Monthly Archives: August 2012

The future is now

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People can talk about the future, and you can think you get it. But sometimes you need to experience it to truly appreciate it.

My timing may be a little off here, but I think it was sometime around the early 90’s. People in Hypercolor t-shirts were talking about an ‘information super-highway’. Preparations were being made. Infrastructure was being laid. The future was on our doorstep.

I remember very clearly thinking something back then that seems ridiculous now – what do they mean by ‘information’? What do I need ‘information’ for? I have the TV. If I need to know something more, I can always go to the library. What other kind of ‘information’ is there?

Today, it’s hard to imagine life without the internet. How did I work out which hotel to stay in? What did I do when song lyrics weren’t printed on the CD (or cassette!) sleeve? Did I really get most of my news from the Advertiser? And how did I find out what my friends were eating for dinner every night?

In the 50’s people of the future were expected to be immune from the effects of the sun.

Of course the problem (for me) back in the early 90’s was that I didn’t really have any context to put the concept into. I could only use what I knew at the time to inform my picture of the future. It’s kinda like those crazy future concept cars you see from the 50’s and 60’s. It’s laughable in some respects to see what they came up with back then, but in another sense you can kinda see what they were getting at. The best they could do was take what they knew then and try to project it into the future.

So since I already look a little slow off the mark, I might as well keep going. For me it was much the same with the ‘cloud’. I first heard the term a few years back, and again I really didn’t have much context to put it into The best way I could picture it was having all of your apps running through your browser, which to some extent wasn’t completely misguided. But it struck me as a way for software vendors to get more money out of you by charging a subscription fee rather than a one-off payment for a license. Perhaps there’s an element of that that’s true too.

But even once I understood what it was, I couldn’t really conceptualise how it would help me. What do I care in the end whether my software is hosted locally or on a remote server somewhere?

Today of course I could list all kinds of benefits. Reduced server costs, less dependence on backup routines, increased security – they are many and varied. But there’s nothing like experience to really drive it home, and at least one of the more significant advantages of the cloud hit hard for me recently.

A couple of weekends ago my car was broken into. Nothing too severe in terms of loss or damage – just a smashed window, a stolen wallet and a stressed wife. But it meant that on the Monday, I really needed to get that window replaced.

After sorting out the insurance I was ready to track down a replacement window, but it turned out there was only one available in Adelaide (from the approved suppliers anyway) and I had to take a bit of a drive to get there. So I threw my laptop in my bag and headed off, prepared to write-off the day to annual leave. After all, repairs of any kind to a car never go as planned. It turned out exactly as expected – what was meant to take an hour took around five.

After I dropped the car off I was stranded, so I went for a walk. Conveniently, some 50 metres or so down the road was one of Adelaide’s finest coffee shops (it’s The Coffee Barun, for my fellow coffee fanatics out there). I’d been meaning to check out their new premises for a while but it’s a little out of the way from where I live, so this was a good opportunity to visit and drown my sorrows in coffee. Turned out they had free Wi-Fi.

What started out as a day to be written off turned out to be one of my most productive in a long time! Away from the distractions and interruptions of the office, and with an endless supply of fine coffee, I was able to get so much done. In fact there was nothing I couldn’t do.

I checked our bank balance and debtors situation, and looked at how our billings were going for the month. I customised some reports. I sent and responded to a few emails and wrote a new blog article. Then I prepared our bi-monthly newsletter and sent off a draft for review. The fact that my car was taking five hours rather than the promised one was almost of no consequence. And I did it all with my headphones on listening to my playlist on random.

This may not be my only office of the future. But it’s at least part of the future. And most significantly of all, it wasn’t until a couple of days ago that it really hit me just how radical that day was. Ten years ago I could really only ever have dreamed of turning such a disaster of a day into something so productive. Ten years ago of course, my desktop computer was less powerful than my phone is today. You can’t really conceptualise the future until you’re in it. More than ever before, I’m finally starting to get it.

One of the best things about the cloud is that the office is never too far away. Oh wait…

Want to know what the best part of all is? I’m on holidays right now writing this post from Bali! Don’t worry – I get the whole work/life balance thing. The kids are by the pool with Mum and I’ve just ducked away for a few minutes. I’ve checked a couple of things and looked at a some reports. As a director of your own business, you can stretch the cord very thin, but you can never totally break it, if only because you worry about how things are going while you’re away. And that’s ok. After all, I’m hoping to do this a lot more as I get older so a healthy – and accessible – practice is a vital part of the plan.

So this is what they meant by the cloud! I’m a convert! Now if you’ll excuse me, it’s beer o’clock (somewhere in the world) and there’s a pool chair calling my name.

