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Jim Dunham is the President and General Manager of IRIS Software Group. With over 25 years of experience leading enterprise software companies across the public and private sectors, Jim is a seasoned executive in accountancy and tax markets. In this episode, Jim shares the story of his professional journey, his experience working in different industries, and how he ended up in accounting. Stuart and Jim discuss how cloud technology changed everything, how it developed over time, and where the most value is created.
Join Stuart McLeod as he interviews the world's top accounting leaders to understand their story, how they operate, their goals, mission, and top advice to help you run your accounting firm.
Stuart McLeod 00:00:06.162 [music] Hi, I'm Stuart McLeod, CEO and co-founder of Karbon. Welcome to the Accounting Leaders podcast, the show where I go behind the scenes with the world's top accounting leaders. Tell me your current role at the moment, what you look after at IRIS, and you had a long and storied career with accounting software. Why don't we start at the end and then go all the way back to the start?
Jim Dunham 00:00:32.113 I do have a bit of a long and sordid career in a number of different areas. So currently at IRIS, I'm responsible for basically any revenue that we generate here in the Americas. So that's looking after, right now, half a dozen different entities that we've acquired since 2019 in the area of both practice management, document management, and payroll. And so if you look at that, that's the star practice management application, Practice Engine, and then iChannel, which was a little company called Conarc out of Atlanta, and then Doc.It up in Canada.
Stuart McLeod 00:01:06.085 Oh, yes. I've heard of Doc.It.
Jim Dunham 00:01:07.349 And then AccountantsWorld was our latest acquisition out of Hauppauge, New York, which we picked up then, a great little cloud platform related to payroll. And they've got a real nice niche area, and we're looking to continue to expand in payroll, and really around that whole notion of both the collaborative tools that you need, practice management, document management, and then also the payroll component.
Stuart McLeod 00:01:34.004 Yeah, well, we're not selling, Jim, so let's get that out of the way first.
Jim Dunham 00:01:38.297 Okay. Well, you asked me what I was doing. That's what I'm doing.
Stuart McLeod 00:01:39.771 We're good here. We're good here. [laughter]
Jim Dunham 00:01:42.554 That's what I'm doing in IRIS for the Americas is-- we're focused on the CPA market, serving them in those different areas.
Stuart McLeod 00:01:52.893 Prior to that, you were at CCA. I'd love to go back to the start, and we'll build back up to where we are today. How did you get involved in the amazing, astonishing, fast-paced, moving world of accounting software?
Jim Dunham 00:02:07.521 [laughter] It's not my original cloth, if you will. I started life in the United States military, spent time working on communication systems, classified systems, and then actually ended up working-- probably my first instance with accounting was actually working on a payroll system for the National Aeronautics and Space Administration. And so redoing their payroll system, and then later building what was called their consolidated agency personnel payroll system, which was a little bit of everything. A real tasking was to understand what it took to actually do very long-term projects and how to actually put the costing and the personnel needs around those very complex projects. So that was very interesting as the customer, if you will, of technology providers and responsible for building that out for the National Aeronautics and Space Administration. And then I got pulled to the dark side and got sucked into the technology community, working for a number of the technology providers that I had been co-innovating with. And so the first one was actually Sybase back in relational war days [crosstalk].
Stuart McLeod 00:03:21.705 Yeah. So I reckon this is, what, early '90s or something?
Jim Dunham 00:03:25.260 That is early '90s. And spent a lot of time in that space, and then picked up a startup there, left, and got involved with a startup again around integration, large-scale system solving big hairy problems, and that intertwines back and forth with accounting and billing and back office. And then actually went over to Siebel, actually, and worked at Siebel for eight years. [crosstalk] they're building software for a variety of different spaces. Not specifically accounting, but we did get quite evolved, if you will, in the front end of that business, serving the sales and marketing needs for many different industries globally. And then did a stint at SAP when Sibel sold, and was actually there in both public sector but really got into GRC in the hype of GRC. And then you start selling back into the financial community kind of in a different angle or a different vent, and that set me up for later to actually come into Walters Kluwer related to internal audit. We were selling internal audit software at WK both into CPAs that were providing that capability for people in the market, but then also directly to customers themselves. So I've kind of seen many different angles of this market. I've been kind of the guy developing it for their sales and using technology. I've been on the pure technology side and I sold into the different components and really serviced this market from a number of different directions.
