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A new beginning

When I qualified more years ago than I care to remember and joined the family firm of Bellman Messik as the third generation of Messik accountants, I rather thought that this was a job for life. As we all know, Life is what happens when you are making other plans and little did I realise that Bellman Messik would be followed by Jayson Newman, Numerica and then Vantis.

What did remain constant throughout, however, was my interest in IT, gadgets and eventually Cloud Computing -the latter rather taking on a life of its own. As I became more involved with the concept, which started with Easycounting, it quickly became obvious (to me at least) that this technology was the way of the future and the reasons for adopting the Cloud were so obvious that they would hardly need justifying.

I am still convinced of the former – although I was obviously wrong about the latter. Few in the accounting profession have been convinced although the number is continuing to grow. I believe that business users get the idea and as I have often espoused – it will be the business users that provide the momentum as they demand a better way of dealing with their affairs.

New technology is often called Disruptive technology – disruptive in the sense that it challenges the current paradigm. It attracts criticism out of ignorance and fear of change. It is the early adopters and innovators that push the idea forward.

Well, after those more years than I care to remember, I have now decided that it is time for my next great challenge. I have resigned from Practice (I reckoned that if I couldn’t get it right after all this time, I never would) and have decided to become more of a loud mouth than before on the subject of Cloud Computing.

I have set up my own consultancy -RFM Associates which will assist businesses and the profession to elevate their business processes to the Cloud. Education – Advice – Implementation are the key aspects and I will pushing these in the months and years ahead.

I am excited about this new challenge and I look forward to contacting many of you in my new role in the near future.

Cloud myths – half truths and propaganda

A headline in the Times business news of Friday 18th June reads:

“Investors thankful for Sage’s wisdom in steering clear of the clouds”

The article itself goes on to explain that Intuit which “..has been quick to embrace the new world of “cloud computing” has had problems in that its servers went down for two days and its “300,000″ small business users have been without access as a result. Consequently Sage is hoping to pick up new users.

I must confess to having had to read this article twice before I could fully take in the absolute nonsense it was spouting and the sheer stupidity of its content.

No doubt the failure of Intuit’s servers is a major issue – disruptive in the true sense of the word – and no doubt someone is in hot water for allowing it to happen. But one incident such as this is not a reason to abandon a new technology – even less justification for maintaining the old – especially when it is Sage.

I know of one major UK accountancy firm whose City office was without power for three days earlier this year when there was a major fault at the electricity sub station. As a result none of the staff could work in the office and had to be sent to other locations – I didn’t hear any one saying that as a result on premise servers and applications needed to be abandoned in favour of the Cloud (although had they been using the Cloud staff could work easily from home or anywhere else!). When a train breaks down there is hardly a cry to return to the horse and cart (even though there may be some in favour of such a move).

And surely this incident must be looked at in the same way. Of course, server failures – irrespective of where they are situated – are going to cause disruption but it is not a problem restricted to the Cloud.

If the gainsayers need foundation for their arguments they need to come up with something better than this!

If its broke – fix it!

There has recently been a flurry of comment on the AccountingWeb Cloud – Accounting discussion group. Much of it is the same, somewhat depressing, comments from the gainsayers coming up with the same old negative responses to the whole concept of using the Cloud for everyday business processes.

There was an excellent blog written last year (I am afraid I can’t recall the author) which likened the apparent hostility and fear of disruptive technology to the negative and scaremongering criticisms of the steam trains that were introduced in the 19th Century – and it fascinates me that the whole subject of the Cloud should generate such passionate arguments.

On one level, I suppose it is positive that there is a debate, but I fail to understand the hostility to the concept – it is very much a case of if you are an adopter you are passionately in favour and if you are not – you are either indifferent or passionately against.

I gave an interview the other day to some business school students who were researching into the Cloud Computing market and were asking my views on the current state of play in the UK. I found myself pontificating on the issues that have been raised extensively in this blog and elsewhere and explaining how Sage has such a stranglehold on the UK accounting market. I went on to postulate that online accounting vendors were doing much better in Scandinavia and the Netherlands because Sage was not a barrier to entry there in the same way that it is in the UK and then was asked the money shot question – how did I see the future growth or otherwise of the Cloud Computing market.

Change shouldn’t necessarily happen for changes sake – if it aint broke don’t fix it holds true in this marketplace as much as any other. Change should and must have benefits – speed up processes, run more efficiently, save costs etc. etc. Exactly what Cloud Computing offers.

