Building Rome in a day

The evolution of a city is something that happens pretty organically. Same with accounting systems. It’s something you only realise looking backwards. The system you have now is not the one you started out with. Sure, that initial decision to lay the foundation of your selected platform was a big one. But it takes time for people to move in and start using it. Gradually they work out their own ways of doing things. They customise it to their liking and build around it, adding new and different modules that become an integrated part of the overall environment. People get comfortable. Generations come and go. Traditions are passed on to the point where they become endemic. How do you tear all that down and start again? And how do you do it all in a month?

Romulus took his time. Then again, a new financial year probably wasn’t just around the corner.

That’s how long we gave ourselves to have an entirely new practice management and general ledger system in place. And when I say a month, I mean going from having no real plans at all in late May (other than to explore more options) to using an entirely new suite by 1st July. A new financial year was about to tick over, so it made sense to use that as the changeover date if possible. We knew the schedule would be tight, so just to make sure we kept the pressure at a maximum, someone had the bright idea to blog about the entire experience as we went along! Are we trying to ‘build Rome’ in a day?

Our first week was really about basking in the afterglow of such a monumental decision. Once we’d returned to earth, our second week was spent mapping out what needed to be achieved by 1st July to at least be functional. So last week was the first stage of implementing the plan. We needed to start using Xero.

The best way to get a handle on what really happened during those watershed moments in history is to go back to primary sources. That way you get as close as possible to the action while mitigating the distortion that inevitably comes when looking back through the lens of time and interpretation.

So rather than me tell you about our week, have a look at a small selection of extracts from actual emails sent and received last week. These are some of the conversations we had:

“The Practice Administrator needs to do the following before we go too much further…..
1.     Invite all staff and ensure they are ‘Active’
2.    Review the standard Chart of Accounts in Xero and add or delete accounts as appropriate.”

“Below is a link to the Xero Payroll demo video. We need to set this up pretty soon. How are you placed for time, to both watch it and work out how to bring our data and settings across into our Xero file to be ready for 2nd July?…we might as well try to get as familiar with it as possible before D Day.”

“I think our best bet from the sounds of things is going to be to not bring the debtors into Xero until WFM is set up. …I could imagine there being a lot of duplicates by simply missing a space or whatever in the name if we set them up manually.”

“We currently support the import of transactions using either .OFX (Open Financial Exchange), .QIF (Quicken Interchange Format), or .CSV (Comma Separated Values) data formats. We recommend you use .OFX. If your bank does not support .OFX, then use .QIF or .CSV.”

“I think there are certainly some real pros and cons re the cloud, but security isn’t really one of the cons – well, not a rational one anyway. Relatively speaking, the security comparison is a shellacking in favour of the cloud. It’s really just a perception thing – people ‘feel’ safer with it under the mattress than on the net because they still feel like it’s in their control.”

“What is the purpose of knowing all those traditional accounting firm KPI’s? What do you do with this information? How does it help you run the business? How do they help you improve the business? How many of them are ‘because that’s the way we have always done it’?”

“KoolAid or Red Cordial at the end…?” 

OK, so it isn’t the Magna Carta (what do you think – Kool-aid or red cordial? These are the burning issues…) But hopefully it provides some unobstructed insight into the daily challenges of the building process.

The Magna Carta: written around the same time as our old accounting software.

In a nutshell, last week involved coming to grips with the snowballing implications of having the ‘bare essentials’ in place, and making sure those things happen. Because our existing methods have developed over many years – our system has been ‘lived in’ for over a decade – everything is connected and intertwined. A change here has implications over there. The reality is that we won’t be able to do it all by 1st July. But we probably don’t need to.

You can’t replicate traditions. Instead, you break the ground in a new area, let people move in and settle down, and over time a new way of living begins to evolve. We won’t have an entire eco-system ready to go by 1st July, but no new initiative starts at that point. What we are leaving behind wasn’t built in a day. This won’t be either.

So far, so good.

A journey of a thousand miles…

The first step on our journey was announcing it to our team last Thursday. We did so with all of the fanfare and revelry you’d expect from accountants –  a meeting in the board room.

