Monday, 14 September 2009

Thomson Reuters adds to its presence in UK tax software with Abacus

(By Philip Carnelley 14 Sep 09 13:30) Thomson Reuters announced today that it is to buy Abacus Enterprise, a London-based tax software business currently owned by Deloitte, in a deal reported to be worth around $45m (£27m). Thomson Reuters bought Digita, another UK tax software and services business back in April 2008. It will now have around 150 people in its two-year old UK tax and accounting division, including 40 transferring in with Abacus. Abacus currently supplies tax planning, compliance and remittance products to about 400 clients in the UK, Ireland, the Netherlands, Hong Kong and New Zealand, including half the companies in the FTSE 100. Thomson said the buy “fills a key gap in our ability to offer corporate tax compliance solutions to large multinational companies.” Deloitte will continue to sell Abacus products under licence.

This underscores that the financial software market doesn’t begin and end with the ERP players. While companies like
SAP, Sage, Microsoft and Oracle have huge market shares for basic accounting products, there remains a big market in more specialised aspects of finance, often vertical-market focused. Tax software is quite a significant niche. But for smaller companies, brand and channel to market are important. As Sage has shown at the lower end of the market, recommendation from your accountant is a powerful selling tool. Breaking free of Deloitte means that Abacus can pursue similar licensing deals with other partners – such as other big accounting firms – expanding its potential market. But not being part of Deloitte means that the old-school marketing approach of “you’ve taken our audit / tax planning services, would you like our software too?” will disappear. Swings and roundabouts? Thomson Reuters is clearly hoping that the wider market and greater scale of its business will outweigh the effects of not being part of the Deloitte family.

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