STOP PRESS: We’re changing the URL of the blog thanks to the legal boffins at Xero. It will be happening as soon as I’m back from holidays. Stay tuned for more information.

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Two things we love about Xero

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You only get one chance to make a first impression. Xero’s been making a few nice moves.

We started our new financial year in a bit of a flurry. Our focus was on getting WorkflowMax bedded down so that we could continue managing jobs, capturing time and invoicing. It’s been a bit of a rollercoaster ride so far as we adjust to new functionality and a different way of thinking.

But we’ve also been dipping our toes into the Xero pool. There are functions in Xero that do more than simply help you to get the job done. They transform the way you operate. Here’s couple of them

Payroll

A typical payroll run prior to Xero.

The payroll functionality is simply fantastic. We pay our team weekly, and our payroll person has said that even after only a few weeks of use, our payroll run is taking her less than half the time that it used to. That’s a massive productivity gain when you’re doing 52 pay runs a year!

It needs a few more reports (there’s nothing for deductions, for example), but overall there are features in the payroll component that leave you wondering how you ever managed beforehand! The employee portal is a great example of this. Employees can log in and see a summary of their leave, apply for leave and also view and print payslips (for those times where, say, they are preparing a finance application).

And the ability of the full version of Xero to pay your superannuation to all the various employee funds for you is an incredible time saver. This feature is only available in the top  version of Xero for clients, but is provided free in the practice ledger (i.e. for our own payroll). Even if we had to pay for it though, it would be worth the premium for the time it saves alone (but don’t get any ideas Xero – we prefer – and are extremely grateful – for having it included at no charge). It’s really like the government’s Small Business Superannuation Clearing House, but all the information is already there. No further input required.

Bank feeds

The bank feeds work brilliantly on so many levels. For the practice, our admin team have said that because so many things are reconciled for them, the time saving per month in data entry and report preparation is huge. Specifically, one comment was “Once you get a few months into using it, I should say you would just be mostly checking what Xero suggests and only entering details for one off type transactions. Will make thing a lot quicker.”

Our practice accountant (i.e. the person responsible for our internal accounting) said “..once I’d set up the bank rules, it only took me an hour to enter data for a 6 month period, which previously would have taken me about 3 hours.”

Naturally this also has fantastic implications for client work. It’s worth noting that bank feeds are not available on our basic ledgers – the ones we would use independently of the client and to which the client has no access (except to view some reports). Of course we pay a significantly reduced rate for those. They’re basically replacements for our practice general ledger software. So at a minimum the client needs to be on one of the retail packages, but there is a raft of options there and in particular some extra ones for Xero practice partners. In my opinion though the additional cost for a retail ledger (either charged to the client or absorbed by the practice) would pay for itself in terms of the savings it will deliver in total bookkeeping and accounting fees. Aside from the benefits of having much of the inputting automated, at the end of the year, with some involvement by the accountant, the ledger is basically complete. And you know the data integrity is going to be pretty good because you’ve been involved in keeping it that way. This opens up a world of possibilities for collaborative service delivery.

This isn’t the sum total of all that is good in Xero, but I wanted to provide some detail on a couple of things rather than sweep over a whole bunch of them. Generally Xero is extremely easy to use and very intuitive.

But it’s features like this that encourage us to remember why we’re in this. I’ve talked about how this isn’t simply a matter of replacing our old software, and how it is instead a paradigm shift in the mindset for operating a practice. This is where the rubber of that choice hits the road. In a future post I’ll discuss some of the functions Xero really needs to truly be practice ready. Sure, the ‘Avant-garde’ will look down their noses at that and tell us to get with the times. But we think there are just some realities of running a practice that have to be faced, and we’re pretty sure the next wave of more conservative practices (like us!) will agree.

But having said all of that, these features make us happy to make the compromise, Why? Because the goal is to provide better client service. Sure, if it’s a disaster internally then the costs outweigh the benefits. But what we’re seeing is massive savings on internal management like our own payroll and reporting, and features on the client side that quite simply will revolutionise our relationship with them.

Artist’s impression of ideal client meeting.

So what system doesn’t have compromises? The better question is where should you be making compromises? Ultimately, we don’t want to run a practice. That’s not the end game – it’s a necessary function of what we’re really here to do. We want to serve our clients in a way that compels them to love us! Not because we’re nice people or narcissists who need to be liked, but rather because happy clients are good for business – theirs and ours. And that’s the mindset shift in a nutshell. Should you compromise your product to operate a system that your accountants feel ‘safe’ with, or change your internal procedures to deliver the best result possible for your clients? Once you start thinking that way, it’s a no-brainer.

