Blake and David are back from QuickBooks Connect and ready to catch up on the news, including the results from two surveys of accounting firms published recently in Accounting Today.
The gist: Accountants in public are feeling plenty of pressure to keep up with technology changes and figure out how to differentiate themselves from the competition.
Also, Intuit’s incoming CEO Sasan Goodarzi has come out swinging, telling the Silicon Valley Business Journal that he thinks QuickBooks has a huge opportunity to win the mid-market from Sage Intacct and Oracle NetSuite with their new QuickBooks Online Advanced.
Meanwhile, Sage has chosen CFO Steve Hare to become their new CEO rather than choosing an outsider with “SaaS in their veins,” as had was expected.
Stories in this episode
Accounting firms challenged in adapting to technology changes — Accounting Today — Only 25 percent of accounting firms feel extremely confident about their ability to keep pace in the current environment of technology changes, according to a report
Accountants in small and midsized practices embracing more technology, but feeling pressures — Accounting Today — Accountants who work in small and midsized practices are using more technology to serve their clients better, as well as attract and retain top talent, but are feeling pressures to lower fees and differentiate themselves from competitors, according to a new survey by the International Federation of Accountants.
Intuit's incoming CEO: 'We have a huge opportunity to win the mid market’ — Silicon Valley Business Journal — Intuit's incoming chief tells the Business Journal why it thinks it can win the mid market as its aggressive plans to do so.
Sage Group Elevates CFO Steve Hare to CEO — CFO — The U.K. software firm had launched an external search for a new CEO but was impressed with Hare's performance as interim COO.
Cloud Accounting Podcast E45: Accountants feeling challenged to adapt to new tech (transcribed by Sonix)
David Leary: This episode of The Cloud Accounting Podcast is sponsored by Elefant. As a listener of this show, I'm pretty sure you've already embraced technology, and practice efficiencies, but sometimes, it's hard to find training in those areas. Some of you look to your state societies to get CP credit, but those tend to be tax-, or audit-focused, and, quite frankly, from what I've heard, pretty boring.
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Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver-.
David Leary: And I'm David Leary.
Blake Oliver: We are back from QuickBooks Connect. You're at home, right, David?
David Leary: Finally back in the closet, yes, yes.
Blake Oliver: Ah, the sound ... It sounds so nice in there.
David Leary: Are you recovered yet? QuickBooks Connect is a lot to take in. A lot.
Blake Oliver: Yeah, my voice is still recovering, but I got a lotta sleep last coupla days. I'm excited to hear about Day Three. Unfortunately, I had to leave at the end of Day Two. I didn't get to stay for the half day that finishes the conference. Was there anything interesting?
David Leary: Day Three, it's kind of a half-day. It's really for the accountants only. Day Three, there's still sessions, and a lot of 'em, sometimes, are repeating sessions, because, if you went to a session on Monday, but it conflicted with a different session you wanted to go on Monday, it was repeated on Wednesday. It was really a way for accountants to maximize the sessions they attend.
David Leary: Then, that day's always the inspirational day, at the end. I think there was just one speaker. It was Alex Banayah. He recently authored a book called, "The Third Door." The gist of it is, let's say you go to a nightclub, and there's people standing in the main line, and that's a door. Then, you got a VIP door, for the movie stars. That's a door. His argument is there's a third door. It's that you sneak through the kitchen, and you bang on the door, then sneak in. You go through a window; you hop through the bathroom. There's always a third way in. It's a way to apply that to life.
David Leary: He kind of discovered a lot of people's success. He's interviewed Bill Gates, Quincy Jones; just tons, and tons of interviews to write this book. He really discovered that all of them had this third door they used to really cross that line to the next level. They all discovered ways to do it.
David Leary: He had a really good speech. He was walking around; he was in the crowd. Very engaging, very motivational. Then, he brought Brad Smith on to interview.
Blake Oliver: CEO of Intuit.
David Leary: CEO of Intuit. Then, after that, they transitioned to introducing to Sasan Goodarzi up on stage, cuz Sasan is now in that transition from Brad Smith to Sasan. Sasan's gonna be the new CEO of Intuit, starting in, I wanna say, January 1st, or January 31st. It's in January of 2019.
