Updated Cloud Accounting Adoption Statistics

I’ve updated my statistics on cloud accounting adoption from the sources to which I have access.  There have also been some significant announcements since I last posted these statistics.  The key takeaway here is that QBO is dominant in the US, and Xero is the leader outside the US, especially in Australia/NZ/UK.Slide1

Key changes in the small business cloud accounting space in the last year or so include the following:

  • Wave Accounting has been acquired by H&R Block, who is now offering bookkeeping services to Wave Accounting users.
  • Intuit is in the process of implementing QuickBooks Online Select, a new service to help QBO end users with first time setup of QBO.
  • Xero discontinued its payroll offerings, and now recommends that people use Gusto for payroll
  • Sage acquired Auto Entry, a company which uses AI and OCR to extract data from invoices, receipts, bank statements, credit card statements, and other sources.  We expect that Auto Entry will turn into another Sage connected service which will connect to Sage Business Cloud.

I also track the ratio of Intuit’s desktop/online ecosystems, and for the first time ever, the QBO ecosystem had more revenue than the desktop ecosystem.


Announcing the Launch of the 6th Annual Accounting Firm Operations and Technology Survey

  • The accounting profession’s first and only national, independent premier benchmark survey for practicing accounting, tax and bookkeeping professionals
  • Participate in the survey through January 31, 2019, and receive a free e-book of the results when they are published in May, 2019

November 30, 2018, Hutchinson, Kansas and Knoxville, Tennessee – Randy Johnston, CEO, Network Management Group, Inc. and Brian Tankersley, Principal of Tankersley Consulting, announce the launch of the 6th Annual Accounting Firm Operations and Technology (AFOT) Survey.  The AFOT Survey will remain open through January 31, 2019.  The survey results eBook, to be released in May 2019, will continue to remain a free resource delivered to practicing accounting, tax and bookkeeping professionals who complete the survey.

“We are always pleased to understand the technology in use by CPA firms across the United States. The survey provides operational information to CPA Firm Leading or Managing Partners while revealing new trends,” said Johnston.  The AFOT Survey continues to lead the profession as the nation’s most valid and complete, professional and insightful presentation of data impacting decisions being made centered on technology budget spend, software adoption and practice management. “I’ve learned something of note every year of the survey,” continued Johnston.

 *** Take the survey now: https://www.surveymonkey.com/r/6thAnnualAFOT ***

The 6th Annual Survey eBook will feature a fresh new design, trend lines and consultative commentary from Johnston and Tankersley.  “The survey’s validity is hugely important to us; we take this aspect seriously due to critical operational and technology decisions being made by practitioners based on the trend lines our survey reveals,” said Tankersley. “This survey is the premier benchmarking tool for practitioners nationally.”

Facts about the 6th Annual AFOT Survey

  • Take the survey, get the $495 Survey results eBook, FREE OF CHARGE.
  • 91 multiple choice survey questions.
  • 30 minutes is the average amount of time required to complete the survey.
  • Only one survey respondent per firm is required; the survey respondent will receive the AFOT Survey eBook via email on or before May 1st, 2018.
  • Who is the best person to take the survey in your firm? The person most familiar with operations, practice management and technology and how decisions in the firm are made.

Survey areas include:

  • Demographics
  • Practice Management
  • Technology Management
  • Operating Systems
  • Computer Hardware
  • Application Software
  • File and Data Storage/Management
  • Remote Access/Internet/Telecommunications
  • Technology Spending, Decision-making
  • Annoyances and Trends

 About the Principals

Randy Johnston is CEO of Network Management Group, Inc. (NMGI), a company he helped to create in 1983. Johnston is renowned throughout North America for consultation he provides on CPA Firm on their operations and technology, while also serving hundreds of CPA firms by proactively managing their technology.  Johnston provides insight and guidance for firms of all sizes interested in growth, profitability, mergers and acquisition.

Dr. Leslie Garrett is the CEO and Founder of Insight Research Group (IRG). IRG is a research firm founded on the principle of providing valid, unbiased and actionable data. Research conducted by IRG entails carefully selected survey methodology to bolster confidence and ensure valid results for a population being measured.

Brian Tankersley, CPA,CITP, CGMA is a consultant, author, and speaker who specializes in accounting technology issues.  Tankersley has spoken in 47 US states, and three Canadian provinces, and writes for major accounting press outlets including CPA Practice Advisor and AccountingWeb.  He is also a faculty member for Yaeger CPA Review.

The Office 365 Outlook “Coming Soon” Switch

Change is coming, but you don’t have to rush things.

