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It’s a connected world

Right now I am sitting in a jungle camp site in Thailand (I kid you not) with 3G on my phone and 6Meg wireless running through the camp. Already this morning I have looked at my emails through Gmail, I checked out Facebook for 5 minutes, I checked my bank accounts, I accepted 11 new LinkedIN connection requests, I had a look on our online community to see of the client chatter and I looked at the daily report on the key metrics of my business.  About 10 minutes of total ‘checking what is going on in my world’ time.

The daily report is automatically generated through our CRM program (www.salesforce.com) and we customise the main report every quarter in line with our quarterly theme. I can see the critical results of what we are focusing on right now. Event numbers, campaign results, client numbers, revenue & profit etc.

With everything on the ‘cloud’ you truly can run a business from anywhere in the world. I can see what it happening as it happens and respond accordingly. I don’t have to wait for the next meeting to jump on something I can see as a trend right now. I don’t have to wait for a lengthy report to tell me what an automated report can tell me.

I have team members in Brisbane, Darwin, Manila, Delhi and Vancouver. I have clients who use our software in 8 countries. How could you manage that with old technology systems on a hard drive or server? Well you can but it is very expensive and very slow.

It’s business real time. It’s a connected world. It’s exciting. It’s now time for a coffee then Elephant rides and Tiger cuddling later in the day. Stay tuned.

Jungle

Product Development for Accountants

Accountants haven’t really needed to invent new products in the past. They did what the government told them to do and occasionally they did some special projects for clients – business advisory type projects. Everything was on a ‘do and charge’ basis.

That’s all changing. The profession is evolving into a technology driven, leveraged IP model where firms are looking at new ways to systemise and leverage their IP base. The objective is to look at what you know and then innovate new ways of delivering that. The delivery could be in a number of wide and varied formats such as:

  • Group coaching
  • Group training
  • Manual / Report
  • Video / DVD in a box
  • Webinar
  • Seminar
  • Training program
  • Software program
  • Online subscription

It is the same IP but packaged in different ways. The hardest part (judging by the 46 Accountants we had in workshop last week talking about this) is coming up with what you actually know. Once you document your IP base then it’s a case of packaging it up and marketing it to your target audience. So what do you know? What does your firm know how to do? Here is my list….

What we know

 

Be Proactive with new services

Most Accountants I meet believe that there are opportunities for additional business in their current client base. However, they don’t seem that active in discovering the opportunities nor promoting the services. I think it is a BIG dis-service to the client if you do not promote new ideas and new services.

We recommend that you ‘stay close to the numbers’ with your service offerings. That way you can leverage the delivery of the services to other team members. By all means offer high level consulting however typically that means that very experienced (read expensive) people need to deliver them.

One of the reasons Accountants do not offer additional services is because they are unsure what the client will say and they doubt if they have the knowledge base to deliver the solution.

You have to differentiate between coaching and consulting. Consulting is where the provider comes up with the answers, coaching is where the client is guided and the answers are coached out of the client.

Financial coaching is the way to go. We recommend that your service categories fall in 8 areas. We call it the Awesome 8! It’s what your clients are interested in – over and above compliance services.

Awesome 8

If you follow the Awesome 8 then here are a dozen new services you could create:

  1.  Revenue enhancement – product & service
  2. Cash flow analysis, forecasting & monitoring –product & service
  3. Profit improvement program – product & service
  4. Debt re-structuring
  5. Receivables management service
  6. Inventory management service
  7. Book keeping (serviced from lower cost countries)
  8. Virtual Management Accounting
  9. Cloud conversions
  10. Sort out the numbers program
  11. Planning session
  12. Monitoring & Accountability program

At the end of the day every client should be buying every product they need that helps them achieve their goals!

That should be your goal.

Disruption in the Accounting profession – Part 3

Disruptive area # 3 – Clients are using the internet for your advice

It seems we use the internet everything we need to know!

Addresses/ companies / people / products/ concerts / store opening times / weather / golf handicap / cycling routes / friends whereabouts (or what they are eating – yuk) and the BIG one…‘how to do’ everything. The internet seems to be our first port of call for anything we want to know or find information on.

Whatever happened to the Yellow Pages, asking people personally, the Encyclopedia Britannica or a Catalogue? All (or nearly) GONE!