I want to tell you a little more about who we are and how we arrived at this point. But I’m also hoping to keep this story as close to ‘real-time’ as possible, so that you can get a sense of the sights and sounds of the journey. So rather than approaching it in a linear narrative form, I’m going to jump backwards and forwards a little.

On Thursday last week we announced to our team the decision we’ve made to move forward with Xero. If you don’t know much about Xero, don’t worry – neither do we!

Whenever an accounting firm decides to change software, it’s a pretty big deal. And no matter how many demonstrations you see and testimonials you read, relative to the amount you’re about learn, you’re still flying into the process pretty blind. Demonstrations always look slick. Testimonials are only ever gathered from the most euphoric zealots. Experience is the true test, and thus far we have none. So to say we don’t know much about Xero doesn’t mean we haven’t done our research. It just means that we don’t have the kind of intimate knowledge that comes with use. If you read my first post, you’d know of course that what I’m saying is we’ve just had our security blanket ripped away from us!

So here’s what we told our team.

Actual whiteboard from staff announcement last Thursday. Cloud not drawn to scale.

Xero is a cloud based accounting system for business, a bit like MYOB or QuickBooks but web-based. It uses a web browser for its interface. We’ve often yearned for an internal practice management, tax and ledger solution that worked as well as these off the shelf products. Some have even asked “Why can’t we just use QuickBooks for our accounting practice too?”. The practical reality is that it’s so much easier to use than our made-for-practice accounting solution. Its reporting is more powerful and customisable, it’s more flexible and it looks better. The simple reason we can’t is because QuickBooks (and MYOB) can’t do practice management for accounting firms very well. They can’t do statutory reporting or tax either.

But Xero is different. Xero partners with many different developers to fit complimentary products around Xero which in turn increase its functionality. There are many of these products for accounting firms and clients alike. So for us, Xero itself can’t give us the kind of job costing and time-based billing capabilities that we need. But Workflowmax can. And Workflowmax uses Xero as its ledger. Xero itself can’t give our clients statutory reporting capabilities. It provides management type reports on the client side. But for accountants, it has the ability to use an additional feature set and draw upon the same data used by clients to create statutory reports. From there we can add a module that prepares more analytical, KPI driven reports. And a module to prepare working papers. And so on. That part of the journey is on the map, we’re certain of it, but we haven’t decided exactly how and when we’ll get there yet.

For now we’ve committed to replacing our existing ledgers with Xero come 1st July this year, and add Workflowmax for practice management. We’ve given ourselves a month to do it. Sadly, there is no tax product available yet for accountants but apparently that’s coming. So it means that we have to stick with our existing tax solution for another year yet.

There is one thing though that for us elevates Xero above any other product. It allows us to work collaboratively with our clients. In our opinion, despite all the hype, there’s no point in cloud for cloud’s sake. There has to be some additional benefit. With Xero, there is a single ledger for both accountant and client. Whether it be our clients doing their bookkeeping off site or us preparing statutory reports and tax returns at our end, we’re both using the same data. A change made by us is reflected immediately in their reports, and vice versa. In addition, Xero includes the ability to feed data in directly from banks on a daily basis, and have standard transactions pre-coded already. That collaboration should inevitably lead to greater efficiency and an enhanced working relationship with our clients.

The response so far? Cautious optimism. It’s been really encouraging to see the team thinking about how working in this way can benefit their clients, and they’ve already offerred some great suggestions of their own. Perhaps the greatest lament to date is that we’re not changing our tax product over yet! That’s been a source of much frustration over the years.

Breaking the news to the crew. “Chances are we’re not coming back.” Crazy off-kilter camera angle demonstrates just how committed we are to smashing the stereotypes.

The truth though is that we are a little scared. Once again, there is comfort in familiarity. But there is also excitement in potential. Christopher Columbus set out to prove there was a westward path to Asia by heading out into the unknown. I’m not sure, but I’m guessing he felt a little the same. Relatively speaking, what we’re about to do is far more mundane. Our fear is in letting go, not in what lies ahead, because unlike Columbus, we already know that others have successfully gone before us. There is an exciting new world waiting for us at the end of this journey.

And even better, we have a guide – Focus Growth Strategies (FGS). More on that part of the journey later.