Category: Computer Applications

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.

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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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Dear Brian: Clearing Out Old Vendors, Customers, Items, and Accounts in Desktop QuickBooks

Dear Brian:

My client has been using QuickBooks Pro for well over 10 years.  They upgrade every few years however the file size is getting very large.  They do not want to switch to another program and do not want to switch to QuickBooks Online.

I was under the impression that the newest versions of QuickBooks allows you to purge old data or allows you to reduce the file size.

What should I do?

Sincerely,
Carl in Philadelphia


Dear Carl,

You may want to consider using the Condense Data feature in QuickBooks (File, Utilities, Condense Data from the menu)- it will let you remove the old data as well as the old list items – vendors, customers, accounts, etc. which you haven’t touched in years.

You can download a PDF file with directions on how to do this by filling out the form below:

The World Continues to Evolve. Will You?

I’ve been part of the CPA profession since I graduated from the University of Tennessee and joined one of the “Big Six” accounting firms in 1992.  I started during the waning days of working papers which were made of paper, and had the privilege of carrying a 40 pound Compaq “luggable” transportable PC as my first work computer shortly thereafter – so I’ve been around a while.  During the last 25 years, we’ve transitioned from paper to computer-based documentation, and have also seen the rise of the internet.  The changes we’ve seen – the rise and fall of Yahoo, Amazon’s domination and disruption of everything, and the rise of smart phones – are nothing short of breathtaking.  When viewed in the context of how we worked 40 years ago, it’s important to remember they didn’t change overnight – it took decades for things to shift to the new paradigm.

A two-sided

The late Roy Amara, a respected researcher, scientist, and futurist who led The Institute for the Future during the 1970’s and 1980’s, is credited with creating “Amara’s Law”.  His maxim states, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” If you think about the tools we use in our offices every day, almost none of the tools we used forty years ago are used today.  Gone are the paper rolodex cards, typewriters, 10-key adding machines, workpaper binders, 5-column paper, phone books, and colored pencils from the past, replaced by multiple monitors, printers, e-mail, and software like ProSystem fx Engagement.  An accountant from 1978 who visited a cloud-based accounting firm without a physical office wouldn’t recognize what he or she saw.  They would be shocked how simple tasks like payroll have been automated and centralized into computer data centers operated by ADP, Paychex, and Intuit which are accessed using the internet– they would be completely lost in today’s world.

We are all learning about emerging technologies like blockchain, artificial intelligence, machine learning, and process automation.  While most of these technologies are platforms for software developers instead of applications you can use to solve a specific business problem.  As I write this in the spring of 2018, there aren’t many ways I can utilize these technologies today – but I believe that they will impact how we work in the future in ways we can’t imagine.

It’s important to stay current on technology, but that doesn’t mean that you have to know everything about it – or as my friend Gary Boomer often says, “you don’t have to know how the movement mechanism in a wristwatch works in order to tell what time it is.”  The time to change your work processes is when it makes financial and operational sense to do so, not when “the cool kids” say it’s OK.  Keep up with your competitors and don’t get behind on technology– because there are a lot of dinosaurs with dusty offices full of paper who upon retirement will realize smaller gains when selling their practice because they didn’t keep up.

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5th Annual Accounting Firm Ops and Tech Survey Awards Announced

April 05, 2018, Hutchinson KS and Minneapolis, MN – Randy Johnston, CEO, Network Management Group, Inc. and Dr. Leslie Garrett, CEO of Insight Research Group are pleased to announce the winners of the 5th Annual Accounting Firm Operations and Technology (AFOT) Survey Awards. Survey respondents identify the software used in their accounting firm that has the greatest impact on their firm in three separate categories: Profitability, Risk Mitigation and Productivity.  The 5th Annual AFOT Survey results book will be released in May 2018.  Respondents selected award-winners in each category from a list of 87 accounting firm software products.

Continue reading “5th Annual Accounting Firm Ops and Tech Survey Awards Announced”

News Roundup- March 13th

Some of the current events I’ve been following include the following stories:

 

The Business Model Problem With Unicorns

There is a fundamental problem with Silicon Valley – too many startups seem to have a business model of “build to flip”. This model – which I’ve seen in the past – is a model in which the company has little, if any, interest in creating a serious, viable product, and is instead only interested in selling out to someone else. The short term thinking reminds me of the 1960’s movie musical, “The Music Man”, where a scam artist plans to sell band instruments to locals in “River City” and skip town as soon as they pay for the horns. One can see the signs of excess in the news – sex and shots in the stairwells at Zenefits, and magazine covers which show the hundreds of “unicorns” (a slang term for a private company valued over $1 billion) running for the exits, and most finding that there is no way out. When MVP describes a “minimum viable product” instead of a “most valuable player”, it’s a sign that the valuations may have “jumped the shark”.  The reported “shots and sex in the stairwells” at Zenefits will be the punch line for the bursting of a modern day valuation bubble, just as a certain sock puppet was a symbol of an earlier period of excess.