Stuart McLeod 00:04:57.625 I was working at Oracle in the early '90s when Sybase was a competitor, so I was only a little junior then and being unduly influenced by the older sales reps. But they would celebrate pretty hard when they beat Sybase in an on-prem deal. There was no such thing as cloud or anything back in those days.
Jim Dunham 00:05:16.402 As did we.
Stuart McLeod 00:05:18.158 Yeah, I bet. I bet. [laughter]
Jim Dunham 00:05:22.176 The marketing battles back and forth between Oracle and Sybase were a thing of legend.
Stuart McLeod 00:05:28.375 Yes, the [fud?], the constant [fud?].
Jim Dunham 00:05:31.279 But you do realize that Sybase was better.
Stuart McLeod 00:05:33.998 Yeah, well, only in the smaller accounts, of course. [laughter]
Jim Dunham 00:05:39.150 Only unless you're the Mormon church and you have one of the largest databases in the world that happens to be Oracle.
Stuart McLeod 00:05:46.085 Yeah, the Mormons have got their own issues at the moment.
Jim Dunham 00:05:51.222 I hired a DBA out of Oracle to come work for me at Siebel, and one of his responsibilities at Oracle was supporting that massive data structure. It's a phenomenal project.
Stuart McLeod 00:06:03.983 I bet. We should not go without mentioning, but the way we got started in accounting or in the accounting software game was building a payroll system. So there you go, we've got that in common. Ours is a little bit smaller than yours though, I think [laughter]. I think we ended up with-- well, these days, it's the backbone of Xero's payroll in Australia, which does about 3 billion-- it does 30% or so of the GDP in Aussie. So the little thing that we built 10 years ago is still going strong and hopefully, it continues to support the Australian economy through its weird ups and downs. And then Siebel, I mean, talking about competition with Oracle, wow, that was some heated accounts, heated tinders.
Jim Dunham 00:06:55.227 Funny little story was we were highly dependent on Oracle's database.
Stuart McLeod 00:06:58.670 That's right. You were too. I remember.
Jim Dunham 00:07:01.309 I lost your video [inaudible]. One of the core developers from Oracle was a guy named Crash, and he was one of the core kernel developers at Oracle, and he came over to Siebel. And every once in a while, when there would be something that we just hit up against some hard barrier trying to use the Oracle database, Tom would lend Crash back out to Oracle to go fix the problem. [laughter]
Stuart McLeod 00:07:26.948 Yeah. Now you mentioned that, I remember because we would always have two bid teams in those deals, right? So there'd be the one that would take the ERP and the whole shooting match, the CRM, and the one that would support the database in the Siebel bid. And I reckon they always priced them both the same [laughter]. You could take all of Oracle just so we beat Siebel, or you could take our database for the price you get everything else for anyway.
Jim Dunham 00:07:59.416 That was always very interesting times. But you know what? At the end of the day, Oracle made the bid and bought Siebel at the end of the day, so there you go.
Stuart McLeod 00:08:07.688 Yeah. That's so Larry, though. It's like, "I'll beat the shit out of you for as long as I possibly can." You did this with PeopleSoft. It was down the road here, on 300 acres of lakefront, and Larry bought some property up here as well. To this day, I still don't think that there's always animosity whenever Larry does a deal. He can never, ever just come away with a win, win, win. It's just not in his nature. He bought another hotel up here and all kinds of things, so him and his kids still have a fair bit of influence, but Dave Duffield does amazing things for the area. I don't know whether it's in spite of their history or because of, but the community is appreciative of Workday and PeopleSoft. And the military background would have been pretty interesting back in those days, right? Have you got a good story from then?
Jim Dunham 00:08:59.975 Yeah, well, I don't have it sitting here, but after many, many years, you still get things in the mail, little love notes in the mail that said, "Oh, by the way, the Congress has passed this, and so we were-- they passed a bill saying that they were recognizing everyone who served during the Cold War." [laughter]
Stuart McLeod 00:09:20.550 It makes you feel a bit older.
Jim Dunham 00:09:22.936 Yeah. It's like, "All right, well, at least we won."
Stuart McLeod 00:09:28.432 Well, I don't know. It might be still going.