Social behaviour is indicating we need(?) to be connected to our device. And the device rules supreme. A few weeks back I was at an airport lounge and my travelling companions had a ‘device bag’ full of connected gadgets.

The world is connected and it is getting more connected every day. Currently we go to our device (pick up a phone or tablet) and tap in the requested search. We can also talk to our device (the annoying Siri in the iPhone as a good example) and she/he can help us. Or talk to our car and another annoying voice (but very proper diction) will give us directions to your destination.

Does this give us an enhanced human experience? Probably not. But it sure is efficient.

Mobile technology is booming. It’s what consumers want. They want information at their fingertips. Tap tap tap and hey presto – I have the answer and now I am an expert.

And that is an issue for anyone in the advice business. AKA Accountants!

Let’s say I wanted to learn about borrowing money through my pension scheme to buy a property. I could ‘Google’ that and find the answer in a few seconds. What if I wanted to work out how to improve the profit of my Winemaking business? I could go to a LinkedIN group and discuss that and get an answer. What if I needed a payroll or tax question answered? I can search it and go directly to the government portal and get the answer.

Uncle/Aunty Google has all the answers it seems.

Enter IBM.

The IBM super computer ‘Watson’ is an extraordinary piece of engineering. It can beat humans (really smart ones) at Chess and Jeopardy (proven) and ‘some say’ he/she is so smart he knows what the President of any country will say next! OK…I made the last bit up.

You get the idea. Watson is a supersmart supercomputer.

IBM have announced this year (2014) to >$1BN investment to develop Watson into a usable resource. There are >2,000 people in the Watson team and their job is to enable Watson into the world. One of the cool ideas is to create ‘Watson for business.’ Think of it as ‘Siri’ (iPhone fame) for business. You have a business question, talk to the device and it gives you the answer. BOOM. Great for the user – not so great for you.

You see, Watson is a sponge like a human. It can absorb / disseminate / translate / organize/ conceptualize any information and then send it back in a usable format. Pretty much all of the worlds ‘texts’ (as in manuals, books and all forms of content) are accessible on the internet. But the internet is a bit of a mess. There is a lot of content to absorb and disseminate. Watson can do sort it out and give it back to you in a usable format.

I got interested in Watson a few months back by the following line in a newsletter I received…

“This is the start of the end of professional services as we currently know it”

WOW. WOW and more WOW!

Does that mean the super computer can replace the Adviser? For repetitive and systematic information absolutely YES. And there will be ‘an app for that’ very soon.

 

I don’t mean to scare you but I do. This is real and it is happening right now and the Accounting profession is in the firing line for massive disruption. Without notice and appropriate action these 3 ‘disrupters’ have the capacity to wipe out a (BIG) chunk of revenue / profit / business value in the profession….QUICKLY.

 

Disruption in the Accounting profession – Part 2

Disruptive area # 2 – Labour is being sourced from less expensive countries

Manufacturing companies have been using low cost labour in developing countries for decades to produce their products. Just look at the clothes on your back. I bet very few of them are made in your current country!

The reality is that (because of escalating labour costs) most western countries have priced themselves out of markets by attempting to produce the product locally.

Up until a few years ago it was primarily ‘hardware’ based companies using this resource. Now we are seeing ‘services’ companies embrace the trend with fully resourced teams.

Most people think of this as outsourcing where in actual fact the correct term is offshoring.

Outsourcing is where you get someone else to the task who does not exclusively work for you. Accountants are a classic outsourced service. You work for many clients and they send their work to you because you are better at it than them.

Offshoring is where you set up a team (maybe starting with one person) off shore and they exclusively work for you. The banks and airlines have been doing this for years. They get themselves an office in a developing country, fill it with desks/chairs/computers/phones, hire & train some people and viola they have an office that can support their customers.

For one off projects outsourcing is the way to go however for larger ongoing tasks offshoring is the way to go.

Accountants have recently embraced the idea very quickly and are hiring people in developing countries with some degree of vigor right now.

I went on an offshoring study tour (in the Philippines) and the opening speaker said 2 things to me that got me excited;

  1. “Any job that can be done over the phone or behind a computer we can do for 50% – 90% cheaper, faster and often better”
  2. “I have been a virtual assistant for 5 years for a university professor in New York. I have gotten to know her job so well that I now mark her student papers for her”

I thought WOW. There are smart, hard workers, there is an abundance of them and they are relatively inexpensive.