Microsoft has announced a new interface for the Office 365 applications which is simpler and has fewer icons on the ribbons.  While the current “ribbon” interface has been in place since roughly 2007 (for perspective, Adobe Acrobat has had at least two major UI updates during the same period (Acrobat X in 2010 and Acrobat DC in 2015).  The mouse-click masters at Microsoft have decided that we need a change in how we use Outlook.  Unfortunately, this update is just now being noticed by many practitioners during the time of the year when we need to be the most productive.


The “Coming Soon” button in Outlook for Office 365 gives you an opportunity to “evaluate”…. er, test, new features in Outlook, and give Microsoft feedback on the new features.  Unfortunately, this switch is getting turned on sometimes by accident, resulting in some confusion, like this e-mail I received yesterday from one of the gentle readers of this blog:

Yesterday when I booted-up my Outlook365 I noticed a significant change in the “look”. My main complaint is the double line-spacing. I can now only see a portion of the emails in my inbox (as well as the other boxes). Even the From/To/Cc/Subject lines are now double spaced. Heck, everything, including the Ribbon, is double-line spaced. When composing a new email Microsoft has inverted the To/From lines. What’s that about? I know I’m sending it out.  This makes working in Outlook365 much less productive.

Fear not, gentle reader.  Nobody moved your cheese.  The old interface is still alive and well – you just have to know how to “re-enable” it.  In the upper right corner of the screen is a on/off switch that is labeled “coming soon” (shown in the picture above).  Flip it to the off position, restart Outlook, and you probably will be back to what it was before.

For my friends who wish to block this tool from being implemented in their organizations, there’s a link at the bottom of this blog post which  allows you to update your group policy templates to allow you to disable this feature for your users.  (If the last sentence you read sounds like gibberish, or Charlie Brown’s parents speaking, then forward it to your friendly neighborhood network administrator, and they will help you take care of this issue).

Have a great year end/tax season/first quarter, and I look forward to seeing many of you in my travels for K2 Enterprises later in 2019.

Phishing on the Rise: Don’t Fall for it.

I’ve noted a significant rise in the number of phishing and malware attacks I’ve received in the last few weeks. With open source phishing tools like GoPhish available to anyone for free, it’s more important than ever to train your employees and be more diligent about where you go online.

I’ve included two of the most recent messages I’ve received to remind you to be very diligent when you are going through your e-mail.

  1. The fake fax/purchase order – This attack sends an unexpected message that has an interesting title, like “Incoming fax message” or “purchase order” from an unexpected sender.  An example of one of these appears below.

Annotation 2018-11-30 101416

Note that this message is from a service I’ve never heard from, and the fax number of the sender (+1 659-802-3681) is from an area code that doesn’t exist, and the CSID (fax header) is from Massachusetts.  Also note that the attachment is an HTML file – and it probably has some bad stuff in it.

Lesson: If the message looks odd, verify its validity with the sender.  If you can’t determine the sender, don’t open it.

2. The portal login – This attack sends a message which purports to be from a portal, but the real objective here is to get you to visit a site you shouldn’t visit and make it look like a legitimate website you use.  In the screen capture below, I’m allegedly being sent a PDF file from a CPA firm in Washington State which is a “proposal”.  Since I don’t do business with the firm, I have to assume that it’s bogus, and I should ignore it.  It’s probably a bogus e-mail, linking to a bogus website, with a malware-laden file awaiting me.

Annotation 2018-11-30 100008

This kind of attack is easily perpetrated with free, open source software – because I’ve personally set up the software needed for this in Linux.  The application, GoPhish, is designed for security professionals to use when testing their employees, but can also easily be used by fraudsters trying to get access to your e-mail accounts.GophishDashboard.png

While I didn’t click on the link to the OneDrive site, I fully expect that it would have had malware on it or would have tried to trick me entering my legitimate username and password into a fake website.  There are a number of free tools which will help you set up fake websites in GoPhish, and it is trivial to use this tool to retrieve the credentials entered by victims.

The bottom line here is that the bad guys are getting better, and it’s becoming easier than ever for criminals, teenagers, and “script kiddies” to use open source software to gain access to your confidential data.

If you’re interested in training your employees and testing your vulnerability against phishing and other e-mail attacks, the following services offer employee training programs for a reasonable price:

You can also see reviews at the Gartner Group’s website online.


