HOW THE CLOUD WILL CHANGE ACCOUNTING FOREVER Bruce A. Phillips bphillips@hpccpa.com
Discussion Paradigm Shifts in Accounting Technology Desktop VS. Hosting VS. SaaS New Sources of Revenue Using the Cloud Harshman Phillips Case Study
Part One Paradigm Shifts in Accounting Technology
Where Are We Today? Where Are We Going? Paradigm shifts in accounting technology The Future is ZERO Data Entry (or close to it) Chunkification of Business Processes
Your Most Important Focus What does it mean to be your clients MOST TRUSTED ADVISOR? How do you become MOST TRUSTED? Should you SERVE your client? Or LEAD them?
The Old World Communication Accountant Travel or RDP Copies of Data Email or FTP to Client Result Expensive Complex Must Coordinate with Client Data Gets Out of Sync Lack of Security Very Inefficient Client Email or FTP Back to Accountant
The New World communication Operations Management Timesheets Job Costing POS Dashboard Client Live Data Internet Cloud Security Hosted Software Back Up & Restore Communication Bookkeeping Consulting Payroll Taxes CFO Services Dashboard Accountant
Technology Adoption Cycle Innovators Early Adopters Early Majority Late Majority Laggards Technology Enthusiasts Visionaries Pragmatics Conservatives Skeptics Our Profession is Here
Generations of Accounting Software Windows 1990 Easy of use, robust applications Great value for client from small to large Client firmly in control of the GL & reports SaaS 2000s True Web-based, multi-tenant apps Robust databases in secure hosting locations Accountants/clients collaborate on same data Integration 2000s Connected services, desktop integration SDKs, web connectors, platforms Data primarily on the desktops & servers Mobile 2010s User access information 24/7 from anywhere Web-based financial dashboards Mobile apps for nearly everything
Tipping Point Past Two Years SAAS is HERE Collaboration Tech Exploding Online Banking Portal QuickBooks Online Over 250K users NetSuite, Intacct, Xero, Wave, Freshbooks, Bill.com Hosting companies thriving Facebook, Twitter, LinkedIn Nearly all banks provide online access Yodlee: data feeds to applications Remote deposit and mobile access File sharing portals: ShareFile, DropBox, SmartVault Accountants publishing financial statements & tax returns in portals where clients can access them Internet Access Ubiquitous high-speed internet Broadband via cellular networks Mobile Devices Ubiquitous among business owners There s an app for that
What s Does All This Mean to Us? Consider Business Processes For Small Businesses For Small Business For Accountants For Accountants
Paradigm Shift for Small Business From Paper Documents in File Cabinets Electronic Documents Snail Mail Invoices, Statements & Checks Letters & Brochures in the mail Brick-and-Mortar Storefronts Excel Expense Reports Learning Software Tricks Efficient Data Entry To Electronic Document Management System Digital Documents in Web Cloud Storage, Attach to Transactions in the GL E-invoicing, E-payments, E-reminders, E-reconciliations Email, Tweets, Blogs, Facebook, & E-newsletters E-commerce Web Stores Online E-Travel & Expense Management/Apps Managing automated web-based data flows Zero Data Entry
What s Does All This Mean to Us? Consider Business Processes For Small Businesses For Small Business For Accountants For Accountants
Paradigm Shift for Accountants From Client-centric, Premise-based Accounting Systems Paper Financial Statements Delivering Reports/Tax Returns Travel to Your Clients Teaching Software Tricks Perfecting your Abilities To Collaborative SaaS Accounting Systems Financial Dashboards in the Cloud Publishing Documents in Online Portals Remotely Accessing the Same, Live Data 24/7, from anywhere Designing, Configuring & Automating Web-based data and Workflows Focusing on Ability in Learning & Applying New Technologies & Services
Today s Challenges Existing Clients Still Very Desktop Focused Distrust of the Internet, Even Though Everyone Uses It Significant Fear of Changes to Existing Processes
Chunkification of Business Processes From All-In-One Accounting Programs All Connected to Each Other Including GL, AR, AP, Payroll, Inventory To Separate Software Chunks That Perform & Perfect each Business Process
Success for Accountants Educate Yourself Use the Products Yourself Learn New Skills Build Real-time Dashboards for Client Move from Technical Consultant to Business Mentor Mastering Chunkification
Part Two Desktop VS. Hosting VS. SaaS
Brief Definitions Desktop QuickBooks Pro, Premier or Enterprise Installed on Your Computer. Hosting or QuickBooks in the Cloud The Services, Program & Data are Located Somewhere else and Managed by Somebody else. SaaS (Software as a Service) Quickbooks Online, Intacct, Accountants World, Xero
The Cloud Internet
Scenario One Client Does Everything, But Recommendations I Need the File at Year End I Need to Analyze the file I Need to do Tax Return I Need to Get Changes Back to Client Return Client s File QuickBooks Online, Intacct, Accountants World, Xero Or Hosting if Budget Allows.
