The Shifting Landscape of FMS Software in Education

What the Data Really Tells Us

A deep-dive analysis of Financial Management System (FMS) provider data across the 2022/23, 2023/24 and 2024/25 Annual Returns - and what it means for the future of school finance technology

Introduction: A Market in Transition

The education finance technology sector is changing faster than many within it realise. For years, the FMS provider landscape has been dominated by a handful of legacy incumbents, with trusts largely locked into long-standing relationships built on familiarity rather than performance. But the data captured across the last three Annual Returns tells a different story - one of shifting loyalties, accelerating compliance demands, and a quiet but unmistakable revolution happening at the modern end of the market.

This analysis examines the movement of trust numbers, market share, Chart of Account (CoA) adoption, and automation usage across all major FMS providers. Sage and Xero figures have been consolidated across all their named variants and reseller channels to give a true picture of each ecosystem’s total footprint, rather than allowing the multi-provider nature of those brands to obscure the overall picture. The results are illuminating - and in some cases, quite stark.

A Contracting Market: The Context That Shapes Everything

Before analysing provider performance, it is important to understand the environment in which these numbers exist. The total number of trusts reporting an active FMS provider has fallen from 2,599 in 2022/23 to 2,408 in 2024/25 - a reduction of 191 trusts, or 7.3% in just two years.

This contraction is not a data anomaly. It reflects real structural change in the sector: trust mergers, school closures, and an increasing number of submissions categorised as “not submitted/closed/closing.” That latter group rose sharply from zero in 2022/23 to 35 the following year, before settling at 21 in 2024/25 - suggesting a period of acute disruption that may now be stabilising, but has not yet fully resolved itself.

What this means in practice is that every trust a provider gains in the current environment is doubly valuable - it represents both organic growth and a share gain in a pool that is actively shrinking. Providers that are growing their client numbers right now are not simply benefiting from a rising tide. They are winning in a competitive market. That context makes the performance of the sector’s growth stories all the more significant.

Market Concentration: Still a Two-Horse Race at the Top - But the Horses Are Tired

The FMS market remains structurally concentrated. As of 2024/25, with all Sage and Xero variants consolidated, the landscape looks like this:

IRIS retains its position as market leader with nearly 30% of all trust clients, and Access sits confidently in second. But look more carefully at the direction of travel and a more nuanced story emerges. Of the top four providers by 2022/23 trust count - IRIS, Access, ESS and Sage combined - only Access is growing. The other three are all in decline, to varying degrees of severity. The upper reaches of the market are not a place of strength right now. They are a place of managed retreat.

Meanwhile, the growth is happening further down the table - and nowhere more consistently or more promisingly than in the Xero ecosystem.

The Established Leaders: Cracks Appearing at the Top

IRIS: Market Leader, But the Ground Is Shifting

IRIS is still, by some distance, the single largest FMS provider in the education sector. With 713 trusts and 29.6% market share in 2024/25, it is the dominant force in any honest reading of this data. However, dominance and momentum are not the same thing, and it is the momentum that should concern both IRIS and its clients.

The provider has lost 66 trusts over two years - a decline of 8% in a market that itself contracted by 7.3%. IRIS is, in effect, losing ground even after accounting for market shrinkage. Its CoA adoption rate of 63% sits 8 percentage points below the sector average of 71%, and automation usage among its client base is negligible. For a provider serving nearly a third of all trusts in the country, these are not trivial gaps. They suggest a significant portion of the sector’s largest user base is not yet engaging with the compliance and efficiency tools that regulators and oversight bodies increasingly expect.

This is not to suggest IRIS is in crisis - it is not. But a provider of this size losing clients consistently year-on-year, while underperforming on the metrics that matter most to modern trust finance teams, is a provider that needs to be asking hard questions about its product roadmap.

Access: The Strongest of the Legacy Players

Access is the clear exception among the established providers and deserves genuine credit. Growing from 478 to 550 trusts - a 15% increase in a shrinking market - is a meaningful achievement. Its CoA adoption rate of 88% is 17 percentage points above sector average, which is the strongest positive variance of any large-scale provider. Its projected 2,387 academies for 2025/26 speaks to broad and stable market penetration across trusts of varying sizes.

Access appears to be doing something right: retaining clients, attracting new ones, and keeping pace with compliance expectations. It is the benchmark against which other established providers should be measuring themselves.

