FULL EPISODE TRANSCRIPT
Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. I am your host Mitch Roshong and I am happy to share our 50th episode of the series for this conversation. My cohost, Adam Larson, spoke with Blake Oliver. Blake is recognized by Accounting Today as one of the top 100 most influential people in the industry. He's the director of marketing for Jirav and is the cohost of his own podcast, the Cloud Accounting podcast. He joined Adam to talk about technology trends in accounting, like automation for reporting and forecasting as well as other things affecting the accounting and finance world. So without further delay, let's listen to their conversation now.
So Blake, you're recognized as the leader in the accounting industry and you've spent much of your career connected to the cloud. Can you maybe give us an overview as to what trends you're seeing in the industry?
Sure. And thanks for having me on your show. A real an honor to be here and talking to the IMA base. So I started at the very bottom of the accounting career ladder as a, as a bookkeeper. And a lot of what I know about technology is, is based on that experience. I was a in case you're curious, I was a music major in college, not an accounting major, not a finance major. So I think that's helped a lot, helped me approach things with a fresh set of eyes in a lot of cases. Okay. So what happened is I graduated from college and I had this useless music decree and I was still trying to freelance and maybe have a professional career and I picked up bookkeeping as a flexible kind of day job I could do. And so I was doing QuickBooks data entry mostly and I had some clients on the side. A lot of what I did, I would say 80% of what I did was keying in transactions into QuickBooks from PDF bank statements are actually more likely printed ones at that point. So, you know, people were sending me there bank statements they were receiving in the mail. I'd key those in categorize their transactions and create reports. And I liked it cause it was kind of a mindless, the thing that I could do in front of the TV or listening to my favorite music and anybody who's been paying attention to what's been going on over the last 10 years knows that we don't really do that anymore. At least in the world of small business. Manually keying in data is not necessary. We've got online accounting, we've got cloud accounting, we have bank feeds, we have API integrations and when that started to all happen around 2010 was when it really started to get big and become, you know, easy to do with off the shelf software. I jumped on that. And so within about five years, I had automated about 80% of my own job as a bookkeeper. Uh, and I started a business doing that and it was a cloud accounting from, we were virtual. We did bookkeeping in a new way. We could lower our prices off for clients more. It was a big business, you know, we grew to 200 clients in three years and I was able to sell that thing. So that kind of proves just how a successful automating inputs can be and so a lot of what we've scene over the last 10 years, both on the, on the small business side and now creeping up into the mid market and enterprise is basically automating that entry of transactions that getting the data into our ERP system or our accounting system, whether that's QuickBooks or zero or NetSuite or Intacct or Oracle or SAP. It's all the same concept. And I think it happened first in the small business side because small businesses are very price sensitive. And so there was this need to automate that, that entry of data. Lot of business owners, they just can't afford accountants or bookkeepers mean the vast majority of business owners do with their own accounting and so there was a motivation for developers to build that stuff. It's been slower in the mid market because, yeah, at scale when you're a big business, it's, well not that expensive really to hire a staff accountant right out of school and make that person just a import transactions manually every day and reconcile the bank account manually and all that, but I think that that's starting to change in some organizations have really figured out how to automate data flow. Some not at all. Right. And some are blocked because they're on, on premises ERP systems. It's very expensive to switch. So we're at this interesting place about 10 years after the birth of cloud accounting where we have some cutting edge folks that have completely automated most of their data entry. We've got folks that are continuing to do it exactly the same way they did 10 years ago, and we're going to continue to see over the next 10 years real divergence among those groups and it's gonna make people's careers or break them. I think.
So I'm sure there's a range of people listening to this podcast right now, whether they've started some sort of automated reporting and forecasting or some others who hadn't even, haven't even begun to there. And like you said, they're still doing accounting like they did 10 years ago. Can you maybe discuss some of those barriers that they may run into and how could they overcome those?