Cloud Accounting Adoption Grows, But Desktop Solutions Still Pay the Bills

Intuit continues to lead in cloud accounting adoption among small businesses and microbusinesses in North America, with almost 1.9 MM companies on QBO in the US.  QBO continues to make strides outside the US, with 800,000 companies in their latest user statistics.  Xero continues to grow in the US, with 132,000 North America users as of the end of March, but we expect that those numbers will grow more quickly due to possible synergies from the Hubdoc acquisition in August.

QuickBooks Online Self-Employed, a product which is designed to track the cash receipts and disbursements of independent contractors, grew to 750,000 subscribers this period.  Although the number of subscribers bundling this solution with Intuit’s TurboTax income tax preparation software was not disclosed this quarter, last quarter approximately half of QBOSE subscribers also purchased TurboTax.

Intuit has quietly launched a new product targeted at companies with 10+ users called QuickBooks Online Advanced, with premium support, and priced at $150/month.  Industry observers I speak with tell me that they expect this product to go upmarket top serve larger businesses over a period of years.  A strategy for involving accounting professionals and software consultants in QBO Advanced has not been launched yet, as the product is not available on wholesale billing for ProAdvisors at this time (9/2018), and we have not heard of a QBES-style “Intuit Solution Provider” VAR program for QBO Advanced at this time.

Despite these improvements, desktop accounting continues to be the dominant platform for small business.  Intuit’s most recent revenue statistics (under the old GAAP standards, not the new ASC 606 rules) show that revenue for the QuickBooks desktop ecosystem continues to lead the QuickBooks Online ecosystem by a significant margin.  While this will evolve over time, the ratio of QBD ecosystem revenue to QBO ecosystem revenue for Intuit’s quarter ended 7/31/2018 is 1.36:1. (source: Intuit)


While we don’t have a method of providing a true “apples to apples” comparison of QuickBooks desktop user counts as compared to QBO user counts for a number of reasons, it’s clear that desktop has a larger share of revenue.  The online ecosystem continues to grow, and it’s hard to quantify the impact of the recent QuickBooks Enterprise price hikes on that desktop revenue.  Sage and Xero continue to be a worthy competitor to QuickBooks in many segments, new products like BQE Core and AccountantsWorld Power CAS continue to show promise.  Ultimately, if artificial intelligence and machine learning can even partially live up to the hype surrounding them right now, the whole game could change – but for now, the desktops are paying the bills.

Some Recent Writings

I’ve written for a number of outlets in the last few weeks… so many that I haven’t been posting here.  Some of those articles which have already been published include:

I’ll be back soon with more, but for now, I hope these give you some new meaty content to chew on.

2018 Sales Tax Holidays

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Many states offer what’s called a “Tax Free Weekend” or a “Sales Tax Holiday” every year.  This is a series of dates when sales tax is not charged in the state on certain kinds of items, like clothes, computers, and books right before school season, or hurricane preparedness right before hurricane season.  While you should visit the website for your state’s department of revenue to learn more about your state’s program, I’ve included a partial list (compiled by the Federation of Tax Administrators here) which lists, in chronological order, the upcoming sales tax holidays for the remainder of 2018.


If you’d like to download the spreadsheet I used to create the table above and the maps so you can try to figure out what was required, you can download it from my ShareFile site.You may ask, “what does this have to do with accounting technology?”, and the answer is that I used two features in Microsoft Excel to transform the data.  The first, Get and Transform Data (formerly known as Power Query) was used to import the data from the Federation of Tax Administrators website and convert it into a useful format.  I then did some additional formulas in Excel to filter out the dates which occurred earlier in the year.   The second, 3D Maps (formerly known as Power Map) was used to create the map showing the states on a US map so I could have an image to go along with this post.

Many other groups have articles or graphics you can share on social media related to these holidays, including the following:

Blockchain is a Database. Get Over It. Really. (Part Two)

(Editor’s note: I recently penned a column for The CPA Practice Advisor titled,
“Blockchain is a Database. Get Over It.” This article is a followup to that article which addresses some additional issues which I was unable to address in the original article. This article has been adapted from an e-mail I sent in response to a reader’s comment about my lack of enthusiasm for current deployments of blockchain in accounting – because it’s an emerging technology.)

Here are direct quotes from two major media articles from Q1 2018 which I reference in my CPA Practice Advisor article titled, “Blockchain is a Database. Get Over It.”:

“It reflects that (blockchain is) a big bubble,” said Huy Nguyen Trieu, an associate fellow in fintech at the Oxford Said Business School, on the spate of company rebrands.

