Odoo is disrupting the small and medium business ERP market. It sits between large ERP systems most often used in listed companies and government agencies and small business accounting systems able to share data though API links, used by most small businesses up to $20m turnover until now.
In the past 20 years Australia and New Zealand has been spoilt with some excellent small business accounting software options sprouting locally and delivering solutions to our local business. It started with MYOB and then Xero came along to revolutionise cloud accounting solutions. I will be using these products as a comparison.
ERP stands for Enterprise Planning Software. It most often consists of multiple software products that are linked by a shared data-base. This means all systems are always using the most up to date information and information only needs to updated in one system to uprate all systems using the same data. This means huge improvements in accuracy and efficiency are capable.
Traditionally ERP systems like SAP and Oracle have cost millions of dollars to install and maintain. When some Mid-tier ERP systems became available I got excited thinking that these would change the landscape. The first ERP system I priced for a client was Pronto in around 2012. This had the feeling of an advanced version of MYOB desktop software and came to a bit over $120,000 a year. This offered a solution less than 10% of the cost of a large ERP but still more than 100 times more than the cost of MYOB software they were using at the time. The gap was still too large.
Odoo is an ERP system from Belgium and is available in online, hosted server (Odoo.sh) and server based installations. The system I looked at is the online version and is hosted in Australia, which means the storage of data is local and Australian data protection laws apply. No compliance conflicts here.
Odoo’s aggressive pricing demands a consideration given that you can gain access to all their apps for $34.40 a month at the time of writing. Xero and MYOB can offer accounting options for about the same price but software from other providers would have to be used to gain anything close to the same functionality which which can quickly blow out costs.
Xero was an early adopter of cloud and open API (Application programming interface) which is an open source coding rules to allow third party software providers to easily share data with the accounting system in a two way system. As such, they have grown the largest community of third party software providers that are able to share data with small business accounting systems in Australia. There are even a selection of applications that will help share data for programs that won’t share data directly with Xero.
This benefits clients because they can select each particular app they want in a best of class approach to building their IT ecosystem in an easy to apply system which doesn’t need any specialist programmers to assist with.
Odoo does not have this type of integration. Instead you have a range of inhouse applications available to use which are synchronised on the same data base rather than sharing data to an external party.
If there is a particular system you feel you cant go without, the best option with Odoo is to go for a server or hosted server version of this software. These versions can be modified to perform specialised tasks or share data. You will need to have some assistance from someone with some programming knowledge to implement and maintain these specialisations through subsequent software updates.
These changes aren’t available to the online Odoo version and you would have to work with the included applications or operate other software without data sharing at this time.
A personal belief of mine is that one of Xero’s greatest features that helped it grow and increase market share was its free training materials. Odoo appears to be using the same strategy. The training materials I’ve gone through so far have not been Australia specific but have been easy to understand, most terminology was easily understood with acronyms mostly avoided and quite comprehensive. I still had a bit of trouble navigating some of the menus to find where to adjust specific settings to start with. The menu system is practical but not intuitive.
Using Odoo online accounting module is most similar to an advanced version of Xero. It contains bank feeds, account receivable, accounts payable, journals and document reading/data entry akin to Hubdoc or Dext. There is definitely an intended system of workflows to adopt maximum accounting efficiency which I like. The other things that stood out was a greater number of data entry options for income and expenses, specifically suited to larger Pty Ltd or Public companies that are required to prepare General Purpose Financial statements over the lower threshold of Special Purpose Financial Statements.
Odoo is a harder to configure and use. This is partly due to the range of advanced processing setting and it’s capability to handle more complex transactions, and FX scenarios. While there is some automated configuration based on the country the system is being established in, it can go a lot further.
I like this system for the feel, look and ability to code more complex transactions in a automated process.
I feel a lot bookkeepers would also struggle with anything other basic operations in Odoo. People with prior experience in accounts payable in a large company using another ERP system like NetSuite, Oracle or SAP will probably find many of the processes and options familiar.
This would not be the system I recommend for a new small business with no prior accounting system experience. Due to the added complexity, the leap may be too far and the propensity to stuff up the data entry is too high. There are simpler options which could be better suited to this situation.
This could be a great system for a growing business who is outgrowing MYOB or Xero ecosystems and want all their operations to be handled in one system as much as possible.
Before making the move I recommend consulting a system specialist about a conversion and have at least one CA or CPA accountant working part time to deal with the inevitable transaction processing queries that will be incurred by less experienced people working with a complex system. Rolling out one system at a time will reduce the learning curve ramp and improve the onboarding process.
It is a great system for the right business or it could be an anchor for the wrong one. Either way, it should be on your list to explore if you’re already an established business, looking to grow, or a start-up with venture capital who is hiring talent straight away.
You can reach Odoo here: https://www.odoo.com/