Jim Dunham 00:09:30.793 We started off Cold War part deux.
Stuart McLeod 00:09:34.779 Yeah, that's it.
Jim Dunham 00:09:36.979 But it was very, very early days of technology, and back then, if you were not in computer science, you were basically either in communications or maths. And most of the systems we had, like night to day. The idea of an API, that would have been--
Stuart McLeod 00:09:55.197 Pretty handy. [laughter]
Jim Dunham 00:09:56.303 That would have been handy, but instead what we were doing was literally writing protocols and protocol gateways, trying to just get the core protocols talking to each other. So you even talk to people in computer science today, they don't even know what you're talking about. And so talk about the gender or the age gap.
Stuart McLeod 00:10:15.586 Yes, the generational divide.
Jim Dunham 00:10:17.023 You start going into the OSI layers and you see people just completely fog over on you. It's like, "What are you talking about?" Yeah, I just hit the button. Very, very different times. But you know what? I don't know, it gives me a little different perspective as to the meaning of hard or difficult.
Stuart McLeod 00:10:36.957 You try some punch cards with your API for a bit and see how you go, right?
Jim Dunham 00:10:43.341 You know what's interesting? When we lived in Maryland for years, I actually used to teach a course in history, and I used to bring all these things in and I had artifacts that I picked up over the years either from the military or from various government agencies I've worked with. And I bring these in and try to get people to guess what they were and they had no idea what these things were. So talk about feeling old. That's good stuff.
Stuart McLeod 00:11:10.394 Well, the technology would not be what it is today without all that foundational efforts, predominantly military based. I mean, it's well known that essentially the internet, or TCP/IP at least, was invented for military purposes.
Jim Dunham 00:11:27.949 Yeah, some of the original guys that-- if you go back and look at the authoring of TCP/IP, the UDP/IDP inside that stack is actually coming out of Ames Research Center. And at the time, NASA science internet, I think his name was Don Amy, actually, was one of the core developers. And so it was interesting as you get into-- again, you bring that up as a protocol. At the time, because NASA was a scientific organization, they routed everything and they used everything. And they were completely open organization, and so their security posture was they watched. And if somebody came in and started doing something nefarious, they would start tracking them and they became very good at that. But some of the core, to your point, those were government contracts many times related to either weapons or other types of military development that drilled a lot of that early technology, even Sybase to a degree. Bob Epstein and Mark Hoffman. Bob was Berkeley, and Mark Hoffman was actually West Point, I believe, and got into the intelligence community and brought in that technology to help the intelligence community. The Open Client Open Server was one of the first multi-threaded kind of distributed capabilities that you could put on a variety of different servers. And so that was all to run things at a much higher rate than we'd ever been able to do before because at the time-- you're going to get me going, Stuart, when you start talking about technology. At the time, model 204 was the fastest inverted list database on the planet. That's what they were using for intercepts and to do all of the calculations related to pulling that information in. So anyway, you get me going on that and give me a beer, and it can get dangerous.
Stuart McLeod 00:13:21.447 No, no. Both, let's do both. I want to say this VM machine-- not virtual machines, but we used to do a lot of work on, obviously, the Sun Microsystems machines because they were sort of the first ones with multi CPU, multi-threaded. What was the machine? It starts with V, and it was a completely different operating system. It was very popular back in the early '90s, and was able to--
Jim Dunham 00:13:48.969 Now you're going to show both of our age because we can't remember crap.
Stuart McLeod 00:13:52.052 Oh, God, no. Because I learned some of that operating system and obviously forgot it pretty quickly. Anyway, I'll find it later. I'll find it later. But it was the--
Jim Dunham 00:14:04.069 [crosstalk] big operating system where the first one is going to-- you're going to chuckle at this. Wasn't it IRIS?
Stuart McLeod 00:14:11.353 There was something like that. It was unrelated, but it was something like that.
Jim Dunham 00:14:15.200 No, it was the first 64-bit parallel operating system I thought was a Sun operating system called IRIX.
Stuart McLeod 00:14:25.405 IRIX, that's what it was.
Jim Dunham 00:14:27.056 IRIX. And that was SGI.
Stuart McLeod 00:14:31.377 SGI, the Silicon Graphics Machines. God, when they turned up at the office, they were beasts.