From Reuters’ Alasdair Pal, “Blockchain Name-Grabbing has Echoes of Dotcom Bubble”, February 8, 2018

And here’s another quote from The Atlantic:

Bitcoin might be where Pets.com was in 2000—a technological curiosity in search of an enduring business need. But blockchain is not where the internet was in 2000. Even blockchain’s biggest defenders can’t say what the technology’s most obvious consumer use-cases are going to be, because they plainly don’t exist yet. It is possible they never will.

(From The Atlantic’s Derek Thomson – “It is Silly Season in the Land of Cryptocurrency”, January 10, 2018 (emphasis added)

The point I’m trying to make is that blockchain is an application platform, and the applications – not the platform itself – are what’s going to change how we work, and they largely don’t exist outside of a few pilot projects as of yet. I feel like much of the current fascination/obsession/cult of blockchain is not much more than misplaced enthusiasm for the get rich quick schemes surrounding the cryptocurrency asset bubble – say 80% of it is this – there are some important parts (20%), but you should be careful. While those apps will be useful eventually, I think you should focus on what will make you money instead of what is shiny.

Let’s take another approach to explaining this- imagine if you and I were transported back in time to our 1970’s selves (sans cigarettes and leisure suits) and someone was talking about how SQL-based databases were going to change the world. I would say sure, SQL is an important technology for software developers, it’s a great technology, and the applications did change the world – but for the end user accountant, auditor, or bookkeeper, SQL in 1975 was a tool which needed to be dealt with once there were applications which used this platform. From an accounting and auditing perspective, IT auditors, internal auditors, and IT specialists who worked with CPA firms were the only people who did much with SQL until the late 90’s.

For the average, non-Big Four firm, there are so many other technologies which need to be higher than blockchain on the priority list – CRM, social media, automation of bank feeds and transaction recording, OCR and AI technologies like those utilized by Receipt Bank and others, data analytics and testing tools like TeamMate Analytics – the list goes on and on. (On that list, blockchain should be just below a Myspace page and just above alpha-testing a self-driving car on the current technology priority list for most users and firms.) While the tools utilizing this platform are evolving, the apps just aren’t there on a widespread production basis at this point. In my opinion, there is much more profit to be earned by dealing with practical, actionable technology which you’re not currently using rather than trying to leapfrog to blockchain unless you have specialized needs and are going to have custom code written, and then, it’s still a crapshoot.

I do think that blockchain will be a bigger deal in the governments of most other industrialized countries before it is in the US due to the comparatively poor state of US government-side technology and the fragmented nature of regulation in the US compared to the rest of the world. In Canada, everyone can file all federal and provincial tax filings with the Canadian Revenue Agency online using the same set of rules and they take all returns. Canada also has a standardized system for classification of accounts which allows financial reports to be filed electronically with the government (GIFI), which is built into Caseware Working Papers (90% market share in Canada). In the US, we have to file with so many different jurisdictions and regulators, with different taxability rules, and many of the states can’t really handle e-filing, so there’s not the incentive for a centralized blockchain like some of the ones proposed for recording VAT in Europe (See https://blog.kpmg.lu/how-blockchain-could-help-fight-or-even-end-vat-fraud/ for more information here). As a result, there’s not the same need

The Indian financial system has had a number of radical reforms after its implementation of a national value added tax (GST) in 2017. The government is trying to eliminate the non-taxed cash economy by (1) eliminating large denomination bills, (2) making their version of ACH payments very inexpensive (but not free), and (3) reducing the supply of paper banknotes in circulation. While some think that blockchain may eliminate banks in India by 2030 (https://yourstory.com/2018/02/blockchain-state-bank-of-india/), my gut says that the political power of banks/financial intermediaries and the state’s compelling interest in controlling money laundering and the cash economy will present massive barriers to its implementation and widespread adoption of cryptocurrencies. Anything that takes political power away from those who have it (and the related money and control of institutions) will be resisted vigorously – and remember that the money laundering penalties in many countries are beyond draconian in most cases – so the penalties for being an early adopter are more like “life in prison” and less like the fines for driving a cab without a medallion.

I hope I’m wrong and blockchain changes our lives sooner rather than later, because it’s a very cool technology and addresses the data integrity issues associated with electronic data very elegantly in a tamper-resistant ledger.

