend, as opposed to a large capital investment.

The technology, which was developed in Ireland by AccountsIQ, will be offered as an online service through the Deloitte Digital division as an own-branded solution.

In Australia, Deloitte Digital is pioneering the delivery of online professional services. It expects AccountsIQ to play a central role in expanding the services it offers, helping it to change the paradigm for the delivery of professional accounting services.

“AccountsIQ provides customers with the ability to securely record transactions, monitor performance and prepare financial reports. We see this as a fundamental change in the way accountants work and in the type of the work they can do,” explains Peter Williams, CEO of Deloitte Digital.

“It changes the nature of the client-accountant relationship from a once-a-year contact to an ongoing conversation, from accountant to business adviser,” he adds.

AccountsIQ’s business model

Connolly says AccountsIQ’s business model centres on recurring revenues, as firms move from investing in software as a capital investment to an operational expenditure.

“This means it takes time for cloud computing ventures to build up recurring revenue streams. Good working capital resources are vital to build the company as it goes about closing deals.

“We are committed to the cloud and software-as-a-service as an operational expenditure business model. Even though it is new technology, it is gaining recognition and we will be focusing on opening up new markets, particularly the UK and the US.”

AccountsIQ has developed an innovative online accountancy platform that allows accountants, franchisers and businesses with multiple locations to access their accounts and business records via the internet in real-time with total security and minimal overhead costs. It was launched commercially in 2007 and already has over 1,500 live users in Ireland, the UK, Australia, the US, India and Portugal.

Brian Kelly, chairman of DES, explains: “This investment reflects our belief that AccountsIQ has developed a truly innovative proposition that represents the future of online accounting and business solutions.

“As investors in managed services over the past 10 years, we are very aware of the rapid trend towards using the internet to deliver secure, online solutions. This trend means increasing numbers of businesses will move their accounting and business services into the cloud. AccountsIQ is leading the way in this growing market.”

Gerry McKeown, chairman of AccountsIQ, adds: “It is a great testament to the AccountsIQ proposition that it attracted this funding in the current climate. The AccountsIQ product represents over 40 years of product development and is now well proven in the marketplace, particularly in businesses with multiple locations.

“It is now set to capitalise on the major move to online services that businesses are making internationally.”

By John Kennedy

Photo: AccountsIQ’s chief executive Tony Connolly.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years