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
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 (email@example.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?
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***
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).
Leslie Garrett, PhD, CEO and Founder
Insight Research Group
To secure your copy of the eBook, visit the CPA Trendlines store, powered by Bay Street Group LLC, at cpaclick.com/nmgi-irg-1
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:
- “Reinventing Electronic Payments”, Tennessee CPA Journal
- “Digitizing the Shoebox”, FreshBooks Blog
- Three conference sessions for the ~27 state CPA society technology conferences run by K2 Enterprises:
- The Second Annual Accounting Firm Operations and Technology Survey, which should be out soon from CPA Trendlines. This one is a beast – around 200 pages of tables, figures, and analysis – but there’s a lot of good information which I wish I had when I was inside a CPA firm.
- I’ve previewed some manuscripts which others will be publishing soon (sorry, the authors are secretive)
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 share articles which I find interesting on Twitter – I’m @BFTCPA. Some of the stories I’ve been following include:
- Microsoft released preview versions of its next version of Office for Windows and Mac this week. I’ve tried them both, and will be writing about them in the near future.
- Don’t forget that Windows 10 will come out later this year. I’ve been participating in the Technical Preview (beta test) for some time, and will have more to report later.
- There’s a new interface, called USB Type C, which is taking the tech market by storm – what CNet thinks you need to know is here. Also, Gizmodo opines that the NSA will love the USB-C charging cables…
- Apple showed off their latest watch, and announced a new Macbook ultraportable. In other news, actress Anna Kendrick has determined that the $10,000 version of the Apple Watch represents “the new gold standard in douchebag detection.”
- In a power grab, our “friends” at the FCC released new rules which regulate broadband internet as a public utility. <sarcasm> (Because we all know that the US Federal Government and public utilities are thriving hotbeds of competitive innovation, and are not places where your dollars go to die.) </sarcasm> The best part – the Wall Street Journal reports that FCC Chairman can’t tell you what the critical “general conduct rule” means.
- Not to be outdone, the FCC’s Canadian twin, the Canadian Radio-television and Telecommunications Commission, issued its first fines under the “Canada Anti-Spam Law”, or CASL – CAD $1.1 million to a corporate training company for allegedly sending e-mail without the recipients’ consent or a properly functioning unsubscribe mechanism. (Now if they can just help those poor suffering nieces and nephews of deceased third world government officials get their money back.)
- We’re seeing more companies calling for measurable performance from their social media efforts – this CFO article is a good example.
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.
FOR IMMEDIATE RELEASE
October 1, 2014 – K2 Enterprises has released their annual technology awards for 2014. “It was quite interesting this year as there were no unanimous winners. There were votes for many solutions. We did have some repeat winners this year but no unanimous winners” said Val Steed, CEO K2 Enterprises. K2 has been providing the K2 Quality Awards now for thirteen years. “The products represented by K2 quality awards are among the best of class available today. Our instructors and attendees recognize the merits of the offering and the benefits that users enjoy.” said Randy Johnston, Executive V.P. “Anyone who can sway over our team members really deserves the recognition. Congratulations to all.” added Brian Tankersley, Director of Strategic Relationships.
K2 Enterprises Annual Quality Awards are determined by a voting poll of the K2 Enterprises instructor team. The polling members of this team are Randy Johnston, Will Fleenor, Val Steed, Brian Tankersley, Tommy Stephens, Bob Spencer, Lawrence (Mac) McClelland, and John Keegan.
2014 Categories and Winners:
•Best Overall Mobile Strategy – Sage North America
•Best New Mobile App – Intuit
•Reseller Program – ADP
•CPA Program – QuickBooks Pro Advisor – Intuit
•Reseller Channel – Open Systems
•New Product – AdvanceFlow – Thomson Reuters
•New Module – Point of Sale – Open Systems
•Management Strategy – Biznet
•Technical Support – eFileCabinet
•Customer Satisfaction – BillQuick
•Ease of Use – Wave Accounting
•Marketing Communications – Avalara
•Overall Quality – Doc.It
•Tax Technology – UltraTax – Thomson Reuters
•Audit Technology – Engagement – Wolters Kluwer
•Business Intelligence Solution – Power BI Suite – Microsoft
•Workflow Solution – XCM Workflow – XCM Solutions
•Small Business Accounting Solution – QuickBooks Online
•Small CPA Firm Solution – Office Tools Professional
•Entry-Level Accounting Upgrade Solution – CYMA
•Top Hosting Provider – Cloud9 Real Time
•Social Media – Jennifer Warawa – Sage North America
•Cloud Power Solution – AccountantsWorld
•Cloud Ease of Use – Sage One – Sage North America
•Cloud Top Shelf Award – Office 365 – Microsoft
•Cloud New Product – Microsoft Online – Microsoft
•Cloud Portal – ShareFile – Citrix
K2 Enterprises is a Hammond, Louisiana based organization that provides continuing professional education services to the accounting profession and marketing consulting services to technology providers in the accounting market. K2 Enterprises delivers approximately 900 educational programs to over 40,000 professional accountants on an annual basis throughout the United States and Canada.
K2 team votes are influenced by end user feedback and experience from consulting and extensive teaching. Detailed biographies on each of the polled members can be found at http://www.k2e.com/team.
Contact: Caron Choate
Telephone: (888) 542-9390
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.
Open source drive encryption tool Truecrypt announced that the product is discontinued on its main website today, and the official website has been replaced with directions for getting any encrypted data moved to Bitlocker-protected drives. The website says that “Using TrueCrypt is not secure as it may contain unfixed security issues”
Directions for Getting Data Out: http://truecrypt.sourceforge.net/
Coming on the heels of the OpenSSL vulnerability, this may shake the confidence which businesses have in the reliability of open source software. Although the purchase price seems right for open source (free), the cost of unexpected announcements like this, the lack of professional management, and other issues with the practical maintenance and implementation of such products makes commercial software look better all of the time.
If you are using TrueCrypt as your hard disk encryption tool, we recommend that you transition to Windows Bitlocker, PGP Whole Disk Encryption, or another solution ASAP.
A group of developers has set up a website for a new “branch” of TrueCrypt development. While this new group may do a great job, disk encryption is not a place where you should cut corners. I’d stay away from TrueCrypt and go with commercial solutions – we need some answers on why the first group shut the project down and what the code audit has discovered before it gets back onto my “safe” list. (I’m using Bitlocker in W81 Pro).
A branch off of the TrueCrypt code has been launched called VeraCrypt. You can learn more about it at their website, https://www.veracrypt.fr/en/Home.html