Starting in 2006, it has grown phenomenally to reach a market capitalisation of more than $2b in just seven years.
But while Xero may be the runaway success story, other cloud-based Kiwi software companies have been quietly building on its momentum.
Christchurch-based goRoster (www.goroster.com) is one of them – and managing director Chris Tacon credits Xero with creating the environment it can succeed in. “When we started, that way of delivering software over the internet was quite new for businesses,” he says. “People expected us to visit them – there wasn’t confidence in buying web-based applications without seeing someone.
“The success of Xero has proven to businesses that there’s value in buying cloud-based software without having to meet and shake the hand of the person you are buying it off.”
From a customer base of “a few dozen” in its first couple of years goRoster grew to around 200 in 2010. And it’s really hit its straps over the past two-and-a-half years, growing by more than 300%.
goRoster has a niche market: organisations for which rostering is a major business issue – particularly in the hospitality sector. It scored a couple of major coups, winning the business of Eden Park Catering Ltd in the build-up to the Rugby World Cup, and of Victim Support – whose contact centre is staffed by 130 employees and 1100 volunteers.
But it hasn’t all been plain sailing. The company began around the same time as Xero, when two Christchurch bars came to Chris and his team, asking for software to help solve their staff rostering problems.
“We took a look at that and saw there was an opportunity to develop something that could be on-sold to others,” said Chris. “After all, the biggest controllable cost in the hospitality industry is the staff wage cost.”
They developed the software for the two bars – one of which had around 100 staff – and then released it to the wider market. But it didn’t take off.
“We spent a lot of time with potential customers who would say things like ‘If you just built this into it, it would be much better’. We were trying to be everything to everybody.”
After about 18 months adding features just about every time a potential customer suggested them, the business was no further ahead. “It became apparent that things had to change,” says Chris.
goRoster took a step back and decided to simplify the value proposition: it would provide a value-for-money, cloud-based rostering software designed to meet business’s major rostering needs easily and efficiently.
It worked. Businesses started signing up, and goRoster developed with them. But rather than adding every new feature customers suggested, the company took a numbers approach. “If we see the same thing being asked for again and again, that will move it to the top of the list.”
There have been other opportunities to go wrong, but goRoster has studiously managed to avoid them. The biggest temptation was to branch out of rostering, and take on time and attendance (clocking in and out) and payroll functions.
“Most of our competitors do more than one of these things,” says Chris. “But if we start doing time and attendance or payroll, we have to learn about that whole other side of the business. We’ve decided, let’s leave it to the experts and concentrate on adding value in the area we know well.”
Instead, he says, goRoster enhances its value proposition by integrating with other specialist systems. “If someone wants to use our system and asks ‘What payroll systems can I use this with?’ we’ll say ‘Here’s a list of them’. And if they ask ‘can you integrate with X payroll system?’ we’ll say ‘I’m sure we can’.”
This approach adds referral opportunities and value to both businesses, he says, while still leaving them to concentrate on what they do well.
The attitudes and skills of Kiwi developers give goRoster, and our other software businesses, a real competitive advantage, says Chris.
“We have very clever people who are also very practical people. Most of these guys and girls who are working here grew up learning how to drive a truck or mow a lawn and do practical jobs. So as well as creating software, they can see practical issues – they can understand how something works in the real world.
“They’ve also come through a really good education system, so they’re not just practical, but highly skilled.”
Chris doesn’t want to give too much away about where goRoster is headed next, except to say it’s in a development phase – and you can be sure that development won’t involve diluting its focus from its core proposition.
So far, most of goRoster’s growth has come from New Zealand, but this year, two out of every three new customers have been from Australia.
goRoster may be getting set to take on the world. Thanks to the path Xero has forged, the world may just be ready to take on goRoster.
SUCCEEDING IN THE CLOUD
There are, says Chris Tacon, three secrets to making a cloud-based software business work (other than the obvious one of providing software people want to use). goRoster learned them the hard way – but you can learn from their experience.
- Focus on what you’re good at. Software that does one thing really well is of more use to businesses than software that tries to do everything, and does it all indifferently.
- Get external advice. Advice from specialist IT marketers and a search-engine optimisation specialist has helped goRoster to grow.
- Don’t be secretive. If your sales strategy is cloud based, you have to be visible. goRoster makes its trial software available to anyone, with no registration. Its instruction videos are on YouTube. “Our competitors can see what we do and how we do it,” says Chris. ”We can’t afford to be worried about that if we want to reach the people who need it. Our customers aren’t going to change just because someone can do something similar for $5 cheaper.”