Scenario Two I Do Everything, But Recommendations Client Want to See Information Currently Client Wants A/R Access and Customer Information Client Wants Monthly/Quarterly Reports Client Wants to Make Sure There s Money in the Bank QuickBooks Online, Intacct, Accountants World, Xero Or Hosted Accounting Application QuickBooks, Peachtree, Simply
Scenario Three Shared Responsibilities Examples: Client just wants to invoice I do everything else Client does everything but payroll Client just enters times I do everything else Client does day to day I do quarterly payroll and file analysis Recommendations Hosted accounting application QuickBooks, Peachtree, Simply Streamline Workflow Bill.com, Bill&Pay, Big Time, Billing Boss, ViewMyPaycheck, SmartVault, FreshBooks, Intuit Online Payroll Or use a SaaS Offering Such as: QuickBooks Online, Intacct, Accountants World, Wave Accounting, Xero
What are the Benefits of the Cloud Accountant Client Easy File Access & Sharing No More Data Exchange Enhanced Workflow & Collaboration Secure Online Storage Save Time & Money Live Data Internet Cloud More Economical Anytime/Anywhere Access Data Always in Sync (Live) Enhanced Security Reduced IT Cost & Needs Solution for multiple office Facilitates Client Relationship Secure, encrypted data transmission Paperless Environment Online Backup & Disaster Storing all Documents Custom Branded Web Portals Mobile Device Access
Intuit Hosting Program Licensed copies of QuickBooks desktop software on remote server Intuit Authorizes third party hosting companies Hosted products include all level of QuickBooks
Intuit-Authorized Hosting Companies InsynQ, Inc (CPAASP) Right Networks Uni-Data & Communications, Inc Xcentric Cloud 9 Real Time Coaxis International, Inc Myownasp NovelAspect Swizznet
Hosted Software VS. SaaS Cons Pros Easy transition no learning curve Less risk easy to convert back to local Hundreds of add-ons available for desktop products Hosting is a great stepping stone the cloud less disruption of workflow Window software not always easy to host Over time, Window will go the way of DOS New SaaS solutions are compelling New models moving towards zero entry (e.g. Xero) makes desktop software even less attractive for long term Serious new development in SaaS not Windows
Part Three New Sources of Revenue Using the Cloud 1. The Client Accounting Services Opportunity 2. Best-of-Breed Cloud-Based Applications & Tools
The Client Accounting Services Opportunity - Changing Landscape - Before: Transactional Low margin transaction processing Means to and end; a tax return Pressure to keep fees low Non-strategic Today: Advisory Improve client financial performance with proactive consulting Save time and reduce cost by standardizing and leveraging automation and repeatable processes Increase real-time collaboration with clients by accessing information in the Cloud Increase margins by providing higher value with increased productivity
Accounting Firm Services Profile Accounting Firm Most Common Services: Financial Statement Preparation General Ledger/Trial Balance Payroll Reporting Cash Flow Management Payroll Preparation Transaction Processing Virtual CFO Service Typically have 24-100 clients Clients have 1-5 million annual revenue Most clients have <10 employees Represents < 20% of overall firm revenue today Huge Growth Opportunity
Getting Vertical through the Cloud Client Accounting Capabilities Driven Through Cloud Computing Business Intelligence Reporting Real-Time Client Collaboration Standardized Workflows Most Popular Client Verticals for Client Accounting Services Professional Services 84% Retail 69% Construction 65% Non-Profit 59% Manufacturing - 52% Wholesale Distribution 40% Technology Companies 28% Franchises 28% Hospitality - 27% Transportation 22% Government - 14%
Move Up the Client Value Pyramid More CPAs are becoming outsourced CFOs for their small business clients Virtual CFO Budget, Business Planning, Business Modeling etc. Controllership Services Monthly Close, Fin Statements, Cash Flow Analysis Transactional Services Tax, Write up, Bookkeeping, A/P, Payroll, etc.
Best-of-Breed Cloud Based Apps & Tools Electronic Digital Signature Accounting Software Hosting File Storage / Portal Online BillPay EchoSign Right Networks SmartVault Bill.com Docusign Cloud 9 E-File Cabinet BillQuick Right Signature InsynQ (CPAASP) Accountants World Bill & Pay
Part Four Harshman Phillips Case Study
Real-Time Case Study Web-based Tax Software Deliver Method of Tax Return (Security) Paperless Working Environment In-House Server Maintenance Cost How it all started End up with Xero, QB online (SaaS) SmartVault (Portal/Doc Management) Right Networks (Virtual Hosted Servers) Bill.com (Online Bill Pay)
From 0 to 35 Clients in 12 months - with staff of 5 Recurring Revenue No Receivables Remote Access Required Secure and Back up Work And Function From Any Location Any Time Total Paperless Environment Improve Banking Relationship Increase Productivty
Personalized Technology Solutions Standardization to Customization Accounts Receivable Accounts Payable Automating Billing and Expenses Payroll Banking and Credit Cards Reporting Taxes Fraud Prevention Internal Controls Virtual Hosted Servers Budgeting & Cash Management Dedicated service Teams
Challenges Client refuse to change workflow Client s outdated computer hardware Client lack of computer skills Client s expectation with transition Pain of setup and conversion Employee training process and cost Learning new things everyday
Solution for Whom? For CFOs (Outsourced/In- House) Focus on core functions. Offload non-core functions No more training new stuff ever Get skilled staff at affordable fees Get access to world-class technology at lower rates Increase customer satisfaction Increase speed and service Offer your client full package service Grow your business fast For CPAs/Accountants No more training new bookkeeper/accountant Reliable quality of work Improve client relationship Growing your business without growing admin cost Lower cost of employee benefit Access to latest technology without training and learning cost Service client from all around the world For Business Owners / Entrepreneurs Save 50% or more of Overhead 24/7 Up-to-Date Financial Data Online Access All Data are Secured and Back Up Real Time General Ledger Financial Forecasts Portal Upload & Download Access Timely Tax Advice Cash Flow Management Allocate Time & Money Savings To Money Generating Activities