This focus on market capitalization instead of net income – or even producing a viable product – is a particularly intractable problem for items in the financial technology (“FinTech”) sector, where the industry actors (accountants, financial institutions) thrive on long-term stable relationships with customers, and mistakes are remembered for decades. Unlike other sectors of the economy, entrepreneurs are interested in dealing only with “grown ups” when it comes to their business finances. The constant change in features and application availability makes the users hesitant to adopt any solution from these companies, whose constant product and business model iteration makes their customers feel like they’re living a very strange version of Abbott and Costello’s “Who’s on First”.

There are opportunities out there – some such opportunities include automation of account assignment to transactions imported from banks, automated reconciliation of statements, and creating “digital plumbing” to solve the problem of digital silos in the very fragmented cloud economy.  Unfortunately, these tasks are not easy – which is why nobody is doing them successfully.  (I hope someone solves these problems soon.)

It also strikes me that there is excessive focus on HOW the products are delivered (e.g. browser/public cloud) instead of WHAT the products actually do for their users. This is accomplished by burying prospective buyers in a blizzard of BS before they buy. A partial list of “danger words” which indicate that this style of groupthink may exist includes cloud (all kinds), user experience, ecosystem, seamless integration, minimum viable product, iteration, market capitalization, and non-GAAP operating results. If you hear most of these words, I’d stay away – or at a minimum, hold onto my wallet. The unicorns are running for the exits, and I fear that some will be trampled as investors realize that they have bought into applications without a viable long term model for operating as a profitable business.

 

Who Will Be The Profession’s Digital Plumber?

I’ve been using, supporting, and following accounting software developments since the 1990’s, and there’s a common problem which still needs to be solved:

“How will I get (my)(my client’s) data from (application one) into (specialized application two) so I can perform (task)?”

There have been a wide range of people who have taken on solving this problem, and almost every family of solutions (e.g. Intuit, CCH, Thomson Reuters, Sage, etc.) has solved the problem for their stack of solutions.  One can easily go from most of the major client bookkeeping products into that publishers tax application, and with a little more difficulty, one can pull data from QuickBooks desktop into the tax software.  All bets are off, however, when you step outside of your tax software’s family of solutions.

If you look at e-mail in the 1980’s, we had services like Prodigy and Compuserve, which in their early iterations had closed e-mail systems – like those run by many companies.  In fact, I have had professional jobs in my career where I didn’t have internet-based e-mail – because it was a closed system.  Once these systems opened up, I had internet e-mail from Prodigy (fmpm09d@prodigy.com).

My friend Randy Johnston has often compared the “my tools only” integration strategy as a nationalist strategy – that is, you’re picking winners and losers in a war (e.g. NATO/Warsaw Pact).  Some of this is because of benign neglect, some due to economics, but part of this is an intentional strategy.  That’s OK – providers have no obligation to support competing solutions – but it’s still frustrating.

What we haven’t seen in the US is someone who will be the accounting data version of Switzerland for practitioners– a company which will put in tight integrations to everything.  The closest company to that strategy seems to be Caseware, which exports to most practitioner tax solutions – but their relatively small US market share diminishes their effectiveness in this role.  QuickBooks is probably as close as any app here – but that’s primarily due to its marketshare in the US.  Without good cross-platform integrations and effective/automated import/exports between the different provider cloud offerings, adopters are just trading an on-premises cloud island for a provider-hosted island.  If there’s no easy way to move traffic between islands, you’re just a castaway.

I will point out that Avalara does this successfully with hundreds of accounting/ERP solutions on the sales tax side, so it’s definitely possible, and I think their strategy will pay off in the long run.

I did a session on Digital Plumbing at the Sleeter Accounting Solutions Conference last year, and some companies are out there which do different tasks associated with this for general accounting solutions.  Leaders are ITDuzzit (now part of Intuit, no longer commercially sold), Zapier, and OneSaaS, but there are many nascent competitors in this space, and I haven’t seen anyone reach scale yet in the practitioner market.