If you think about an Accountants day. Most of it is spent on the phone or behind a computer. Most of the day is spent dealing with client queries and processing Accounting work. The technology products will take a lot of the processing work away and the balance can be done by cheaper labour off shore.

What is left are team members who are customer facing and adding value. The Accounting firm of the future has a local team who are customer facing (nurturing, sales and advice) and everything else (back office and processing) is done offshore.

There are 3 compelling reasons why this makes sense;

  1. An abundance of labour
  2. A labour force who are supremely qualified
  3. A lower cost structure.

Let’s take the Philippines as a case in point. It is estimated that circa 1.3M work in this space. It is growing every day. Their English is fantastic, the schooling system is very good, they are very family orientated, the time zones are reasonable and the government is right behind the initiative with infrastructure. They cannot build the office towers fast enough.

The table below highlights the salaries (March 2014) that Accountants in the Philippines are being paid. These are considered ‘middle class’ salary levels as the cost of living is so inexpensive. Compared to western salaries they are very reasonable.

Salaries in the Philippines

You can set this model up one of 3 ways:

  1.  Hire people directly who work from home.
  2. Go through a serviced office business (called a BPO) and hire the people through them.
  3. Incorporate a company and set up your own office – viable if you need 20+ people.

When hiring someone you do it via video conference (Skype, Google hangout, Go to meeting etc) and you do it the same way you already do. Place an ad, go through a recruiter, receive resumes, cull them out and hire the best for the job.

If you go through option 2 then the BPO (stands for Business Process Outsourcing) will help you hire the people. The training is up to you – again vide video conferencing or personally. They are your employees and they need to be trained in your systems and your way of doing things. They become part of your team so they need to be treated as so.

As an example my Australian team had a cooking class the other night. My team in the office in Manila did one on the same night in their city. My Australian team does daily huddles and they Skype in our team every day in the Manila office. What we do in one office we do in another.

Some people have a problem with this idea. “We must keep the jobs in our country” I hear. “What will our Accountants do if we send the work to a team elsewhere” is also another one. “What would my clients think” is a common one. Well, most Accounting firms will have different nationalities employed already. What’s the difference? You just have a team working for you in a different country in your office.

If you pare the comments down often they are either racist related comments or the person saying them has inadequacies and hang ups that their job can be done by someone else for a 10th of their salary.

All of this is globalization and a change in social behavior. I think the concept got off to a bad start with telemarketing companies calling you at home and you could not understand what they are saying. It also got off to a bad start because the term ‘outsourcing’ was created and many Accounting firms sent jobs off shore and because the person worked on the job was not working 100% for that firm there was a lot of re-work needed.

As a disruptive trend we are seeing Accountants use the available resource in the following way:

  • Hiring marketing people to do the marketing work for the firm. I know of an Australian $4M firm who has 8 marketing team members offshore.
  • Hiring client service coordinators to handle data collection and job set up from clients.
  • Hiring book keepers to do book keeping work for clients – on charging clients @ $20 per hour and making a 5 times margin.
  • Hiring data integrity people to sort out client data before it gets to the Accountant.
  • Hiring technical people who can do ‘cloud conversions’ and other software help.
  • Hiring product development people to create product for the firm.
  • Hiring administrators to do document scanning, corporate secretarial, debtor collection, filing etc.
  • Hiring Accountants to do the accounting work that does not involve client facing meetings.

Now here is the BIG one.

Businesses (your clients) are being directly targeted by Accounting firms (offshore or local ones who have an offshore team) offering accounting work from $8 – $25 per hour.

This is escalating at a great rate of knots.

As a consumer of accounting services why would I pay $200 per hour when I can get it for $20? There has to be some compelling reasons as to why I would continue paying for something 10 times as much!

The profession has to be real as to how long you can hold your prices when technology is commoditizing compliance and global markets are offering lower cost labour direct to your clients.

To hold prices you will have to add value, add value and add more value to remain relevant in the future. Accountants will have to offer valuable commentary to the data in front of them and move much more into business advisory services.

My view is that as an Accountant if you are not adding value to the data that is in front of you then your days are numbered!

This is a big disruption to the labour force of Accountants in western countries. It is also a great opportunity to capitalize on. The world is changing fast. Are you ignoring it, embracing it or hoping it will go away?

It won’t.