David Leary: They embrace; they gave hugs. It was really a symbolic passing of the torch from one to the other, publicly. Then, that kind of wrapped up QuickBooks Connect. Maybe it should be noted, as well, if you go to QuickBooks Connect's website, for those of you that maybe missed anything, all the keynotes, it looks like, are recorded, and on the front page, it looks like.
Blake Oliver: Oh, great, so you didn't even have to go.
David Leary: They have some recaps there, as well. You can actually see the official Intuit media of the recaps, which will be different from Blake's, and mine.
Blake Oliver: So, David, I got a bunch of stories, stats, that we should share with our listeners from the last couple of weeks, because we have been so focused on the conference, on QuickBooks Connect. We should run through those, right?
David Leary: Yeah, let's jump through a couple stories.
Blake Oliver: All right, cool-
David Leary: The world kept moving, while we were at QuickBooks Connect.
Blake Oliver: This is a survey that was reported in Accounting Today. The article is Accounting Firms Challenged and Adapting to Technology Changes. The lead is that only 25 percent of accounting firms feel extremely confident about their ability to keep pace in the current environment, through technology changes, according to a report by Wolters Kluwer Tax and Accounting, at its CCH Connections User Conference, in Miami Beach.
David Leary: Is there any size they have these firms that were in the survey, or was it just kind of general?
Blake Oliver: I'm not sure exactly who was surveyed. I think it's a pretty broad survey. The top five concerns of the firms that it polled were 1) keeping up with technological change; 2) to growing the business; 3) meeting client expectations; 4) data security, and 5) completing work accurately, on time. 43 percent of the firms polled felt that the pace of technological change might be moving too fast. It was a bit more at small firms, than at midsize, and larger firms.
David Leary: Yeah, but even a lot bigger than that. Then, half of everybody thought it was moving at just about the right pace. The vast majority are like, "It's going just about the right pace," or, "It's going too fast." There was a couple exceptions, I think. One percent of the firms said it's going too slow, in comparison to what clients' needs are.
Blake Oliver: Yep, those are the super-early-adopters, right there. Then, about eight percent said that tech change is moving way too fast for their firms to keep up with client needs. Makes sense. Everybody's facing a challenge.
Blake Oliver: It ties in to, I think, the challenge that many accounting firms are facing, which is they're having trouble finding the right mix of skills, when they're hiring. This is another stat from another survey in Accounting Today. The article is Accountants in Small and Mid-sized Practices Embracing More Technology but Feeling Pressures.
Blake Oliver: This article is based on a 2013 IFAC Global S&P survey, which had over 6,000 responses from small, and midsize practices in 150 countries. This is a global survey, and the stat I wanna call out here is that a 54-percent majority of the respondents said they have difficulty attracting next-generation talent, with 66 percent saying that the number one reason is the lack of candidates with the right mix of skills. I think, probably, what they mean by 'right mix of skills' is both the technology skills, and the soft skills that everybody really wants these days.
David Leary: Technology just doesn't mean Excel anymore-
Blake Oliver: Not just Excel.
David Leary: You just can't be like, "I got Excel."
Blake Oliver: Excel's important-
David Leary: Not just Excel-
Blake Oliver: Yeah, not just Excel. You've gotta really understand information systems; how to move data around.
David Leary: What's interesting about this ... I feel like both these articles can contradict an article we had, a couple weeks ago, that was about ... In the UK, and making tax digital. So many firms, they were so confident. They were gonna have all their clients ready for making tax digital, which is basically getting rid of all paper, and having everything in a technology stack.
David Leary: Some of these numbers are not reconciling across here. I guess we'll find out, because the making-tax-digital deadlines are coming.
Blake Oliver: Maybe those firms are just pushing that onto the client, saying, "You've gotta get an accounting software," because, again, we make some assumptions here, where we ... Those of us who are in more modern firms, and have outsourced accounting as a practice area ... A lot of firms don't. They're still really just doing tax, and audit, and not dealing with that for their clients. That's my theory. It's just that maybe, in the UK, those firms that are confident about it aren't even having to deal with it.
David Leary: All right, gotcha.
Blake Oliver: Does that makes sense?
David Leary: They're just punting it.
Blake Oliver: Yeah, they're just punting it over to the clients.
David Leary: My client said they could do it; I guess I'm gonna count that as a win. Okay, that makes sense.