Chris Keall of the National Business Review in New Zealand points out today (link requires subscription) in a paid article that Kiwi company Common Ledger has received a relatively small amount of funding ($1MM NZD) to develop solutions in Australia/New Zealand.  What a pity that we don’t have anyone taking on this task in the US.  VC’s seem to be throwing money like crazy at cloud products, but nobody seems to be helping the various data clouds automatically talk to each other.  What a pity.

If any of you readers are aware of anyone who is solving this problem, please let me know.  If accounting is going to become more automated, we have to move past 1980’s solutions like manual import of CSV files and transition into real solutions which are less of a pain to implement.  We’ve seen this change radically with bank feeds in the cloud accounting solutions– when will we see it with other accounting data flowing between various best in breed practitioner solutions?

 

Second Annual CPA Firm Operations and Technology Survey Released

As many of you know, I do most of the data analysis and writing associated with the CPA Firm Operations and Technology Survey published by CPA Trendlines.  My co-authors, Dr. Leslie Garrett and Randy Johnston, and I  released the new 2015 edition of the survey today.  The survey was an 86 question survey, was promoted by most major publications serving the profession, and offers over 180 pages of tables, charts, and analysis about over 600 US and Canadian accounting firms.

The press release issued today follows.

ANNOUNCING THE RELEASE OF THE 2nd Annual ACCOUNTING FIRM OPERATIONS AND TECHNOLOGY SURVEY EBOOK

April 09, 2015, Hutchinson KS and Minneapolis, MN – Randy Johnston, CEO and Founder, Network Management Group, Inc., Leslie Garrett, PhD, CEO of Insight Research Group, and Brian Tankersley, editor of the publication announce the release of their 2ndAnnual Accounting Firm Operations and Technology survey eBook. The eBook is published in cooperation with Rick Telberg, President and CEO of CPA Trendlines.

“We are very pleased with this year’s survey participation, we have respondents from all 50 states, and our number of respondents doubled over last year’s results, further validating the data,” said Garrett. The 2nd Annual Accounting Firm Operations and Technology Survey eBook features results from 86 survey questions presented using bar charts and tables showing last year’s results against this year. Every survey question features a table revealing how firms of different sizes responded which allows readers to benchmark their practice against others of similar size.

The value-added content in the Accounting Firm Operations and Technology eBook includes:

  • Inside the Numbers: For each section of the survey (Demographics, Practice Management, Technology Management, Operating Systems, Computer Hardware, Application Software, File & Date Storage/Management, Remote Access/Internet/Telecommunications, and Technology Decision-making, Annoyances and Trends) our research, analysis and editorial team reports on significant findings in the data. The content in these sections are data-driven based on survey results.
  • Consultants Counsel: For each section of the survey our research, analysis and editorial team provides consulting commentary to help readers understand how they might apply the results to their practice, which aids in planning and future decision-making.
  • Trend Watch: For select results, our research, analysis and editorial team identified trends that seem to be developing, which gives the reader the opportunity to adjust their operations and technology planning accordingly.
  • Thought Leadership: Several of the profession’s most respected thought leaders weigh-in and provide insight into select results. Articles have been contributed by Richard Koreto, Managing Editor of AccountingWEB, Daniel Hood, Editor-in-Chief ofAccounting Today, Jim Boomer, CIO and Shareholder, Boomer Consulting Inc., Gail Perry, Editor-in-Chief of CPA Practice Advisor, Rick Telberg of CPA Trendlines, and Bob Scott, Editor-in-Chief of The Progressive Accountant.

***NEW THIS YEAR***

Trend Watch

With two years of data to report on, our team noticed trends developing in certain operational and technology areas. Where trends are apparent, a Trend Watch section appears in conjunction with the bar chart or table, further illuminating to the reader results that are worth paying additional attention to. “After looking carefully at the results, the editorial team thought that identifying trends was important and convenient for the reader,” said Johnston.

Productivity, Profitability, Risk Mitigation Awards

Respondents of the 2nd Annual Accounting Firm Operations and Technology Survey were asked to identify the accounting practice application software that has had the greatest impact on their firm in each of these three areas: 1) Productivity, 2) Profitability, and 3) Risk Mitigation. Congratulations to the 2015 award-winners:

  • Productivity: Intuit QuickBooks
  • Profitability: CCH, a Wolters Kluwer business
  • Risk Mitigation: Thomson Reuters

About the eBook

The Accounting Firm Operations and Technology eBook is 200 pages in length and features 86 survey questions and overall results for each survey question presented in easy-to-understand charts and tables. The eBook also provides survey results by size of firm broken down by solo practitioners, small firms (1 to 10 employees), mid-sized firms (11 to 49 employees) and large firms (over 50 employees).

