So as you may know we recently spent 3 days in the company of over 3,000 accountants. Sounds fun right. Well you’re wrong it was brilliant. We learnt a shed load of stuff and you can find out more about the detail in our summaries.
Not a detail person? Find out what Xerocon taught us and hopefully you can also takeaway some key things from this:
The Swag Gets Better
What an array of free swag that was on offer this year. I never have to buy a pyjama t-shirt again. Big thank you to Receipt Bank, Xero and Satago as I did the school run in heavy showers this week and was kept dry from the best umbrella I have ever owned from Xero, a showerproof jacket from Receipt Bank and a hot coffee in my travel cup from Satago. If there is anyone out there with branded gloves they need to offload I’m your man.
What was great this year in the world of abundance as Gary Turner called it, was that I did not have to disappoint the kids as three of everything was OK.
Middle Aged Male Accountants Shouldn’t Wear Swag
There is a place for the t-shirts you get from Xerocon and that place is in your own house where no one can see you. The thing is most of the swag is designed for the fitter, younger variety of human. A large size in cheap t-shirts is not a large size in designer clobber. As such no self respecting accountant should be seen the day after getting free t-shirts parading around the London Excel. Remember you have a professional standard to uphold.
The eco-system might implode
Email-to-bills, machine learning, AI, improvements to Projects and Expenses and acquisitions by Xero are all very interesting but what does this mean for data capture tools such as Receipt Bank, Autoentry, Datamolino and Hubdoc? As well as the other products out there? We think they still have a place as the fetch functionality for companies that do not issue invoices is still required as is the ability to process other documents in non-PDF format. As Hubdoc can complete these functions and was recently acquired by Xero it will be interesting to see where they go with this. Quite simply a few strategic changes could mean an end to the data capture tools we currently use if the price was right.
We are now starting to enter an era where the eco-system could become destabilised. It is fragile. The very thing that has bought Xero great growth could now become the prophecy of its own downfall. Much like the Xero Partner Programme. When accountants have served their purpose will they become obsolete as well? One thing is for sure this is only the beginning and where there are shareholders to be satisfied and progress to be made the little guy very rarely wins.
If you are building an app that purely works from the Xero platform you may have a window of a couple of years before you become obsolete. Don’t sell the house to fund your dream it could be a big mistake. There is going to be massive demand for standalone products that operate and function independently of Xero but integrate to reduce the admin burden on small business. The quick wins for Xero are to close the door on the others as that makes them an even more attractive proposition as an accounting package.
Stop being lemmings
No one has got this new accountancy or advisor lark down everyone has just upped their game from a marketing perspective. The fruits of your labour are not ready for harvest and those with the most amount of stamina will win out.
Whilst certain firms and individuals can be held on a parapet as with anything in business you need to look beyond the shop front. We speak to many leading lights and one theme that is quite common is that they do not have all the answers, there are many challenges and mistakes being made everyday but the key is to learn from them quick and move on. If that is the case then why not walk your own path. Are these practices any more profitable than you, do they provide a better level of service than you? The marketing machine will tell you yes but where is the hard evidence.
Holding up shining beacons of success and growth whets the appetite for others to achieve the same but it is all for the same reason and that is to sell product. Make sure you are making changes on your own terms and with your clients best interests at heart and you won’t go far wrong.
For Apps Sake
There’s an app for that! I don’t think I have ever felt more that we have gone to far with apps. If there is a tiny chink in the armour or the smallest gap to plug then we are in there like a whippet. Just because we can build apps doesn’t mean that we have to.
I see a future where there is limited commercial software. You won’t need to code to build business solutions. Each business with have an internal resource who can build an app for that. Those with the best imaginations will be the winners. It’s not what you’ve got but how you use it!
In Damon Anderson’s talk it was mentioned that 90% of small businesses have less than 10 employees and Gary Turner mentioned that we could have 20 million businesses in the UK in the future which in my opinion would mean they employ even less than 10 employees. If that proves to be the case then why are software developers building products to integrate with Xero when they are not right for that market. Enough already.
Apps are ripe for consolidation
One of the cool things with API’s is that it is now quicker and easier than ever to build products that talk to one another. Problem solving has never been quicker to complete. What this inevitably means is that there are large amounts of overlap as solutions are built then tweaked as customers ask for more functionality. The original problem being solved now leads to other problems needing to be solved to remain relevant.
