Microsoft creeping into tax software market?

By Simon Godley

I recently saw an article announcing that accounting firm Tenon has signed a deal with Microsoft to supply their accounting software, whereas previously they had favoured Sage. Tenon has said that they are continuing to use Sage, but the Microsoft offering is 'better'. Tenon will use the Microsoft product for outsourced finance function, presumably for their clients.

This prompted me to look at the Microsoft site for the product. There are actually two sites - one for financial management software and one for Microsoft Office Accounting, which seems to be for smaller businesses. Both sites are quite impressive, with video sales pitches which give a very convincing overview of the products. When you look at the add-ons available (for the Microsoft Office product), you can add a payroll service for an extra £9.95 per month. This does all the PAYE and NIC calculations, and can handle e-filing. The basic MS Office Accounting product is free to trial for 60 days, and then costs just under £150 to buy (for one user).

There is no evidence of specific corporate or personal tax products as yet, but I guess that could be another add-on from Microsoft in the future. Their current offerings seem to be pitched to the SME market, hence the competition with Sage, so no direct product competition with the suppliers of larger group CT software.

It is a brave move by Microsoft, and a move into mature markets (ie US and UK accounting software), but that seems to the their strategy on products - see what the competition has produced, and then design something better.