ESS: A Story of Significant Concern

The ESS numbers are, frankly, alarming. A loss of 133 trusts in two years - a 29% decline - is the largest absolute fall of any provider in the dataset. Its market share has compressed from over 17% in 2022/23 to 13.2% in 2024/25. Its CoA adoption rate of 42% sits 29 percentage points below the sector average, the worst performance of any provider with meaningful scale. Automation usage is effectively zero.

It is difficult to look at these figures and identify a positive trend. ESS appears to be losing clients at pace, and the compliance metrics suggest the platform is not keeping pace with sector expectations. The question for trusts currently on ESS is not whether change is happening in the market, but whether they are positioned to move with it.

Civica: A Cautionary Tale

Civica’s decline is the starkest in percentage terms anywhere in the data. From 180 trusts in 2022/23 to just 98 in 2024/25 - a 46% collapse in two years. The 2023/24 data had already flagged this as a trend, and the 2024/25 figures confirm it has deepened rather than stabilised. Civica now holds just 4.1% of the market, and there is little in the data to suggest the trajectory will reverse without significant intervention.

The Sage Ecosystem: Overall Decline in a Fragmenting Brand

When the full Sage ecosystem is viewed as a single entity - consolidating all variants and reseller channels across the brand - the combined trust count has fallen from 425 in 2022/23 to 347 in 2024/25, an 18% decline in two years. Projections point toward 305 trusts by 2025/26 if current trends continue, which would represent a further meaningful reduction on an already-weakening position.

Across its combined 1,945 projected academies and 347 current trusts, Sage remains the third-largest ecosystem by trust count when consolidated - but that position is becoming harder to hold. The overall CoA adoption picture across the Sage family is mixed, pulled in different directions by its various channels, and the aggregate performance sits broadly around the sector average without distinguishing itself in either direction. What is clear is that the Sage brand as a whole is losing ground in a competitive market, and the trajectory - without a significant product or positioning shift - points consistently downward.

That said, within the Sage family there are pockets of genuine strength. Certain education-specific Sage products carry exceptionally strong CoA adoption rates, suggesting the brand is capable of delivering high compliance performance where it has invested in sector-specific functionality. The challenge for Sage is translating that performance from individual product lines into the broader ecosystem, and arresting a decline that the data has now tracked consistently across three reporting periods.

The Xero Ecosystem: The Most Compelling Growth Narrative in the Sector

Here is where the data becomes genuinely exciting. When all Xero variants are combined across all reseller channels and direct routes to market, the Xero ecosystem has grown from 128 trusts in 2022/23 to 178 in 2024/25 - a 39% increase in two years, in a market that simultaneously contracted by 7.3%. Projections suggest 201 trusts by 2025/26, which would represent a further 13% increase on already strong growth.

To put that in context: while the market overall lost 191 trusts, Xero gained 50. Every single one of those was won in competition with established, well-resourced incumbents. This is not a provider riding a rising tide. This is a provider actively reshaping a market.

What makes the Xero growth story particularly significant is not just the volume of client gains, but the quality and consistency of performance that sits behind them. Across every single Xero variant in the dataset - without exception - CoA adoption rates sit above the sector average. The combined Xero ecosystem CoA adoption rate, weighted across its 178 trusts, comfortably exceeds 80%, making it one of the strongest-performing ecosystems in the sector on this measure. That is not an accident of individual provider quality. It is a reflection of the underlying platform’s fundamental suitability for modern, compliance-driven trust finance operations.

Xero’s automation performance further reinforces this picture. Its education-focused channel is among the sector leaders on AR submission via automation - second only to Hoge 100 across the whole market - with an adoption rate of 14% against a sector backdrop where the vast majority of providers register at or near zero. Xero’s open architecture and API-first design make integration and automation significantly more accessible than legacy platforms requiring extensive customisation, and the numbers reflect that structural advantage clearly.

The combined ecosystem also serves 675 academies in projected terms, with a client profile that skews toward larger, more sophisticated multi-academy trusts - the kind of organisations whose finance directors and CFOs have evaluated the alternatives in detail and made an active, informed decision to move. These are not trusts drifting passively into a default choice. They are organisations choosing Xero deliberately, and staying.

Projected to cross 200 trusts by 2025/26, winning clients from multiple competitors simultaneously, and leading the sector on compliance adoption - the Xero story is not one of a provider that stumbled into growth. It is one of a platform that was built for this moment, found the right partners to deliver it in an education-specific context, and is now reaping the rewards as the sector begins, slowly but unmistakably, to vote with its feet.

