Kelly Phillips Erb, who covers tax for Forbes, and is the majordomo at www.taxgirl.com is running her annual #TaxHaiku contest. (Many of you, the gentle readers of this blog have seen some of my previous year entries here and here). (Who knew that people who could do #taxes could also write poems? I suppose it’s the torture our souls have endured during the long, long winters in front of monitors.)
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.
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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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.
I was fortunate to be invited to attend an analysts conference for Zoho Corporation. For those of you who aren’t familiar with Zoho, they have about 60 different SaaS applications for all aspects of running a business, including e-mail, calendar, CRM, accounting, reports, HR, e-mail marketing, help desk, meetings, and many, many more. The apps are sold individually, in four bundles (CRM Plus, Workplace, Finance Plus, and IT Management), or in a mega-bundle called Zoho One. I’ve been using Zoho One for a couple of months, and it’s been pretty amazing. Some of the things I’ve done with it include:
I was pleased to write a white paper with Randy Johnston a couple of years ago for CPA.com called “The Journey from Premise to Hosted to Cloud: A CPAs Travel Guide“, which details the transition from having your IT hardware on site to using a hosting company like Abacus Next, and then the eventual move to browser-based SaaS applications.
While I wrote this a couple of years ago, it has held up pretty well, despite the rapidly changing IT environment. You can download it from the CPA Firm Software site’s page on Cloud Computing
This week’s episode of the excellent Security Now! podcast (#599, starting at 53:10) discusses the use of AES Crypt by clients to encrypt tax data when sending it to practitioners. (I assume that those documents are destined to a professional preparer, like you, the gentle reader of this blog). While I won’t restate the original blog post (which is at http://cantus.us/encrypt-your-tax-documents-before-you-send-them/), the method described is a relatively simple way for an end user to encrypt and send a group of encrypted files over an insecure medium like Dropbox or other consumer-grade file sharing tools. While the method described in the post can be implemented poorly (weak passwords, sending the wrong file, using e-mail, etc.), the basic methodology appears sound – but you need to evaluate the methods you approve for clients to use transmitting data.
Some of the current events I’ve been following include the following stories:
- HARDWARE AND SOFTWARE
- Sometime in 2017, Microsoft will bring MS SQL to Linux – via @Wired
- KPMG Recruits IBM Watson for Cognitive Tech Audits, Insights via
- There is a ‘game changer’ technology on Wall Street – Blockchain – and people keep confusing it with bitcoin
- Microsoft’s Project Rigel Brings Surface Hub Capabilities To New Devices
- Seagate’s blistering new 10GBps NVMe drive is the world’s fastest-ever SSD=> Interesting claim for fastest SSD, but we don’t see the stat you should be looking at when you expand your storage – IOPS, or I/O operations per second.
- GOVERNMENT AND PRIVACY
- How State Revenuers Are Going After E-Commerce (Wall Street Journal) => Great reason to learn more about @Avalara, which can handle this crazy compliance challenge.
- The DOJ threatens to seize Apple’s source code and electronic signature
#policestate via @FortuneMagazine
- Surprise! US Govt has authorized NSA
#surveillance data for domestic policing that has NOTHING to do w terrorism http://wpo.st/wyuK1
- More airports calling out TSA for long lines http://usat.ly/1p8l0Fv via
@usatoday Agree that @AskTSA lines have been worse in 2016. Evidently, I’m not the only one to see this trend.
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.
One of the more important things that CPAs and other financial professionals should do is to buy good quality hardware. This can be accomplished in a number of ways, but I have two basic rules for purchasing computer hardware
The first rule: Buy hardware produced by a leading manufacturer.
While you can save a little money by purchasing “off brand” hardware, you will almost always lose that time when you have to deal with proprietary device drivers or cheap build quality. Although you could purchase that computer from someone besides HP/Dell/Lenovo, I have a suggestion: Don’t do it. The risk is too high, and the return is insignificant. Don’t.
The second rule: Buy business grade hardware
Most computer makers have two grades of hardware: Home grade hardware and business grade hardware. Unfortunately, many professionals pay more attention to the hardware branding rather than the build quality. I generally feel good about the products coming from the “big 3” major manufacturers – Dell, HP, and Lenovo. I would add to that list (insofar as build quality is concerned) the Microsoft Surface Pro line of tablets (but not the Surface tablet/laptop). I also list Apple hardware as home grade – primarily due to the complexity of dealing with MacOS and Windows on the same machine. Many people disagree with me on this point (the Apple fans, primarily), but given that I do speaking and consulting to CPAs, and they generally are required to use Windows applications, I generally discourage Mac adoption. (I would remind you, the gentle reader, that it’s a free country, and if you want a Mac, go buy one – but don’t complain to me when your users can’t handle dealing with the cost, complexity, and memory requirements of Parallels desktop running a purchased Windows license – to each his (or her) own.)
My current working list of product lines which appear to be “Home Grade” vs. those which are “Business Grade” follows.
Business grade laptop/desktop hardware lines
· HP laptops: EliteBook, ProBook, ZBook
· HP desktops: EliteDesk, ProDesk, EliteOne, ProOne, Z-series
· Dell Laptops: Latitude, some Vostro, Precision Mobile Workstation devices
· Dell desktops: Optiplex, Precision
· Lenovo laptops: Thinkpad, B-series devices
· Lenovo desktops: M-series, P-series, Thinkcentre, Thinkstation
· Microsoft Surface Pro tablet/laptop
Home-grade laptop/desktop hardware lines
· HP laptops: Stream, Streambook, Pavilion , Phoenix, Envy, Omen, Spectre
· HP desktops: Stream, Pavilion, any others not in business grade device list
· Lenovo laptops: Ideapad, Flex, E, G, L, S, U, and Z-series
· Lenovo desktops: A, B, C, H, K, and Q-series. Horizon and Erazer series devices
· Dell laptops: Inspiron, some Vostro
· Dell desktops: Inspiron, XPS, Alienware, 3000, 5000, and 7000 series
· All Chromebooks, Chromeboxes
· Microsoft Surface (not Surface Pro) tablet/laptops
· All Apple-branded laptops and desktops