Yeah, the biggest barrier that I see is when a finance team or an accounting team is stuck with an on premises ERP system and for whatever reason it's decided that it's too expensive to change or perhaps there's not a solution out there that's customized enough to their business. There's always, you know, reasons for keeping old technology and you have to just figure out how to adapt. And that's been the big barrier to adopting cloud is if you don't have API's, if you don't, by the way, API is application protocol interface. It's simply a way for computer programs to talk to each other. And cloud makes us easy because you've got apps hosted in the cloud and they all have API APIs. A lot of them do these days. And so it allows you to hook them together and transfer data. Well not as easy to do when you've got an on prem system. It typically doesn't have an API and you could pay somebody to develop it, but that's expensive to maintain and it usually out of reach for a lot of organizations. So we've had this divergence where folks who are on cloud ERP systems or cloud accounting systems are able to take advantage of all this automation and those that aren't, aren't, well, there is a technology out there that has been talked about quite a bit and I think this is actually one of those technologies that is not a bunch of hype. It's going to have a real huge impact. And that is RPA, robotic process automation. And it sounds really fancy, but it's actually a really simple idea. Think of an Excel macro. An Excel macro is a little program you can write as an Excel user without needing to necessarily know how to code. Maybe you do a little bit of coding and visual basic or something like that, but it's not, you don't have to be a developer to do it. Well, RPA, you can think of as simply an Excel macro that can work outside of Excel. It can function across programs on your computer and click a mouse like a human type in texts like a human. You combine this technology with OCR, which is the ability for a program too. Read a document and transcribe it into text and then interpret that text. If you add a little artificial intelligence, a little machine learning into this concept of macros and you mix that all together, that's RPA. So it allows you to do, it's basically automate the flow of data in and out of systems that don't have APIs. It's like a replacement for that person sitting in front of the computer, probably me 10 years ago, keying in information. You could hand an RPA tool, a bank statement, and you could teach it how to code transactions into your desktop accounting software. That's the promise of it. There's been a ton of investment. It's you know, multibillion dollar industry now. And that I think is going to be what poles, the rest of the teams that are not on cloud into this world of, of automation.
So it's going to bring teams together that aren't normally together. What other benefits do you see from a company making the effort to take that extra step to start, if they have those barriers in place, and they go to RPA or even if they don't have those in place and they just, they convinced their boss, Hey, we need to go this route. What are some of the benefits that you're seeing that for people adding this to their business?
Well, one of the benefits that I'm enjoying right now is the ability to work remotely. When you have access to your systems and your data in the cloud you can work from anywhere. And that is really important in the accounting profession because we have a talent shortage right now. We don't have enough CPAs, CMS, basically anybody who you know, really knows what they're doing, it's hard to find a talent. And so it's important that we as managers and CFOs and the controllers figure out a way to let our employees work from home at least part of the time. Okay. Remote work has been increasing between a 2005 and 2017. There was 159% increase in remote work and there are now 4.7 million people, mostly knowledge workers who work remotely. That's 3.4% of the population, right? Not a very big number as a percentage of the entire us population. But if you think that most of those people are in professions, then it's a lot actually. Um, as, as it gets harder and harder to recruit folks, we're going to see remote becoming more important. So that in addition to the, yeah, just the efficiency gains you get from RPA and cloud and API APIs, it's going to drive a lot of productivity which will allow us to do more with fewer people.
I think those are some very good benefits and where somebody looking into what are the risks?
So security of course is the big risk right now. Malware attacks malware attacks in particular have been really bad over the last year or two on hosting providers. So this is something that if you are going to migrate to a cloud solution you gotta be really careful about is selecting the right provider and the right type of hosting. So the type of hosting that's been susceptible to malware attack is shared hosting where you are provisioned the workspace on a server that has multiple companies sharing the same resource. If one of those companies gets infected with malware, then your instance or your workspace could be affected as well. And that recently took down a provider called Insync. Ironically, a company called summit hosting acquired in sync after the malware attack. And then they themselves, we're a target of a malware attack. And I mean this can put you as a customer of these providers out of commission for a week or two or more. I think the summit folks, some of them we're down all last week. Yeah, we're recording this toward the end of January. I mean, can you imagine if you're an accounting firm or if you're a corporate finance department not having access to your Sage files or your Intuit, here are your QuickBooks files for a week. Like how would you function? So that is a big concern. It's causing some people to say, Oh, we're not going to do that. We're going to stay with our local server in our office and it's true. That may make you less of a target, right? Because you're not part of one of these bigger companies, but you definitely, well, you most likely will not have the same security protocols in place as a hosting provider. So you yourself might be an easier target in some ways, even though you're a smaller target. So it's a real concern and it can be addressed. But it's something that that needs to be top of mind when you are going to cloud, especially if you're going to keep a desktop style application and host it in the cloud rather than going to true SAS.