The reality of the 25 years I have been in the profession is that some really smart people said that computers were going to displace all accountants by 2000, then other experts said that outsourcing was going to kill the jobs in profession by 2010, and now we have people saying that blockchain/AI/machine learning is going to kill all accounting by 2020. My response to them is that it’s 2018, and we’re all still here – I don’t think anything will kill accounting totally. While it may change the way we work eventually, consider how much accounting has changed in my 26 years in the profession:

  • Have you seen a 4, 5, 7, or 14-column pad lately? (I saw the first one I’ve seen in about three years being used by a CPA at an industry meeting in New York a couple of weeks ago)
  • When was the last time your hand touched a colored pencil, other than when doing art or helping your kids with their homework?
  • Do you have a 10-key adding machine on your desk? When was the last time you used it? Can you still buy ribbons/ink for the one you have?
  • When was the last time you wrote and mailed a paper letter to anyone other than a government employee or an attorney?
  • When was the last time you sent a fax to anyone other than a government employee who doesn’t have the technology they need at the office? Do you still even have a physical fax machine?
  • Do your new staff know how to use cursive handwriting? (Surprisingly, many do not.)

(By the way, I did all of those things on a daily basis when I started in the profession, and now I do almost none of them in a given day.)

Technology isn’t going to eliminate us unless we let it by trying to stay in the past and ignore how it changes our work. I would argue that the tools we’re going to use in the future and how we work in the future are going to change in the next 25 years at least as much as they changed for me in the last quarter century. We’ll have to have new tools which don’t yet exist to audit blockchains effectively – but those tools will become available in the next couple of years. So learn a little bit about blockchain – I’ll be doing some webinars to explain some of the concepts in the future – but don’t let the fear of missing out (FOMO) drive you to try to force-adopt it before the tools are ready for what you do.

Right now, for most people, blockchain is a bleeding edge technology, and almost all of you should wait until it’s a little farther along before you try to embrace it – but you should learn about it and be ready when the apps arrive.  I hope you’ll join me at the remaining 2018 K2 Technology Conferences to learn about this topic and many more strategic technologies which will affect you in the future.

Some CPE webinars which may help you learn more include:

AICPA will also be releasing a report from the Blockchain Symposium in the near future, and I’ll link it here when it’s available

CPATechBlog.com Cloud Accounting Dashboard as of 5/24/2018

I’ve updated the CPATechBlog Cloud Accounting Dashboard for the latest statistics on cloud accounting adoption for the most recent earnings and public company disclosures from Sage, Intuit, and Xero.


Highlights from the most recent updates include the following:

  • Intuit continued to dominate the cloud accounting space, with 1.82 million companies on QBO as of 4/30/2018, as compared to 132,000 in North America for Xero.  The other competitors in this space do not break out North American adoption stats or are private and do not have to disclose adoption stats to the public.
  • In addition to the 1.82 million companies on QBO in the US, Intuit reported another 720K QBO companies outside the US, as well as 680K users of QBO Self Employed.  The 720K QBO companies outside the US compares unfavorably to the 1.25 million companies on Xero at 3/31/2018, but both performed favorably against the 431,000 reported on Sage Business Cloud Accounting (the product formerly known as Sage One) at 3/31/2018.
  • Intuit disclosed that 330,000 of the 680,000 total QBOSE users bundled the product with TurboTax, which may make some of you practitioners nervous about recommending that product – don’t forget that there’s a way to connect QBO for Accountants to your client’s QBOSE, and Intuit says that they won’t try to sell TurboTax to your QBO self-employed clients – if you need details, drop me a line – Brian at bftcpa dot com.
  • I still estimate that the ratio of QB Desktop users to QBO companies is 1.30:1 as of the most recent earnings release.  What’s more important for you, the gentle reader of this blog to know is two things:
    • While the ratio of QBD users/QBO companies is 1.18:1, the ratio of the desktop QB ecosystem revenues to the QBO ecosystem revenues was 1.42:1 – so desktop versions of QuickBooks are still essential to the QuickBooks business for Intuit.
    • Slide3
    • The really bad news for users of desktop versions of QuickBooks is the forward looking information about desktop versions of QuickBooks – and I’m quoting directly from their Q3 Earnings Call Script here.  “Desktop Ecosystem revenue grew 3 percent in the quarter and is up 7 percent year-todate. For fiscal 2018, we expect QuickBooks desktop units to decline mid to high teens and Desktop Ecosystem revenue to be up mid-single digits.”  While we’ve known for some time that Intuit passed on a price increase to QuickBooks desktop users, it tells me that we should probably expect prices on desktop software to continue to climb as Intuit continues to try to make it financially advantageous for users to switch to QBO, where they have more control over the ecosystem, as opposed to QB Pro/Premier/Enterprise.

While Intuit has a lead in US cloud accounting, if the much vaunted machine learning and artificial intelligence capabilities which the cloud brings us in the next few years ever actually happen, accounting software may become something that people used to use – like buggy whips.  Truthfully, if the technology winds shift quickly – it’s still anybody’s race.

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