Keeping our eyes on the prize

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On Monday morning our server went down. We were offline for most of the morning. These are the times you can see with clarity what the goal is and why it’s so appealing.

I’m not going to say that I haven’t experienced moments of doubt with what we’re doing. Even blind panic has shown its face on more than one occasion. But what’s interesting about this journey so far is that like many things in life, the agony and the ecstasy are inextricably connected. We’ve had a few frustrations. But it’s precisely because the goal is so enticing that we have had times where we feel challenged. A life without servers!

There was an interesting article posted this week by Sholto Macpherson at cloud-computing advice site Box Free IT. You probably need to read it if you want to make any sense of the rest of this post. Reading between the lines, you can see that there is some concern amongst the incumbents at Xero’s success in changing the landscape. But ultimately what stands out the most to me is that I’m just not sure that the major players really get it.

“I came because I didn’t know any better, but I stayed because it would cost too much to change. Call me a fan!”

I’m not convinced that accountants stick with what they know because they are loyal. Don’t get me wrong – I think they would if it were that simple. But I don’t think that ‘pedigree’ is the reason accounting firms stay with a software vendor. Buying an enterprise level accounting solution isn’t like going to your favourite supermarket. It’s not a matter of going back to someone you trust each time because they’ve been around for a while, or they smiled at you as they sliced your ham. In fact, the barriers to changing software are so great that it would really be impossible to know what a customer thought of your product if return business were your only gauge. We can testify to sticking with something we really didn’t like, enduring exorbitant price rises year on year whilst getting almost no product development in return, simply because the thought of changing was too overwhelming. And even if we could get through it and were willing to wear the cost, we couldn’t be confident of seeing any real improvement at the end of the process anyway. Does that make us loyal?

It reminds me of Channel 9’s response to criticism of their Olympics coverage. Citing the ratings numbers as evidence of a successful package really tells you nothing of the quality of the broadcast. Unless your viewers have a pay TV alternative, where else do they have to go? If they love the Olympics, they’re going to tune in even if Eddie McGuire and James Brayshaw call every event! Does having no other viable option mean that your customers are happy?

This is entirely anecdotal, but based purely on my discussions with accountants over many years, I can’t remember meeting anyone who’s gushing about how fabulous their systems are. I can’t recall ever being regaled by tales of how software has completely transformed the way a practice operates. Instead, most accountants will tolerate anything if it means getting the job done each year. And the price they pay for this grudging forbearance is significant. For us, it was just under $20,000 a year in maintenance.

So this is the point. Why did it take something like Xero for us to make the switch? It wasn’t because we could replicate the features we had in our existing suite of software, but rather because we couldn’t. Why take the risk for something that basically does what we’ve always done, with perhaps some prettier user interface features and fancier reports? And at a significant cost in both software and hardware? Xero brings a completely new paradigm for running a practice, and the price makes it worth the risk. Especially when you know that others have already successfully implemented it.

When we’re done, it won’t matter if our server goes down. Will we even be using it for anything other than some storage of old data? Even if our internet connection drops out, we now have two services with two different ISPs (one ADSL, one wireless) so we’d just switch connections and carry on.

It’s true, as Sage managing director Alan Osrin said, that “Cloud programs such as Xero’s WorkflowMax Practice Manager…would take a long time to match the features of the server-based incumbents“. We’re wrestling with that to some extent right now. But is that the goal? We don’t want software that will match the traditional way of doing things. We want something completely new. Otherwise why change?

Don’t even think about it…

Server-based, enterprise level software solutions ultimately represent the same way of skinning the cat. We chose Xero not because it replicates but because it innovates. We can already see so much potential for positive change. There are ways of doing things that we hadn’t even considered possible.

If you’ve been following this journey, you’d know that we’re not here to tell you that it’s all beer and skittles. We’ve already discussed some of the hurdles we’ve had to get over so far and we expect there will be more to come. It happens with any new system, and even more so with one that requires a transformation in thinking. There are still some things that we think Xero need to take note of if they want to capture a big slice of the market (my next post will be a review of Xero so far – the pros and the cons). And Clive Rabie of Reckon is right on one thing at least – Xero needs tax, and sooner rather than later!

But this isn’t about finding another master to shackle ourselves to for the next decade. We don’t want a system that does what we’ve always done in a prettier way. This is a flight to freedom! If you want to make it to the Promised Land, you sometimes have to spend a bit of time in the wilderness. Uncertainty and change are scary, but we think the prize will be worth the effort.