Jim Dunham 00:14:37.889 It was the SGI IRIX 64, I believe, was one of the first 64-bit operating systems.
Stuart McLeod 00:14:43.705 And that was the only-- that was sort of the first--
Jim Dunham 00:14:47.392 It was a variant on Unix, right?
Stuart McLeod 00:14:49.282 Yeah. But as for the Sun Microsystems machines, wasn't it Jobs that sort of started SGI when he got kicked out of Apple the first time? That was the story, wasn't it?
Jim Dunham 00:15:01.750 You're just randomly talking about computing history across the ages.
Stuart McLeod 00:15:06.501 Yeah, it's fascinating. I mean, our audience, they're-- well, it's all right. It's only my mum that listens anyway. And then she gave up a few episodes ago. Have you ever been to the Computer History Museum in San Jose?
Jim Dunham 00:15:18.676 I have not. And I used to live just up on the peninsula. I lived in San Carlos.
Stuart McLeod 00:15:26.517 It's amazing what's in there. It's fascinating, as somebody who sort of grew up with a lot of that. Just the rapid pace of change was amazing. But I'm sure it still is, we just don't notice as much.
Jim Dunham 00:15:39.437 You look at these. Right?
Stuart McLeod 00:15:41.387 Yeah, no, it's ridiculous.
Jim Dunham 00:15:42.897 It's crazy what's on the phones. And it's funny, guys, every once in a while, it's like, "What's behind you?" And I have an old workstation here because I used to do a lot of underwater-- I used to do photography and video. And so my son had built a big machine to do rendering for me. It's got four parallel video cards in it that are water-cooled and have all the stuff on them and everything. But you could get them parallel, so when you go to do the rendering for the video after you've done your editing, it doesn't take you like 6 hours.
Stuart McLeod 00:16:18.105 To get it done, yeah.
Jim Dunham 00:16:19.802 You can get it done in like an hour.
Stuart McLeod 00:16:22.650 And now you can do that on your phone [laughter]. Frustrating, right, when you spend 20 grand on a machine, and [crosstalk] years later, it's worth fuck all.
Jim Dunham 00:16:29.731 Exactly. We built this thing that used to make the lights dim. And you know what? We're great. Now you just load it up and-- you know what? The video rendering is still pretty processing memory intensive. Because you know what? It changed because I was doing like 720 and up to 1080, and now with 4K, everything just accelerates as far as the amount of data that you're processing. And so it always seems about the same because the quality of the image is so much better and all the controls you have on it. The software packages themselves, they're just as big as they ever were or bigger. It takes more and more memory to load those things into systems as well.
Stuart McLeod 00:17:16.322 Well, where I work, Jim, you don't have to load fuck all. Right? This whole [inaudible], all you need is a [inaudible]. Remember? You don't need to fake this online screen scraping shit.
Jim Dunham 00:17:27.980 I'm not sure you're doing a lot of video rendering in the cloud, per se.
Stuart McLeod 00:17:31.275 Not much. Not much. Although the marketing department do enjoy that stuff. We should talk a little bit about accounting, right?
Jim Dunham 00:17:39.183 Yeah. If we must.
Stuart McLeod 00:17:40.634 We'll have to change the name of the podcast to the Computer History Podcast. There we go. That wouldn't be a bad one. There's probably plenty of them out there. Let's start with something like COVID's influence on the American market in particular. What was your sort of takeaway from sort of the last-- from early '20 to the-- sorry, early '19 to the end of '21 and through that period?
Jim Dunham 00:18:08.028 Yeah. So COVID's impact, to me, since kind of the inception-- actually, it's interesting. I was at a sales kick-off with my team at the beginning there, and the team from China couldn't come. And that was kind of the beginning of it all, if you will. Yeah, dreaded shutdowns in the office, and actually even being a cloud company servicing customers in the cloud, we still had people that came in the office. There was still a sense of camaraderie, if you will. So I think there's a couple of different dimensions of that. It's like, how did it impact your customers, how did it impact the way you worked, and how did it impact the macro market, if you will? And the thing is that there's very seldom events that actually impact all those different dimensions, from my perspective. So impacted the way we worked. We immediately had to figure out how we were going to route all the calls to people that were now at home that didn't have setups to be able to manage just supporting our customers. So it's funny. Because we didn't know what was really going on and how long it was going to last, we just went out and bought a bunch of [inaudible].