Chart of Accounts Adoption: Progress, But the Biggest Providers Are Holding the Sector Back

The sector’s overall CoA adoption rate has moved from 62% in 2023/24 to 71% in 2024/25 - a nine-percentage-point improvement in a single year. The number of adopting trusts has grown from 1,491 to 1,585. This is genuine, meaningful progress and reflects well on the sector’s collective response to the Department for Education’s compliance expectations.

However, the sector average is being materially dragged down by the performance of its two largest providers. IRIS, with nearly 30% of all trusts, sits at 63% CoA adoption - 8 points below average. ESS, with 13% of the market, sits at just 42% - 29 points below average. Together, these two providers account for over 40% of the market and both underperform the sector mean significantly.

If IRIS alone were to reach sector average, it would add approximately 57 additional adopting trusts to the national total overnight. The leverage that large-scale providers have over the sector’s compliance headline is enormous - and the data suggests that leverage is not currently being used to its full potential.

By contrast, the providers showing above-average CoA adoption rates read like a who’s who of the sector’s growth stories. Iplicit, the Xero ecosystem, Access, Hoge 100 - the providers gaining clients are, almost without exception, the same providers leading on compliance. The market is beginning - slowly but perceptibly - to reward platforms that make compliance achievable by design rather than by effort.

Automation: A Plateau That Should Concern the Whole Sector

The automation adoption data contains what is perhaps the most surprising finding in the entire dataset. After strong growth in earlier years, uptake has effectively stalled:

The near-complete stagnation between 2023/24 and 2024/25 - a gain of just one trust across the entire sector - is remarkable given the rapid growth of previous years. Automation of Annual Return submission represents a significant efficiency gain for trust finance teams and reduces the risk of manual error. The fact that uptake has flatlined, in a sector that is increasingly time-pressured and resource-constrained, suggests a structural barrier rather than a lack of interest.

That barrier is almost certainly platform-dependent. Only a small number of providers are enabling automation at meaningful scale, and the sector’s inability to grow this number further reflects the dominance of legacy platforms that were not designed with open integration in mind. The providers that are enabling automation - Hoge 100 at 22%, Xero’s education channel at 14%, and a small number of others in single digits - are almost uniformly the same providers gaining market share. The message to the rest of the sector could scarcely be clearer.

What Does the Future Look Like?

The projected 2025/26 figures, while speculative, point in directions that are entirely consistent with the trends already observed. The combined Xero ecosystem is projected to reach 201 trusts - a further 13% growth on already-strong 2024/25 numbers. Access is projected at 556 trusts. IRIS continues to decline toward 674. ESS falls further to 296. Sage combined trends toward 305.

The structural story being told by three years of data is one of a market reorganising itself around compliance, cloud-native technology, and the specific demands of modern multi-academy trust finance. The providers positioned to benefit from that reorganisation are those that were built for this environment - not those that have been retrofitting older architectures to meet new expectations.

Conclusion: The Direction of Travel Is Clear

Read as a whole, the data across three Annual Returns tells a coherent and consistent story. The FMS market is contracting in total size, consolidating at the top among fewer dominant players, and simultaneously fragmenting at the edges as newer, more specialised providers gain ground. Legacy incumbents with below-average compliance metrics are losing clients. Modern platforms with strong CoA adoption and automation capability are gaining them.

Sage combined is down 18% over two years, with the trajectory pointing further downward. ESS and Civica are in significant and sustained retreat. IRIS remains the dominant player but is quietly, consistently eroding. Access is the standout among the established names - growing, compliant, and stable.

And then there is Xero.

Up 39% over two years in a market that lost 7.3% of its total client base. Every single variant carrying a CoA adoption rate above sector average, with the combined ecosystem comfortably exceeding 80% - well ahead of the 71% sector mean. Among the sector leaders on automation adoption. Projected to cross 200 trusts by 2025/26. Winning clients from multiple competitors simultaneously, chosen disproportionately by large, sophisticated, compliance-conscious trusts that have made an active decision to move.

The numbers do not show a provider that stumbled into growth. They show a provider that has built something the sector genuinely needs, delivered it through partners who understand the education landscape deeply, and is now reaping the rewards of a market that is - slowly, but with increasing conviction - beginning to move toward it.

In a sector where legacy relationships have historically trumped product quality, that is a genuinely significant shift. And the data suggests it is only going to accelerate.

Data sourced from Annual Return FMS provider datasets AR 23/24 and AR 24/25. All Sage and Xero figures represent aggregated totals across all named variants and reseller channels within each dataset. Market share percentages based on total active trust submissions per reporting year.

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