With any new market there will always be a period of consolidation as companies are purchased for strategic reasons (Hubdoc and Instafile) or solutions will pair up as they decide they are stronger together. Why use three apps when one will do? As advisors it is becoming increasingly difficult to offer and provide an accounting solution to a client. Run through the list below for a moment and also bear in mind that on Day 2 of Xerocon Nick Houldsworth told us that less than 9% of users use more than 5 apps.
Xero for core accounting
Xero Payroll for staff management
Receipt Bank for data capture
ApprovalMax for accounts payable workflow
Soldo for staff expenses
TripCatcher for mileage claims
Xero Workpapers for year end accounts queries
Instafile for esigning accounts and tax returns
Senta for task completion and document loading
Futrli for forecasting and budgeting
There’s ten for fun and that doesn’t complete the stack. This is before we go onto industry specific tools such as Deputy, Vend etc etc
The list could go on but you get my point. You need to sell LastPass to clients just so they remember their logins although they’ll never remember which software does what in the first place so that ideal for self service disappears in a puff of smoke.
The acquisition of Hubdoc was an interesting one in that people are asking what now for Receipt Bank or why didn’t they buy Receipt Bank. Only the top brass will know the answer to those questions but I am sure that Hubdoc makes a good fit strategically for Xero in terms of trying to break that North American market.
Where does this leave data capture tools like Receipt Bank? I know one thing for sure that Open Banking now opens the door for other competitors and you only have to look at APtimise, Lightyear and Compleat to see there is a new app in town. One that better serves the larger businesses but as all small businesses strive to have the best apps money can buy these tools are no longer out of grasp for them either.
Whilst we love Receipt Bank if you consider to get the same solution as APtimise you would need a client to use Receipt Bank, ApprovalMax and Telleroo it starts to make perfect sense that apps are now ripe for consolidation. If not only to make it easier for accountants and advisors to wrap packages around them but to make it a much easier sell for them. There’s an app for that is getting a bit tiresome and hard work for reseller and end user. In the World of Abundance simplicity will win.
Then throw in InView which for us is not a product in its own right but a feature for one of the Automated AP solutions or data capture. The world has gone mad. Enough already. Start consolidating before we go back to pen and paper.
Whilst open banking is a great advancement as mentioned in our PSD2 post back in April it is going to create a second wave of addons for Xero. Gary Turner believes that it could be bigger than the current marketplace which already boast 728 different apps. How is anyone going to know what is the best solution for a client? Maybe the client will not need an advisor with an integrated solution they should be able to work out for themselves what they need financially and where to get it. Lets face it most will just use their current providers unless there is an amazing deal to be had elsewhere.
As per our point above will there be an explosion of apps then a period of consolidation? Whilst the big banks are slow to turn and get up to speed they don’t need to. A lot of product builds are there purely to sell out and make a fast buck. The traditional banks are already starting to wake up to what is going on around them – FreeAgent acquisition by RBS is a prime example.
Let’s not forget that most of the new banks with their sexy front end banking is actually running of the traditional banks clearing accounts so they are already in partnership to a point. It is not a massive leap to see the traditional bank snapping up these early stage fledglings. Our point being don’t spend ages building new networks and connections and singing their virtues to your clients as some of them may not be around that long.
One of the greatest examples of where the traditional banks have been slow is in the creation and availability of decent bank feeds into Xero. As such we have now seen a plethora of pre-paid top up debit card apps spring up. The problem being solved is speed to get new cards added to an account, control over employees spending and data flow into Xero. These are all things that in time the bank can resolve.
Love Fest is here to stay?
We really enjoy the positivity and atmosphere at Xerocon as it helps remove us from our pragmatic sensible approach to life. Life is rosy for a few days when you spend time with like minded individuals all fighting for a common course. When does it end? When the inevitable has been achieved and traditional accountants have been removed from the circle of life does the real fun begin. Is it at that point where there is no longer enough businesses to go around and it is not a choice over good and evil but good and good do the cracks start to appear. The us and them mentality no longer existing and it being us against us.
Will we see such an abundance of addon partners at future Xerocons now that Xero are encroaching into their turf? Time will tell.
