Q&A: Xero's Australian MD, Chris Ridd

Managing Director of Xero Australia, Chris Ridd.

Former Microsoft southern region manager turned managing director at accounting software company, Xero, talks about the role of Cloud computing in the software and SME market.

What is your role at Xero and can you give me some background on what the company does?

I am the managing director for Xero in Australia. We are an online accounting software provider focused on the SME market. Our solution is a great example of Cloud computing, where customers can gain access to a business application, in this case their accounting system, over the internet via any browser and on any device, including a mobile phone such as the iPhone. Customers pay a monthly subscription fee to get access to the application, in much the same way as pay TV.

We are seeing an impressive adoption rate of Cloud solutions and we work closely with the accounting and bookkeeper community, which see huge advantages in moving their SME clients to the Cloud, enabling them to work on the same shared data and delivering huge efficiency gains and the ability to collaborate on financials real time. Xero has 50,000 business customers around the world.

What does your IT team look like?

You're actually looking at him! Seriously though, we don't have one and I'm pleased to say that we don't need one. Being a leading Cloud provider, we practice what we preach and so all of our business applications and IT requirements are serviced using Cloud offerings. Apart from some productivity applications on our iMacs, we don't own any software or server hardware. As an illustration, we recently moved to a larger office space where there was a disused data centre on one of the floors. We scratched our heads about what we would do with the space. Given that half of my team are budding musicians, one of them came up with the concept that we would convert it to a music studio. It now proudly boats a large PA system with guitar amps, drums and other instruments. Friday night drinks have never been the same!

How long have you been in operation and what kinds of projects are you working on?

Our origins are from Wellington in New Zealand where the company was formed in 2006 by Rod Drury, IT entrepreneur, and Hamish Edwards, his chartered accountant. Rod was busy running his business using a desktop accounting solution and felt there was a better way, so the two got together to seed a solution that allowed them to collaborate on financial data using the Cloud. And so Xero was born.

Ever since then we've been busy evolving the product with new features and one of the great things about being in the cloud is that when we bring new features to the product, our customers get access to them straight away when they log in. No expensive or complex upgrades or patches to install. Right now we a busy integrating full featured payroll into the product for our Australian customers which is the result of a strategic acquisition in July of local cloud payroll provider, Paycycle, with integrated functionality in Xero expected in the first quarter of 2012.

What role do you think Cloud computing plays in the startup space?

If you are starting a business from scratch today, Cloud is the only way to go. Most startups we speak with are frantically getting their business model sorted and thinking about all the pieces that are going to help them get the business going.

While accounting and technology plays a critical role in this, on-premise or desktop models soak up valuable time and money and can slow you down. For starters, you have to acquire software and hardware upfront. This can be expensive and takes time to setup because you often need to think about all the associated challenges that go with managing IT, like security, backup, integration with other applications, support, and additional users.

Going to the Cloud means someone else handles a lot of these complexities. So long as you have a laptop, a browser and a high-speed internet link, you are in business. Getting your accounting system up and running should be easy and only a minor consideration in all the other important things that you need to think about in getting your business going.

What experience did your role at Microsoft give you for your current role?

The 15 years I spent at Microsoft was a great learning experience for me. I was lucky to work in various disciplines in the business, from sales, marketing, business analysis, product management and the channel. Getting exposed to all these areas rounds out your skill set and has given me the ability to draw on the knowledge I have gained in each area.

Perhaps the most important lessons over the years were the people management skills that I developed from managing different teams. I was at Microsoft during an interesting period where they went through some significant cultural changes and learnt a great deal from some of the leaders in the business about building strong teams and the importance of nurturing an open and diverse culture.

Who are some of your local customers?

Our business is very much focused on the SME space and extremely diverse in terms of the kinds of customers that are using Xero. Our sweet spot is the micro-business owner with one to five staff, but some of our customers have staff up to 20 and much higher. Our customers range from IT startups, to restaurant owners, tradespeople, retailers and many other service-related business owners.

How do you maintain innovation in a sector that is growing so quickly?

You have to invest. Believe it or not, building a horizontal accounting system is a big job and we are constantly looking at ways to enhance the product for our customers and accounting partners. From the outset we knew we needed strong cash reserves and so have put together a very strong investment backing and board to carefully manage the financial aspects of our business.

This has enabled us to deliver no less than 60 product releases in the past five years. That's one new release every six weeks and this puts innovation in the hands of our customers way faster than an on-premise software model could hope to deliver.

We also use Twitter and LinkedIn to engage in ongoing dialogue with our customer and partners to understand the feature sets that really matter to them and help to shape our roadmap. It was one of the factors that drove us to invest in payroll functionality and acquire another business, Paycycle, back in July of this year.

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