Stuart McLeod 00:19:20.910 [laughter] Just to [inaudible] something to somebody somewhere.
Jim Dunham 00:19:24.733 Well, we could change the routing really quick, but where does it go? And so that was a quick answer. And then we got smarter as we got into it. I think what customers-- what it did specifically for me and the accounting market is-- we talked a little bit about this earlier, Stuart, when you were talking about on-premise. A lot of the people that were just hell-bent on having on-premise systems. "That's my accounting system. It must be inside the firewall."
Stuart McLeod 00:19:52.397 In the very safe cupboard that I use to store it next to the coffee.
Jim Dunham 00:19:57.213 Exactly. All of a sudden, that became irrelevant because that wasn't the case. And people were no longer getting together in the office, and I needed to support people wherever they were, and my working hours were changing and there were all kinds of other issues. And so people that had actually started to move to the cloud-- when I say people, organizations that had actually started that move were far better off already. And people who didn't, they had a cultural shift, organization shift, process shift. I think it was much more disruptive where the businesses who had kind of just let technology languish. And that might be a lesson moving forward, that staying up to date, maybe you don't want to be on the bleeding edge in accounting, but being a fast follower is not a bad thing.
Stuart McLeod 00:20:48.308 We encourage that.
Jim Dunham 00:20:49.642 Yeah, yeah. Well, the people's understanding, if you will, kind of cloud IQ, I think increased significantly in a very short period of time because they were forced to, not only for their own life. We're using Zoom, but if you look at Zoom or you look at Teams, how quickly these products iterated in a six-month period. Teams went from basically not functional to highly [crosstalk].
Stuart McLeod 00:21:18.660 Very fucking annoying to way less annoying.
Jim Dunham 00:21:21.790 To way less annoying, and into an actual usable tool. And then they started adding things like-- this is amazing. And you see this stuff just show up when they started adding-- not just record, but transcribing everything that happens, especially for an audit function. What a great thing to get on the phone with somebody and transcribe everything and it's all written up. I don't even have to do the writing. Wow. It's the tools of the cloud that can actually change the way you work.
Stuart McLeod 00:21:48.165 Yeah, even accessibility as well. COVID had a great impact on, say, the deaf. People wearing masks, they couldn't--So all the tools [inaudible] for not yet the majority in the industry became almost compulsory. Right?
Jim Dunham 00:22:06.972 Yeah, I completely agree. So I've seen a huge change across a variety of different dimensions, both personal, how it impacted your life, how it impacted the customer's life, and I think that one of kind of increase in the cloud IQ at a much more accelerated rate. I don't know what else you could have done that would have--
Stuart McLeod 00:22:28.014 Had the same impact.
Jim Dunham 00:22:29.800 --kind of moved people along those lines. It's kind of interesting because, in some degrees, the equity markets are still a little bit behind on that curve because everyone's interested in cloud and so forth and so on. But the investments in cloud organizations, it takes a little bit different philosophy and there's a different skill set of who runs these and how do you set up the organization and how do you set up modern production services and how do you serve customers and how important it is that it's always on. It's anywhere and it's always on. Very, very different mentality than to your point about the machine in the closet down the hall from the coffee machine.
Stuart McLeod 00:23:07.472 Yeah. Well, and [inaudible] the coffee. Sometimes with something flammable, I always found that one the best. Stick it in there with something that heats up real quick.
Jim Dunham 00:23:15.721 In the magnesium rack near heat.
Stuart McLeod 00:23:17.398 Yeah, that's it [laughter]. That'd be right. It's sort of related. Excuse my ignorance, but your parent company is in the UK, so you would get a fair bit of comparison between the North American market and the UK market. Coming out of the southern hemisphere and a lot of experience with Xero and Xero's markets, predominantly Australia, New Zealand, and then slowly grinding our way up into the UK, and did a pretty good job of that, we always sort of felt that the UK was a bit more progressive than here in North America. Think the government, the making tax digital sort of programs and those kinds of things have certainly had an impact. And they were pre-COVID as well. But I'm sort of making this a bit rhetorical now - I didn't mean to - but I sort of felt that North America caught up a little bit in the technology progression through COVID to Australia, to the UK, to New Zealand, etc.