Speed of change
Acquisitions speed up the rate of change massively. For 8 years there has been talk of accounts and tax software in the UK to no avail. No problem we’ll purchase Instafile, data capture is a real bitch for small businesses, no problem we’ll buy Hubdoc. The acquisition of WorkflowMax from the outside doesn’t look like a roaring success nor did the acquisition of Workpapers but these were products purchased with the aim of getting partners on-board faster to peddle product quicker. It didn’t work, however the latest round of acquisitions are in my opinion not all about partners. Whilst Instafile on the face of it has the facade of being all about the partners it started out life as being a tool that could be used by the business owner. The purchase of Hubdoc is certainly well into that bracket.
Are the Xero partners stagnating and the pace of change which is demanded at Xero is driving us down a different route? Have Xero partners become saturated or have they run out of steam? It is tiring being at the cutting edge and being a guinea pig. The constant change from a practice and client point of view is draining. The number one issue we hear is staffing. That is not corrected overnight.
Xero have a strategy
One thing I feel that has changed since the last Xerocon is that there seems to be a much more strategic approach to what they are doing. I am not sure if this is the reason for a change of CEO or as a by product of that change but with the acquisitions that Xero are making, the feature sets that they are adding and where you could potentially see them going next this feels like a much more corporate, considered tactical approach to business. It doesn’t feel anymore that it is just about building beautiful accounting software it is much bigger than that.
Advisory is the new accountancy
Nothing new to see here we know but worth a mention that we are starting to see two completely different types of accountants. Those that use tech to advise and accountancy is a by product of what they do and those that don’t want to be an advisor. Using tech to do compliance faster so they can do even more compliance and be as busy as before. Maybe it’s all this growth talk that is prompting most to consider doing more accountancy work just faster so they can do more accountancy work and grow and be big and successful until there is no compliance anymore!
Do you need to go to Xerocon?
What was quite interesting and maybe we’ve just never spotted this before but there are a lot of things at Xerocon that are big announcements several months ago. To name a few the Xero New Navigation and New Sales invoicing functionality has videos on Vimeo from several months back which would imply that these features have been launched in other territories already and we are just next on the list. If you want to know what the future holds for Xero features keep an eye on the Vimeo channel or read the blogs from other Xero territories that way you’ll be well ahead of the game.
Of course it is still worth attending as there are so many feature releases and updates it is impossible to keep abreast of them all. Xerocon is a great way to get a deep dive into what you may have missed and get the brain thinking about what you can do with all the latest releases.
Human at Heart was a feature of Xerocon this year and I must admit there is nothing like putting a face to a name and having the chance to meet humans in the flesh that you have only ever met online. It is great to catch up with old and new connections especially in such a positive atmosphere of sharing and learning.
Accountants are not innovators
It was mentioned on more than one occasion that tech doesn’t innovative and that people do. I find this to be complete bullshit in an industry that has not really changed in hundreds of years. The vast majority of technological advancements and disruption in the accountancy industry has not been lead by accountants but by others. An early adopter is not an innovator they are simply more open minded than most. Accountants are not, have not and probably will not ever be innovators. It is not in their DNA. If MTD was not being thrust upon the industry most would be content with paper and spreadsheets evermore. Lets not kid ourselves that accountants are anything other than compliance bods – an advisor on the other hand that’s another matter.
It serves a purpose for software companies to big up the little guy and make them believe that he is an innovator and ahead of the curve as it sells product. You call it innovation, I call it free marketing resource.
Alexander Graham Bell was an innovator not the first person to buy a telephone.
This latest wave of innovation is being driven by software products that change the methods in which accountants work. Every now and then a new idea may come from that. It is an ember of innovation.
Xero will be the death of accountants and bookkeepers
It’s all very nice at the moment being recognised for being the new kid in town. The innovators and disruptors in a stagnant industry but lets face facts once you have helped Xero achieve global domination and everyone is the same and your jobs have been automated to hell – whats next? Make hay while the sun shines people because there is a storm coming. There have long been addons that can automate some of the work but never before have we seen Xero start to encroach into this space as with recent acquisitions. You see whilst you can control the addons by deciding what to tell or not to tell clients when it is baked into the very fabric of what is being used day to day it is very hard to hide. How long is it before Instafile can extract data from Xero and file it with the relevant authorities with little or no interaction from its bookkeeper or accountant? Not that big a leap is it?
What you do from here is up to you but for us there is a clear path. Software and technology will replicate any repetitive, mundane, simple, verifying and checking, data processing jobs which is a good thing. No one wants to pay someone to do that type of work right? They want advice, support and guidance. There in itself lies the challenge. Are you up for it?