The vast majority of Accounting firms operating systems are server based rather than ‘cloud’ based. This has not been an issue up until now because the vast majority of team members in a firm have been ‘office bound’ and any access to data was from the desktop in the office. Having everyone bound to a desk is very last century thinking. The world is flat and with cloud based operating systems you can have team members anywhere working real time with no synchronization or terminal server issues.
Take my business for example. My business is a professional services firm like yours. I have a regular office in Brisbane with 11 team members who live locally. On top of that myself and co-director, Colin, go into the office around 1-2 days per week only. The rest of the time we are ‘away’. I have a full time person Darwin, 1 in Vancouver, 3 (soon to be 7) in the Philippines and 1 in India. That’s 5 permanent locations. Both team members in Darwin and Vancouver were relocating from Brisbane and instead of having them leave the company (both are excellent at what they do) we set them up locally and they continued to their job form their new location.
All team members wherever they are only using 1 database, 1 accounting system, 1 project management system, 1 document management system, 1 document creation system and many other cloud based applications to help them to their job. All systems are linked together so we can see real time what is going on. No speed issues, no dropouts (unless the internet goes down) and improved productivity. The management team get an automatic KPI report every morning that is generated by the system. It just turns up and it shows the heartbeat of the business.
We have team meetings with each person on video on the big screen and other than touching them it is like they are with us in the same room. My cloud based system has been up and running for 2 full years and we could never ever go back to a server based system. The old system was just too restrictive for workflow, collaboration and overall efficiency. Remote people seamlessly working together is just one of the advantages. The biggest thing for me as the CEO is the access to management data no matter where I am.
For an Accounting firm the ideal cloud based ‘practice management system’ needs to be able to do the following as a minimum:
- Everything the current server based system does – tax, accounting etc except for 1 database only!
- Relevant KPI reporting – Revenue, Profit, WIP management, Debtors, cash balance, average hourly rate (AHR) all hours, AHR on job by job basis, productivity etc
- Pipeline management – not current workflow but sales pipeline / opportunity management
- Client relationship management – ability to know what clients are buying what services and the ability to create marketing campaigns to existing or prospective clients
- Run your firm based on best practice – no charge rates ($1 per hour), hours budgets on jobs not $ budgets, pricing up front etc. Link to your clients who are also on the cloud so you can have the heartbeat of your clients
The bonus ‘wish list’ items like document management, document creation, project collaboration can be sourced through other applications that do not require additional client databases to be created. To help you choose the right system for your firm, and to learn about what cloud solutions can and can’t do I am presenting a 1 day seminar with a range of speakers around in 14 locations in March & April this year. For more information and how to register go towww.cloudseminar.com.au.
This morning I presented (via video link) to 23 executives of the Australian Taxation Office. All 23 are high powered decision makers who where wondering about my views on the Accounting profession and that of their Entrepreneurial clients.
They were particularly interested in my thoughts on the impact of cloud computing. I had 4 main points to make;
- Cloud technology – how it is a major friend to the business community and both friend and foe to the Accounting profession. They like this idea and although they asked some pretty inane questions they know it is inevitable.
- Globalisation – how access to labour in developing countries is helping businesses but not helping the tax department for revenue. They seemed a bit ambivalent about this one. No questions asked at all. Bizarre.
- Hyper growth – how many entrepreneurs are growing and want to grow yet government agencies are not supporting the growth. In fact the opposite is happening by incurring taxes (payroll tax) on us for hiring people and making it difficult to access grants – or the grants are drying up. The government want us to pay more tax yet are not helping us do so. I had a go at them about supporting foreign companies with massive subsidies (like the car industry that is not owned locally) and not supporting small business. They agreed but I don’t think they know how to do anything about it.
- Simplification of tax and red tape – I had a whinge about the volume of paperwork and poor service we receive when we interact with the ATO. They agreed.
Most of the time was spent on item # 1. We had a robust discussion around security, why cloud makes things more efficient and the appetite for businesses owners to do ‘one click lodgement’ (that was my term BTW.) This task force has been set up to improve dramatically the ‘service’ provided to the customer (us in Business) and to simplify the data transfer.
What was really exciting was the discussion about a standard ‘chart of accounts’ for industry types and ‘standard business reporting’ for all businesses. Basically what the ATO are talking about is enabling businesses to use cloud technology and link real time with the tax department when ever we want to lodge it. I said we should pay tax like wages – every 2 weeks. Better on everyone’s cashflow! This is on their agenda.
What ‘one click lodgement’ means is that businesses will bypass the Accountant for this service. It’s going to happen. Is the profession ready for this? More reason to add value, add value, add value. Compliance is commodotised and soon the intermediary Accountant / book keeper will be bypassed as we go straight to the ATO.
Great for business. Not great for Accountants.
Over the past 20 years I (and my colleague Colin Dunn) have been involved in creating, marketing and selling approx. $170M of information products. There have been a range of delivery formats – group coaching, seminar, conference, group phone coaching, in a box, online, software, webinar etc. Here is a checklist we go through every time. You might find it useful.
- What do we know?
- What markets would buy it?
- How are we going to package it?
- What technology do we need to create/deliver/support it?
- How are we going to market the products?
- How are we going to sell the products?
- How are we going to deliver products?
- How are we going to support products?
We’re running a 2 day high end product development symposium on Hamilton Island. December 5&6 2013. It’s going to answer all these questions and show you exactly how to do it. Let me know if you’re interested. Send to email@example.com
The last time I made 12 predictions for the profession was in 2010. They have all happened or happening! The market has changed and after copious amounts of research I am predicting 12 critical changes to the profession in the coming years. Here goes…
- Compliance will (already) become a commodity service that will be sold by the most efficient, lowest cost provider
- Around 90% of businesses will embrace cloud technology as their Accounting system – approx. 10% now
- Around 90% of Accounting firms will embrace cloud technology as their operating system – approx. 3% now
- Business coaches and consultants will embrace cloud financial analysis tools that enhance their credibility and take business away from Accountants
- Compliance clients will become more transient as their data is light and more portable – gone will be the local Accountant with 80% of clients in a 20km radius
- Cheap and very smart offshore labor and offshore based Accounting firms will process the majority of ‘back office’ based compliance for local Accounting firms and local businesses – the local firm will be customer facing and everything else will be done offshore
- The price of statutory compliance (what we know today) will plummet by more than 50% of the current price
- Marketing and Sales skills will be learned and implemented in the majority of Accounting firms
- Young people will not be attracted to traditional ‘staid & boring’ Accounting firms – instead opting for technology savvy and value adding Accounting firms
- Time based billing (the archaic hangover from the last century) will be replaced by packaged services with fixed fees – hopefully the fixed fee is based on your value contribution
- With compliance revenue plummeting Value Added Services will make up more than 80% of the revenue of an Accounting firm
- Clients who have been yearning for additional services will finally be served properly by their professional advisers
You may believe, you may not. You may be seeing and feeling them already. Your firm will need to adapt to capitalize on these. There is a tsunami of change happening. You can get wiped out or you can learn how to surf!
What are your views on my predictions?