Jim Dunham 00:24:14.828 So when COVID started, I was actually working at Walters Kluwer. So I was in that kind of very different domain and I was responsible for global business, so I was seeing what's happening to [inaudible]. I'll tell you what's really surprising there. Along those lines where we expanded, one of our areas that was less [inaudible] was actually the Middle East. And we saw expansion in Dubai and Saudi Arabia and those kind of places that I thought was interesting. As far as the UK over the US, I think it's really sector-specific. So if you look at what the sectors and how various sectors are functioning, the UK government, I think, has always done probably a little bit-- we always look at compliance-related issues coming first in Europe, even the privacy issues.
Stuart McLeod 00:25:03.882 Yeah, GDPR and everything.
Jim Dunham 00:25:05.407 And all of those things happen in Europe first. There's an acceptance of them and I think part of it is the way people live in density in the cities and so forth and so on, but also it's the society as how the governments think about solving that problem. And then there's some kind of evolved version that hops the pond.
Stuart McLeod 00:25:26.040 Except for privacy stuff. America still hasn't done fuck all about that. [laughter]
Jim Dunham 00:25:30.461 We don't care about that.
Stuart McLeod 00:25:31.637 No, not one bit.
Jim Dunham 00:25:34.637 It is interesting. It is interesting, but I think a number of the businesses, the acceptance of cloud in Europe, and specifically in some of those technologies and the compliance related environments were definitely ahead of the curve in both the organizations that I've worked at as it relates to the US. Now, you're saying that the US has stole this massive market, and to appropriately crack the nut, it's kind of like the diesel. Once it gets going, nothing can stop it. So very interesting to see the different dynamics. And then also, having lived on the East Coast, and then having gone and lived in Silicon Valley, high-tech organizations and firms run at a different pace.
Stuart McLeod 00:26:14.464 Oh, completely.
Jim Dunham 00:26:15.379 It's a completely different mindset and everything else. And Stuart, if you know, you can't explain it. And people think because they're in software, they're in high tech, and it's like, no, it's different. It really is different. If you're working on the corner of 92 and 101, which is kind of like the nexus of engine development and software, B2B enterprise software, or you're working downtown in San Francisco, or you're working down further on the Peninsula, that's fine. That's a very different domain.
Stuart McLeod 00:26:48.478 To Westchester or something.
Jim Dunham 00:26:49.572 Anywhere. Anywhere.
Stuart McLeod 00:26:51.192 Anywhere. Even the accountants in San Francisco, Silicon Valley, there's a handful that are really progressive and great, but a lot of them are sort of isolated from customers surrounding them.
Jim Dunham 00:27:05.631 The rest of the world.
Stuart McLeod 00:27:06.741 Yeah, yeah. It's true.
Jim Dunham 00:27:09.617 Actually, I think it cuts across many different disciplines. Let's just leave it at-- I will live and die on the note that you cannot explain it unless you've been there.
Stuart McLeod 00:27:18.197 Yeah. There's a couple of different countries in the United States of America. There's no doubt about that. Every four years, cessation comes up. And so tell me about the acquisitions-- but a couple of companies, particularly Star and Practice Engine that were certainly aimed at the bigger end of the accounting world.
Jim Dunham 00:27:42.461 The CPA market, yeah.
Stuart McLeod 00:27:43.135 Something that IRIS knows a lot about. And those guys have been plugging away for a long time and built a pretty good little base for themselves. And is there a roll up there or is it just sort of let's keep churning them out and producing revenue, or is there some efficiencies and operational effectiveness? What's the plan?
Jim Dunham 00:28:03.683 Yeah, I think if you look at any place where we've acquired more than one of the same thing, there's really going to be either two kind of schools of thought in the PE world, if you will: sweat the asset or do something with it. And IRIS is definitely in the latter camp. They're the do something with it camp. So the intent there is-- I don't know how familiar you are with some of the recent launches in Europe, but there's a program called Elements, which is more of a platform--
Stuart McLeod 00:28:33.324 Built on the [Salesforce?] platform.