But of course what many people are turning a blind eye to is that Sage is broke – it doesn’t run more efficiently and it is considerably more expensive. When one of my staff is trying to justify to a Partner that the cost overrun of a job is due to problems installing the client’s version of Sage onto our network before he could work on it, you have to ask yourself – why put up with it.

What the marketplace needs at the moment is for a major player to announce that it is not going to use Sage for its clients but adopt an online system instead and that clients will have to adapt accordingly. It is a brave organisation that adopts that approach but they will become leaders of a group that will – inevitably – grow over time and will reap the benefits accordingly.

What’s the difference between Sage and an ostrich?

@Duanejackson’s excellent blog today highlights the amazing comments by the CEO of Sage about SAAS. He quotes:

“As Sage put out their results yesterday, their CEO said:

“Well, many of the people who’ve launched SaaS products in the last four/five years and that industry analysts get very excited about, even though most of them have got less than 5,000 customers, is that what those solutions are is actually desktop solutions online…..”

We shouldn’t really be surprised at this head in the sand attitude. A few years ago I had fairly detailed talks with Sage about them buying Easycounting as a way to enter the, then, nascent SAAS market. The talks were somewhat complicated by Sage executives leaving the company as soon as we had met with them but eventually we got to meet the Sage technical director.

He quickly killed the idea as he was unable to see why there should be any demand for online accounting. This forward looking attitude is no doubt healthy for the director of a FT 100 company – but, hey, Sage is an FT 100 company so what do I know.

I will leave the Sage bashing to Duane and @DAHowlett – after all they are much better at it than I. However it is interesting to speculate why Sage have such a blinkered view of the Cloud.

There is one reason, of course. One of the major characteristics of the SAAS model is that prices are based on per entity costs with no ongoing licence, upgrade and support fees – all of which Sage charge at exorbitant rates.

The current SAAS model just doesn’t work for them and until they can find a way of monetizing it and competing in the Cloud market place, they will stay away from it.

Of course, the problem with sticking your head in the sand is that you have an exposed backside….I think there will be a long queue to be the first to kick it!

Crossing the Chasm – does it require A Bridge Too Far

I am grateful to @garyturner for drawing my attention to an article in Wikipedia on Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers a marketing book by Geoffrey A. Moore that focuses on the specifics of marketing high tech products during the early start up period.

In Crossing the Chasm, Moore begins with the diffusion of innovations theory from Everett Rogers, and argues there is a chasm between the early adopters of the product (the technology enthusiasts and visionaries) and the early majority (the pragmatists). Moore believes visionaries and pragmatists have very different expectations, and he attempts to explore those differences and suggest techniques to successfully cross the “chasm,” including choosing a target market, understanding the whole product concept, positioning the product, building a marketing strategy, choosing the most appropriate distribution channel and pricing.

It can best be illustrated by the following “bell curve”:

The relevance to the Cloud Computing debate is striking and the definitions of the innovators and early adopters etc are spot on. Looking back at my experiences when Easycounting was first introduced and the ongoing issues rolling out E-conomic in my own organisation only goes to emphasise the point.

In the wider world the debate goes on as regards Cloud Computing and whether or not the “Chasm” has been crossed. I would say that within the Accountancy profession as a whole it has not – we are still in the innovator stage.

However, for the users, I think it may have been – and this is where we reach an interesting dichotomy and return to a point I have raised many times before – I believe that the progress in Cloud Computing is going to be led by the client and the accountants that don’t follow will -in time – loose out.

I have an interesting situation in my own practice where we are currently quoting for a new client who already uses E-conomic- his accountant hasn’t caught up with him.

So have we crossed the Chasm – for some of us maybe – for others it might just require a Bridge Too Far.

The mobile office – here, there – Cafe Rouge

I had a meeting the other day with a new client to discuss setting her up on E-conomic.As it happened the office boardrooms were fully booked, so armed with my trusty Acer netbook, we de-camped to the local Cafe Rouge and had our meeting there.

Meeting in the surroundings of the local hostelry made a nice change – the refreshments were certainly better than I would have got in the office – but what we all seem to take for granted is, that with the benefit of the local wi-fi service I had full access to what I would have shown the client had we remained in the office.

The ability to work anytime anywhere is a feature of 21st century living and one which we very quickly accept as being the norm. The technology behind it never ceases to fascinate me and the ability with which we can interact with the cloud is one of the wonders of modern life.

