Could AI swallow the accounting software market?

Adam Turner

The article is relevant to members in Australia and New Zealand and was current at the time of publication.

Fears that businesses will abandon specialist software in favour of simply asking the likes of OpenAI’s ChatGPT or Anthropic’s Claude for insights, have triggered concerns of a “SaaSpocalypse” – impacting the share prices of many software giants, including accounting platforms such as Xero and Intuit.

These fears are not unfounded, with OpenAI reportedly aspiring to replace line-of-business SaaS platforms, while Anthropic is taking a more collaborative approach that integrates with SaaS. 

Despite the hype, accounting firms are better off using AI to complement rather than replace specialist business software like QuickBooks and Xero, says Alan FitzGerald, Founder of Practice Connections Advisory, an IT consultancy that specialises in accounting firms.

Think of AI as Lego

For example, connecting Claude to Xero is much easier than using Claude’s nascent coding tools to replicate Xero’s accounting essentials, such as general ledgers and journals, FitzGerald says.

“Think of Claude like a box of Lego – you can build amazing things from scratch but there’s a lot of effort required for accounting firms to get even close to what something like Xero does very well out of the box,” he says.

“After reinventing the wheel in Claude, you’d likely end up spending more money on AI costs and more time fixing AI’s mistakes than if you’d simply granted Claude access to your existing accounting platform.”

While accounting platforms grant access to services like Claude and ChatGPT, they also feature their own AI tools, such as Just Ask Xero and Intuit Assist.

With SaaS vendors continually expanding their features, FitzGerald says accounting firms should ensure they understand the full capabilities and product road maps of their existing software before embarking on AI development.

“Some accounting firms invested a lot of time and effort into developing their own internal ChatGPT, only to see their accounting software build those AI features directly into the platform,” FitzGerald says.

The fact that accounting platforms like QuickBooks and Xero aim to meet the needs of a broad user base means that some accounting firms will continue to look to AI specialists for their advanced needs, says Tyler Wise FCPA, Partner, Accounting & Business Advisory with financial advisory and accounting services provider Findex.

“SaaS platforms gradually incorporate specialist features as they gain mainstream acceptance, and AI is no different,” Wise says. “As such, it’s likely that platforms like Xero and QuickBooks will continue to meet the AI needs of many accounting firms over time.”

No wipeout in sight

“Claude and ChatGPT likely won’t wipe out accounting software, instead they’ll extend accounting software for those accounting firms that are ready to take AI to the next level.”

Accounting firms can also put sophisticated AI assistants like Claude to work as “AI agents” that link business systems, collate data and oversee complex workflows.

Wise says SME accounting firms are more likely to go down this path than the larger firms that already integrate their systems and data using sophisticated ERP platforms.

“Accounting firms that have never been able to justify investing in those high-end business systems might find that AI integration allows them to punch above their weight,” Wise says.

When it comes to managing workflows, Robotic Process Automation (RPA) bots follow preset rules to quickly accomplish repetitive tasks. Meanwhile, AI agents are goal-oriented and can learn and adapt with minimal human intervention.

Humans still matter

The two can work together: AI agents can manage a team of specialist RPA bots to coordinate complex cross-platform workflows with significantly improved exception handling, while final approvals remain with a staff member to ensure accountability.

Even though accounting platforms like Xero and QuickBooks feature built-in AI assistants, they do not block the ability for accounting firms to link sophisticated third-party AI agents and RPA bots.

Reducing the time staff spend on repetitive tasks can reduce the number of seats the business requires in their accounting platform. As a result, accounting platforms are embracing usage-based models that charge based on transaction volume, data processed or AI usage.

This change aligns with accounting firms shifting their focus from traditional compliance to strategic advisory services, says Guy Ioppolo FCPA, Founder and Managing Partner of intelligent business software solutions provider Ioppolo & Associates.

At this point, AI is expanding beyond entry level compliance work to handle more complex tasks such as forecasting, says Ioppolo, who is Chair of CPA Australia’s Digital Transformation Centre of Excellence.

Entrusting AI with tasks like forecasting can also change the way accounting firms use software, such as financial modelling via Excel or traditional Enterprise Performance Management (EPM) solutions.

Instead, Ioppolo says accountants are using sophisticated Agentic AI assistants and emerging applications infused with AI to draw directly on data within accounting software, accepting user assumptions and undertaking the calculations. 

“Once again, AI can save senior accountants a lot of time and effort when it comes to high value tasks like forecasting, but it’s not taking them out of the loop,” he says. 

“AI is undertaking the grunt work, so senior accountants can spend less time crunching numbers and more time interpreting and validating the results.”

“This allows accountants to value-add by leveraging their deep understanding of their customers, local markets and in-house IP to provide tailored and trusted insights that AI cannot replicate.”