Jim Dunham 00:28:35.544 No. Elements is its own platform. Yeah, yeah, yeah. And the idea is that you can sign on. There's the API, there's all the micro-services that you would expect in a platform. And then, as you do acquisitions, we can start plugging these acquisitions into that environment and give a much more consistent experience to our users. And that notion will come into the States as well. But right now, we've got some other kind of work to do as far as consolidating some of our existing acquisitions that we've already done. No surprise to anyone and no surprise to our community, but we are absolutely committed to making sure we can bring our customers with us. There's a bigger play to really focus on that engagement layer, really focus on the CPA community and figure out the best way to serve them. If you haven't figured out, we're somewhat inquisitive. So if there's other things out there that are interesting, that are in kind of that archipelago or in that orbit, we're very interested to pull those into the whole. Right now, we're in an interesting time. [inaudible] COVID, and I'll draw a couple of intersections for you. COVID has created a really interesting activity in the payroll market because in the States specifically, compliance has changed where they used to-- a lot of the states had reciprocal agreements across state lines. Now, the states are all vying for, "Wait a second now." [crosstalk].
Stuart McLeod 00:30:07.911 Yeah, they spent 181 days in Nevada or California. California and Nevada will fight over my residency for days t ocome.
Jim Dunham 00:30:17.420 So that hourly compliance requirement for both hourly employees and salary employees is really interesting right now. And because of that, there's some additional regulation that's coming down the pipe, and there's enforcement-- I don't know how much you're into this, but there's enforcement of what type of payroll provider, technology provider are you, and do you have the money transfer licenses as well to operate in these different environments? And because of that, you're finding a lot of independent payroll providers that are just saying, "I'm not doing that. I'm out."
Stuart McLeod 00:30:53.613 Just too hard. Too hard, yeah.
Jim Dunham 00:30:55.853 Too hard. Now, on the flip side, if you got a great technology platform, like this company, it's four letters, begins with an I. We've actually kind of cracked that nut. So there's an interesting opportunity, I think, in the market when you combine the impact of people moving, kind of the gig economy, people moving and living in different places. Because you have people that are working. They didn't go back to the office, so they're working in Denver for ski season, and they're going down to Florida for the season when they want to be warm.
Stuart McLeod 00:31:27.895 Yeah. Even better. We found a couple in Mexico.
Jim Dunham 00:31:31.651 Yeah, exactly.
Stuart McLeod 00:31:33.704 [laughter] Getting American wages down in Guadalajara, so fair enough.
Jim Dunham 00:31:39.194 It's changing the way people live and work, and because of that, get paid. There's a compliance requirement to that as well. So we're finding an interesting nexus that in some instances we were smart about, we were in the right place, and other instances, we're working really hard to make sure we can solve for that.
Stuart McLeod 00:31:58.627 I mean, I don't track the US payroll market. I sort of got a bit of PTSD from payroll over the years. And I don't track it too closely, but I'm sure--
Jim Dunham 00:32:09.389 I noticed a common twitch.
Stuart McLeod 00:32:10.969 Yeah, that's it. My right eye hasn't recovered. But I mean, Gusto and Zenefits are obviously big players in the SMB space now. There's Parker Conrad's new thing. His name will come to me later. But are there a couple of smaller ones that are showing promise that IRIS might snap up, or are you more interested in sort of the more perhaps slower organizations or mid-tier organizations? Let's call them that.
Jim Dunham 00:32:40.269 Let's just say we have a healthy appetite.
Stuart McLeod 00:32:43.959 Yeah, yeah. All right, well, as I said at the start, we're not for sale, but there are big checks out there occasionally, but we're still not for sale. So there you go.
Jim Dunham 00:32:54.508 It's always one of those things where I'm looking for, again, kind of those interesting intersections in the market when macro conditions happen and you think there's going to be this period of time. Then how do you get on that wave and ride it? And obviously, that's how we drive enterprise value to our investors as well. But I also think if it's linked to really solving a core problem in the market, it's a fun place to be, you're solving a really good problem, people in the organization, it's a good place to be, you're driving enterprise value for your investors. I mean, that's truly a win-win.
Stuart McLeod 00:33:32.219 Definitely. It is fun to create value. I think the accounting, the CPA market is under a huge change at the moment. Traditionally, particularly in North America, you've got the very small wind, the one to three, which has dominated the practice numbers. And they're finding it's hard to get the multiples that they used to. It's hard to provide a succession plan that's compelling because the son that you [born?] to take over the practice is no longer interested in sitting in an office in, I don't know, Walnut Creek for the next 30 years and taking over the practice. They're more interested in going to Costa Rica for three months and Colorado for four. And it just doesn't work like that anymore. And I think we've-- I don't think it was that intentional, but just there's so much platform to build in order to really accommodate all the needs of practices that we start at the small end. And we've seen quite a change over our short life already in that smaller end of the market. And they're the cloud progressive ones, too. They're the ones that are driving the change in the technology.