Blake Oliver: What else is new?
David Leary: I think we had bigger mid-market news, right? Something about Sage, and then, Intuit actually made a comment, as well, about mid-market.
Blake Oliver: Oh, yeah. Let's talk about this. This article in Silicon Valley Business Journal; this headline caught my attention: Intuit's Incoming CEO "We have a huge opportunity to win the mid-market." Where did this come from, David?
David Leary: I saw it, I think, on Facebook, or Twitter. The reason I even saw it is because I think Brad Clemente, who's in the picture in the article, tweeted it out, like, "That's me, right there inside this biz journal!" The photo almost trumped the headline.
David Leary: Yeah, it looks like ... There was an announcement from Intuit, recently, about how they're gonna start going QuickBooks Advanced. It's gonna have more features; a bigger QuickBooks Online, but I have not ... There's no real announcements about this, so, it's interesting that this quote was out there, from Sasan. I didn't see anything at QuickBooks Connect, this week, about QuickBooks going upmarket.
Blake Oliver: I was expecting that, if this is a big push, there would be some big announcement about QuickBooks Online Advanced, which has been released. There was a press release about it; there were a few articles about it, ahead of the conference, but, then, I didn't ... Maybe there was a breakout session about it, but I didn't see anything on the main stage.
Blake Oliver: Apparently, Goodarzi, Sasan Goodarzi, gave an interview with The Silicon Valley Business Journal, and he said that they are gonna go after the mid-market, now. Curious to know how they define mid-market, of course, because definitions are always different.
Blake Oliver: Here's the quote from the Sasan. He said, "It's a market that's very over-served, and expensive. Some of these companies are over-served by Sage, or NetSuite, and we believe we have a huge opportunity to win the mid-market. We already have customers on Desktop, and we're just taking that game to the cloud."
David Leary: I think that's a valid argument. I would argue, even, some people who have QuickBooks Enterprise are oversold. It kind of happens naturally. If a company has enough money, sometimes, they're sold the more expensive product, just because they could afford it, but, maybe they don't need that. Just as there's people using QuickBooks Enterprise - they coulda just used QuickBooks Pro, back in the day - there's probably people using Intacct, or a large, mid-market Sage product; that they probably coulda just used QuickBooks.
David Leary: I could definitely see how that window's there, but I've never seen Intuit make such a statement like this, or a stake in the ground. This could go back to Matt Paff's interview, and article, from six months ago, that, "Hey, you American guys, QuickBooks, and Xero are coming." Maybe Matt saw the future a little bit on this one.
Blake Oliver: Another interesting tidbit from the article: the author reports that Intuit hopes to capture the 200,000 clients, who have to move on from the product, annually, because they outgrow small-business category. This is attributed to Alex Chriss, Intuit's chief product officer, and leader of its Small Business Group.
Blake Oliver: He said, "Mid-market is really exciting for us, and one of the biggest reasons is that many mid-market companies start as a small business, and today, they face a challenge. They have to make a choice to move off of us, and the current choice is not only an exponential increase in price, but a massive increase in complexity, as well, so, they have to learn new tools in the middle of growing."
David Leary: I find that 200,000 number extremely high.
Blake Oliver: There can't possibly be 200,000 clients - 200,000 QuickBooks Desktop, or Enterprise users - moving to ... Or just 200,000 QuickBooks users, period, moving to Sage, or NetSuite, annually-
David Leary: You would see the numbers of growth in those other companies' financials, right?
Blake Oliver: Yeah, because, together, I think the last time I saw numbers from NetSuite, and Sage, they don't have more than 60,000 customers between them, so, I think that's a mistake in the article.
David Leary: I've always kinda felt like there's-.
Blake Oliver: You know what I think he's saying? You know what I think he actually meant is there's about 200,000 Desktop/Enterprise users.
David Leary: Got it. That could go other places, if-
Blake Oliver: Yes.
David Leary: [crosstalk] If they make a new cloud decision, which is a vulnerability for Intuit, actually.
Blake Oliver: Yeah, and that's what we've been talking about is there are these 100,000 to 200,000 Desktop users that Intuit needs to move to the cloud, if they wanna have a single-platform strategy.