Media Contact:

Leslie Garrett, PhD, CEO and Founder

Insight Research Group

lesliegarrettphd@gmail.com

To secure your copy of the eBook, visit the CPA Trendlines store, powered by Bay Street Group LLC, at cpaclick.com/nmgi-irg-1

 

Recent Reading and Writing, March News Update

I’ve been quite busy over the last couple of months, but unfortunately, I don’t have a lot which I can show you, the gentle reader of this blog.  A listing of some of the writings I’ve worked on in the last few weeks is as follows:

I also have been meeting with software publishers and reading voraciously preparing for this year’s tech conferences and seminars, which start for me next week in Philadelphia, and take me around much of the continental US this year.

I hope you’ll plan to attend the 2015 @AICPA Practitioners/TECH+ Conference in Orlando June 7-June 10th. You can save an extra $100 w/code TAC http://pstech.cpa2biz.com/

I share articles which I find interesting on Twitter – I’m @BFTCPA.  Some of the stories I’ve been following include:

I’m sad to see that The Sleeter Group has sold to Diversified Communications, but I know it was an offer which Doug and Sherrill couldn’t refuse.  Congratulations, and we hope to continue to work with you in the future.

Be careful out there, people.  I look forward to seeing many of you on this year’s journey.

 

Recent Software Company M&A Activity

As readers of this blog know, the only constant in the accounting technology space is change itself.  With that in mind, I wanted to let you know about some recent acquisition announcements in the accounting space.

SAP to Acquire Concur– Enterprise software giant SAP announced after the market closed last Friday that they have an agreement in principle to acquire the outstanding shares of Bellevue, Washington based Concur Technologies.  Concur provides tools for managing the expense reimbursement process in small companies (with a SaaS offering) and with an on-premises expense management toolkit for enterprises.  (Source: @WSJ)

Sage to Acquire PayChoice  – Small and mid-sized business management company Sage has announced an agreement to purchase PayChoice, a provider of payroll and HR services for small businesses over a software-as-a-service (SaaS) platform.  Sage’s press release described PayChoice as follows:

Founded in 1990, PayChoice is headquartered in New Jersey with 260 employees and 16 offices across the US.  PayChoice provides full-service and self-service payroll and HR services to more than 100,000 SMBs in the US, through a direct sales force and third-party licensee channel.  PayChoice’s revenue for FY13 was US$38.9m.

PayChoice has developed a next generation, cloud-based payroll and reporting platform called ENCORE.  The platform, which was launched in September 2011, encompasses both mobile and web-based payroll applications, operating from a single codebase for both its direct and licensee clients.  ENCORE supports the needs of businesses with self-service solutions through to more complex full-service solutions on the same platform, supporting the needs of SMBs as they grow.

The release also disclosed that consideration for the purchase was approximately $157.8M (converted from GPB at a rate of 1:$1.628)

From the release:

“PayChoice is an excellent business, with a strong management team, attractive cloud platform and a proven business model based on supporting the needs of small and medium-sized businesses and licensees,” said Pascal Houillon, president and CEO, Sage North America.  “We are excited about the growth opportunity that the combination of Sage and PayChoice creates in this market and delighted to welcome the management and staff of PayChoice to Sage.”

Payroll and compliance with constantly changing employer regulations are two consistent challenges for SMBs.  This acquisition will enable Sage to provide intuitive payroll solutions as well as integrated ancillary services such as tax filing and direct deposit as part of the company’s core offerings, making it easier for small and medium-sized businesses to consolidate and review business data, manage relationships, and simplify day-to-day operations.

Infor Completes Acquisition of SalesLogix – Infor announced earlier this month that they have completed their acquisition of the assets of the SalesLogix CRM application from Swiftpage.  Readers may recall that Sage spun off both SalesLogix and Act! to Swiftpage in early 2013. as part of a series of deals which included spinning off Sage Non-Profit Solutions (now called Abila) to a private equity group run by KKR-Accel.

Consideration was not disclosed by either party, but Infor did mention that SalesLogix is used by 70,000 customers at 1,700 organizations who use SalesLogix.  300 of these companies use both SalesLogix as well as one of Infor’s solutions.  Infor plans to incorporate the product into Infor CloudSuite, a set of cloud applications which run on Amazon to meet the needs of specialized industries.