Jim Dunham 00:34:47.433 I don't disagree with that. And it's interesting because that area is still one of the areas where if you look even on the tax compliance side, that's becoming so highly commoditized that the dollars are just dropping out of that. So where do you go?
Stuart McLeod 00:35:04.461 Where do you go?
Jim Dunham 00:35:05.435 So the engagement products are definitely a better place, from my perspective, to be. And then also getting smarter on this dreaded [inaudible], whether you call client advisory services or accounting advisory services. But those other services that are starting to use some of the latest technologies around, whether it's AI or machine learning or natural language processing, to actually look at all that data that is now done by a commodity system and figure out other options for you. And I think those advisory services are an interesting place as well. So when you're talking about small companies, those are interesting to me because that's where real innovation happens, I think, is in some of the small little startups, and you get the really interesting innovation, new ideas. Even in organizations like ourselves, that's kind of where diversity of thought comes in because you inject kind of some of those new free radicals into the system and [crosstalk].
Stuart McLeod 00:36:07.819 They get a bit frustrated after a while, let me tell you. [laughter]
Jim Dunham 00:36:11.738 Yeah, yeah. But that's how you stay young. Every once in a while, you got to get challenged by some free radicals.
Stuart McLeod 00:36:20.650 Yeah. You're talking about engagement and what your main competitor in the UK, Sage, picked up a go proposal. And James [Ashley?], who is a great friend of the podcast and of Karbon, is belting his way through Sage and trying to create a way of thinking and bring about a bit of energy into some of these perhaps older organizations. Let's call them more experienced organizations. Let's call them that.
Jim Dunham 00:36:48.005 I wish all competitors well because a vibrant market is good for everyone.
Stuart McLeod 00:36:52.376 Exactly. Exactly, exactly. Well, Jim, on that note, we're wishing all competitors well. We do too. We're up to our hour, which has just flown by. It's been amazing to have you on, and I would love to do another computer history exercise.
Jim Dunham 00:37:10.989 Sure, sure. You know what? I'll dust off some of my-- you caught me flat-footed on my computer history.
Stuart McLeod 00:37:15.865 Me too. I'm going to get back into my-- I'll break out Vim, the text editor. I still try and do some notes in Vim occasionally.
Jim Dunham 00:37:26.451 Yeah, I spent a lot of time with Software AG and Database and Natural and Supernatural, and some of the early days of the multi-dimensional databases with the first IRI online, which was first mainframe multi-dimensional database. So you had to build your own front end. That's a great one. You get a back end on the mainframe, but you got to build everything else. So that's some great, great fun. Well, Stuart, it's been a pleasure. Nice to meet you.
Stuart McLeod 00:38:00.521 Absolutely. Likewise.
Jim Dunham 00:38:02.143 Thanks for the invite. Maybe sometime if I'm traveling out there, I'll join you in the studio and we can have beer and technology.
Stuart McLeod 00:38:10.523 I'd love that. There you go. It's a date.
Jim Dunham 00:38:13.549 Or if you get out here in Boston as well, let me know.
Stuart McLeod 00:38:16.666 Will do. I'd love to perhaps catch the Celtics [inaudible] outside in Windsor, I reckon. Jim Dunham, thank you so much for appearing on the Accounting Leaders Podcast.
Jim Dunham 00:38:26.948 Hey, thanks so much, Stuart. [music]
Stuart McLeod 00:38:34.025 Thanks for listening to this episode. If you found this discussion interesting, fun, you'll find lots more to help you run a successful accounting firm at Karbon magazine. There are more than 1,000 free resources there, including guides, articles, templates, webinars, and more. Just head to karbonhq.com/resources. I'd also love it if you could leave us a five-star review wherever you listen to this podcast. Let us know you liked this session. We'll be able to keep bringing you more guests for you to learn from and get inspired by. Thanks for joining, and see you on the next episode of the Accounting Leaders Podcast.