David Leary: Maybe this is less of Intuit winning mid-market. It's really keeping the mid-market we own, you know, or even, Intuit saying, "We own this mid-market. We own 200,000 mid-market clients, already, and we're gonna keep 'em.".
Blake Oliver: Definitely on the lower-lower end of the mid-market, for sure. All right, well, that's interesting. Speaking of mid-market, there was some news about Sage. We've been talking about Sage a lot, recently, because their CEO got sacked, and they've been searching for a new one.
Blake Oliver: Sage has struggled to find its way in the cloud. They have a lot of different products; not a cohesive strategy. Their initial cloud strategy has kind of fizzled, and they're facing a lot of competition from Xero. Who have they selected for their new CEO? I was thinking they were gonna go outside. I think a lot of people were thinking that. Come to the US, and find somebody who has done really well in SaaS, but, they didn't. They elevated their current CFO, Steve Hare, to CEO. They picked an insider.
David Leary: Yeah, and I am not familiar with him, in any way, shape, or form, and any exposure to this was people's reactions on social media. I think people were like ... I think Sage made a claim that, "We're gonna find somebody with SaaS in their veins."
Blake Oliver: That's what the chairman said . He said, "We need to find somebody to be CEO who has SaaS in their veins," so that's what I thought they would do.
David Leary: People said that they missed the boat on this. They should have ... I'm not familiar with his name, but whoever the CEO of Intacct was; bring him in to run all of Sage, just not Intacct.
Blake Oliver: I guess Rob Reid?
David Leary: I guess we'll watch this one, but I feel like nobody was like, "Ah, what a great move, Sage!" Nobody was tweeting that out.
Blake Oliver: Yeah, that doesn't inspire a lotta confidence in me. We'll see. Steve Hare joined Sage, in January 2014, after serving as an operating partner at a private equity firm, called Apax Partners. He has also been the CFO of several UK public companies, including Invensys, Spectris, and Marconi. I don't know any of those names, do you?
David Leary: No, not any of 'em, at all. He's gonna combine the roles of CEO, and CFO, until a replacement finance chief is-.
Blake Oliver: That makes sense.
David Leary: He's gonna not only [crosstalk] double-duty, as well. He said the right sentence. "We'll be able to succeed in our journey to becoming a great SaaS business."
Blake Oliver: There you go.
David Leary: It's the right speak, but, based on who they said they were looking for, and your thoughts about them getting external, or using something they already have that has built a successful SaaS business ... It kind of explains the way Twitter reacted, and social media reacted to this article.
Blake Oliver: Well, David we got so much more we could talk about, but maybe we should just save it for next week.
David Leary: What is next week? Well, holiday's Monday, right, so people are taking off work. Hopefully, the news'll slow down just enough, so you, and I can catch up. I feel like I have 500 articles, I haven't plowed through yet. There could be a diamond, here [crosstalk] to read.
Blake Oliver: It's good, though, because, when we started doing this, we were worried that we wouldn't have enough to talk about for a weekly show, but, not a problem.
David Leary: I think one thing we should do, though, before we forget ... A lot of you met us for the first time at QuickBooks Connect. A lot of you discovered The Cloud Accounting Podcast, when you were at QuickBooks Connect. This might be the first episode you're listening to, so welcome all our new listeners.
David Leary: If you have any articles, or ideas, or something we should be talking about ... Like, "Hey, I saw this article in The Wall Street Journal; you guys should discuss it on The Cloud Accounting Podcast," you can get that to us through Twitter. Blake, what's the easiest way to get to you?
Blake Oliver: I am @BlakeTOliver, and you, David?
David Leary: And I'm @DavidLeary.
Blake Oliver: Tweet at us. Connect with us online. If you happen to be at the AICPA Controllers Conference next week, I will be there from the 14th of November, through the 16th. I'm gonna be presenting on the top five technology trends that controllers, and CFOs need to know.
David Leary: Awesome. On that note, have fun in Vegas, and we'll chat on Friday.
Blake Oliver: Talk to you later.
The above audio transcript of "Cloud Accounting Podcast E45: Accountants feeling challenged to adapt to new tech" was transcribed by the best audio transcription service called Sonix. If you have to convert audio to text in 2019, then you should try Sonix. Transcribing audio files is painful. Sonix makes it fast, easy, and affordable. I love using Sonix to transcribe my audio files.
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