Maybe I am easily pleased – but I hope we never get too blasé about what is available.

Reasons to use the Cloud – Volcanic eruptions!

The Twittersphere is awash with comments concerning the unprecedented disruption caused by the Icelandic Volcanic eruption (not content with bringing us to our knees with their banking collapse etc etc).

One comment which caught my attention was from @GaryTurner who wrote:

“Waiting for the 1st Ash Cloud Computing story to emerge about people doing their accounts from a foreign airport….”

Of course this is what Cloud Computing is all about – the ability to access your business critical information from anywhere any time. If the Norwegian prime minister can run his country from an Ipad in an airport lounge then Cloud users can run their businesses in the same manner.

There is a growing list of reasons why the Cloud makes so much sense – I just don’t suppose that anyone expected a Volcanic eruption to be one of them!

Cloud Computing implementation – a case study

Project Summary

A new client wanted us to act for them in connection with the monthly processing of management accounts and preparation of annual statutory accounts. As a large (and growing) group of companies, the brief required us to not only dealwith the current situation but look down the road and plan for projected future expansion and development.

Pitch

When making the original pitch we’d suggested using E-conomic our online accounting system and on demonstration, the clients felt all their requirements would be well-met.

As this particular project ably demonstrates – one of the principal advantages of an online system is that teams working together ie the client and us – have mutual and instant access to real-time live data. Even the initial factor of the data not having to be re-keyed, cuts down on the human error factor as well as on staff time and costs. The mutual access enables straightforward communication with both parties seeing the same thing at the same time and able to discuss issues and agree changes, again, eliminating the bugbear of misunderstanding or misinterpretation.

Process

1. As well as processing current material, the client wanted 3 years worth of historical data brought in, giving a full transactional record on the one accounting system.

2. The client had been using Sage and the chart of accounts was approx 600 lines – where they had been using individual nominal accounts for each P&L analysis detail. A priority therefore, we felt, was to come up with a COA of more manageable proportions. Our team met with the client finance personnel and over a number of planning sessions, a new and improved COA was developed cutting the number of individual codes down to about 120 lines.

3. Any further required analysis was to be provided by tag descriptions to act as a suffix to the text field in an entry. A nominal ledger drill-down and extract could then be further analysed by use of the tag descriptor.
The setup teams also looked at the other features E-conomic offered, including departmental analysis and fixed asset register, and collaborated as to the planning and implementation of these features.

Historical Data Transfer

1. The import of the historical data involved the transfer of some 20,000 transactions from Sage into E-conomic. However E-conomic’s efficient and relatively simple to use import facility (a main consideration when making them our online system of choice) enables files of data in csv format to be mapped and imported.
To optimise efficiency, the Sage data was sorted by transaction type and the Sage codes were mapped to the new E-conomic ones by use of vlookup functionality.

2. At each stage the original Sage TB’s were compared with the E-conomic TB’s and any variances resolved.The data import process was completed in approx 4 hours. So what potentially could have been a bit of a nightmare in fact ran like a dream.

3. Once the data was imported, the two systems were run in parallel to iron out any further variances or differences that might have occurred.

Summary

The key to the success of the whole process was the preliminary planning and close liaison between the client setup teams and ourselves – facilitated by the ability to review data simultaneously.

The new system is now setup and ready to go live. Most importantly, we have a client whose expectations have been met and exceeded.

Will UK accountants ever “get” the Cloud

There have been a number of interesting announcements from various Cloud providers over the last few days -E-conomic announced the other day that they had passed the 24,000 users ceiling and Xero presented their latest quarter global results which showed an increase in turnover and profits.

What strikes me about both these is that, positive though the announcements are, they deal with the global situation, whereas growth within the UK is generally still slow.

The announcement that has got the blogospheres going, however, is that of Iris’s investment in Free Agent. This is a major step forward in the UK accounting world as it shows that – at long last – a major on premise supplier has taken notice of the obvious benefits of Cloud Computing and is jumping on the bandwagon – albeit in a small way.

Actually, what is perhaps surprising about this news is not so much that Iris have taken a bold and sensible step but that it has taken them so long to do it. What needs to happen now is for other UK providers to take similar steps – whether they will or not remains to be seen.

Another aspect that seems to prevail is that many of the Cloud providers that report growth in their markets tend to concentrate on the smaller end of the SME spectrum. E-conomic and a few other similar players will do well in the Medium arena – the competition is wide open there and the first player that seizes the high ground will prevail.

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