Where do you think we're going in the next 10 years? You know, you mentioned you kind of walk through your story of your, these last 10 years, but where do you think we're going for these next 10 years?
So as I mentioned, a ton of the productivity gains thus far in the world of cloud accounting have been on the data input side. And I think that the next 10 20 years is going to be about the outputs because that's where we really create value. Four management or for our clients is in the information we give them the reports, we give them the insights that we give them. And we talk a lot in the profession about becoming better storytellers, becoming advisors versus number crunchers. Everybody wants to go there. Controllers want to be risk managers. They don't want to be number crunchers. Accountants with their own practices, right? They want to be advisors, even coaches. So their clients, they don't want to just be filling out a tax return. So the question is how do we get there, right? What is actually the way that we do it? We all want to do a better, how do we do it? And the answer in my mind is forecasting the ability to look into the future and figure out with a client or with management what is going to happen, what is likely to happen. And it's not just about financial numbers anymore, it's about non-financial metrics, website visits leads generated, maybe manufacturing activity. everything is game, right. We shouldn't just be focused on the numbers that have to do with dollars. We should be focused on all the metrics that are important to the business and accountants, we are really, really well positioned to own the aggregation of all that data from across all the different departments in the business. Yes. And put that together into something that's meaningful, interrelate all that data, both non-financial and financial. So a lot of time we, we talk about creating dashboards but it's not enough just to create dashboards because most of the time dashboards, if that's all you're doing there historical, we're, we're creating some KPIs. We're looking historically it's better than nothing, but it's not helping us look into the future. so that's where forecasting comes in and there's a lot of forecasting technology out there. I happen to think that the best kind is driver based financial modeling. Almost a modeling is this sort of complicated thing that we've done in Excel. You have to be an Excel wizard to do it because it's really hard. Ah, yeah. There's entire books and courses about how to do financial modeling and Excel and you get paid a lot of money to do it if you can learn how. Right. But the problem is it's, yeah, very easy to break, right? It's, it's delicate. It's exposed database, right? There's better ways to do this. So a lot of companies are coming along and we probably have heard of them, you know, host analytics, adaptive insights that, that take this concept of financial modeling and put rails around it, right? So that you and people can collaborate and you can import actuals and everything like that. So I'm working with a company now called Jirav. I started working there at the end of last year and our goal is to bring that financial modeling technology, which. normally is very, very expensive to small and medium sized businesses. So you can create plans that, that are driver based that you use custom data, not just financial data. And then you can sync that up with your actuals in your QuickBooks online or your net suite or your zero file and you can do forecasting every month and roll it forward automatically. Okay. We'll import your headcount data from your payroll system, such as Gusto, ADP, paychecks, you're interrelating all of that with your financial information, with your non financials and, and you know, doing real monthly re-forecasting, which is most small businesses just never did it because it's so expensive to pay a CFO to do that for you.
You know, Blake, those are some great insights and I just wanted to thank you again for coming on the podcast today. We really appreciate having you on.
Oh yeah, it's a pleasure. And do you mind if I pitch my own podcast? Sure. So if you want to stay up on what's going on in the world of cloud accounting, I have a show called the cloud accounting podcast. I do this with David Leary who spent 20 years working at Intuit. So he comes from the software side. I come from the last 10 years, mostly in public accounting and we get together every week and we go through all the news stories that are top of mind for us. So that way you don't have to read accounting today. Journal of accountancy, accounting, web, all those sites to try and stay up on what's going on. Actually, I also read the IMA magazine. Was it Strategic Finance? Is that, is that it? Yeah. So, you know, we talk about those articles, we analyze them, we discuss them. And so in an hour a week, you get the top stories that you need to know as an accountant.
This has been Count Me In,
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