CHAPTER 2

Embrace The Cloud With Open Arms

In order to become efficient and scale, your systems need to work together. It's impossible without the cloud.
Embrace The Cloud With Open Arms

by Trent McLaren

Every kid coming out of Harvard, every kid coming out of school now thinks he can be the next Mark Zuckerberg, and with these new technologies like cloud computing, he actually has a shot.

Marc Andreessen, Co-founder of Netscape, Board Member of Facebook

This quote captures a perfect point around the opportunity cloud technology presents. Everyone has a shot at making a dramatic impact to the lives of their customers, their employees and to their business. You want to build the next Facebook? Or perhaps you want to be the next Deloitte?

It’s often said that it’s not the big that eat the small, but the fast that eat the slow. Embracing the cloud will enable you to be fast, to act quickly and allow you to give your customers access to information so they can make fast, real-time decisions. Moving to the cloud is not just about new products but a re-invention of internal processes which will force us to re-evaluate where our efficiencies are and how we keep innovating and disrupting ourselves.

What is the cloud and why should I care?

"Cloud computing is a type of computing that relies on sharing computing resources rather than having local servers or personal devices to handle applications. In cloud computing, different services — such as servers, storage and applications — are delivered to an organization's computers and devices through the Internet." (Webopedia)

Why is the cloud important for accountants? Because you can collaborate easier with your team and your clients in ways that have just never been possible before. Opening up a foray of new possibilities on services and opportunities that you can now create new revenue streams from.

Collaboration

Guy and I sat down and agreed that embracing the cloud is the smartest things you can do in your life as an accounting and bookkeeping practitioner in 2017. This chapter is perfect for the managing partner, business owner or practice manager making decisions on what solutions are used inside the business.

In reality this is what this book is all about. Ignite Your Practice. Embrace the cloud with the notion to grow and scale your firm, allowing you to improve your efficiency, firm capacity, grow your revenue and expand your market share. You’ll do this by implementing the right cloud solutions that allow you to automate the low level process work, giving you and your team the capacity to: 

A) Take on more clients
B) Create and add more value to existing clients
C) Diversify and drive new services with new and existing clients

Cloud accounting is the biggest thing to shake the accounting industry since accounting software first came into the market back in the 1980’s. It’s vital that you understand how cloud accounting will shape and impact your firm. 

In this chapter we want to run through why you need to embrace the cloud in your firm. I’m not just talking about accounting ledger software. I’m talking about moving your entire operations to the cloud.

We’ll run through the benefits to being a cloud only firm and what opportunities will present themselves as a result.

Impact of the cloud in the accounting world

Long story short, you need to care about cloud technology if you want to create competitive advantage and deliver world class customer experiences. 

Cloud technology becomes a no brainer and will be a key part of your firm’s strategy for success, allowing you to grow and scale without having to add more employees to expand your capacity.

What are the technological barriers holding you back in your firm at the moment? Think through all the times you’ve had to travel to see a client to retrieve source, documents, receipts or perhaps because you needed physical signatures on legal documentation. Think of every event that requires a physical face to face meeting. 

Cloud computing can make it much easier to collect financial data - for example, scanning their expenses and uploading them rather than handing over a carrier bag of receipts at the end of the tax year.

Embrace The Cloud With Open Arms

Laurel Grey

RSM Australia

Now I’d love for you to imagine a world where you can substitute those interactions with technology. 

Think of a world where you can achieve these tasks from your office. Think about when ATM’s first came into the world, how much did we save not having to speak with a bank teller anymore. How much more time do bank tellers now have on their hands because they implemented ATM’s all over the country.

Think of Uber, think of AirBNB, these are all cloud based solutions that deliver a world class experience and disrupted the incumbents that became too comfortable. These disruptors are giving their customers a better way to live, a better way to work.

This is the same impact cloud technology is having on the accounting industry. And this is exactly what we hope you’ll strive to become. Accountants and bookkeepers aiming to deliver world class experiences running like a well oiled machine, allowing you to grow and scale your practice. 

Cloud technology allows accountants and bookkeepers to work with real data, collaborate in real time and integrate many business systems together. If there’s anything I can highlight more than anything it’s that everything operates in real-time. Automatic back-ups, accessed anywhere in the world, at anytime of the day.

The accounting business model has changed

Implementing cloud technology into your practice will force you to change your business model. You’ll stop focusing on time spent completing work and start focusing on the outcome you are trying to achieve with your client. This is a great thing. 

This will allow you to increase your revenue earning capacity. As we all know there are only 38 hours in a working week. If you bill everything on hours spent completing the work, the only way you can continue to scale is by hiring more staff, so that you can bill more hours. 

If we flip this model on its head and start to rethink our pricing strategy, we’ll start to charge for the desired client outcome. Allowing us to focus less on managing time, and focus more on achieving the result. 

Bigstock Value Price Scale Concept 81535118

We are then encouraged to improve our process and efficiency without the impact of losing revenue for doing a faster job. We have the ability deliver the same results in half the time. Allowing you to achieve an uncapped earning potential as it’s based on work completed, not how long it took to complete the work.

You’ll still need human capacity to complete the work. But we can now also start to ease the workload by using data extraction tools that automate the data processing. You’ll want to train your clients on how to use these solutions as it will help reduce your time spent on data collection, and more time spent on managing the quality of the data, and ensuring the solution is accurately processing the data. You become quality control. 

Cloud will also force you to start billing your clients more regularly. We believe you’ll break up your revenue between recurring work (regular work on a monthly, quarterly basis) and project work (which is your adhoc, non-recurring work, you may also find you’ll do some time cost work here.) 

This also means you need to start tracking and measuring your firm’s KPI’s differently. In chapter 1 we talked about the key metrics and KPI’s you should be using to measure your firm. The main metric we recommend getting your head around is your MRR (Monthly Recurring Revenue). Check out that chapter here to brush up on the metrics we think you should be using in your firm.

Benefits of the cloud

I want to take the time to work through the benefits of operating your firm on the cloud and we’ll actually provide some great examples for you to review. The benefit lies in your ability to access data, seamlessly, anywhere in the world on any device. This gives you the ability to action things faster and collaborate in real-time with your clients.

We can see that as we start to look at what is changing for the accounting industry, we start to open up the the opportunities of what’s possible. Allowing firms to move into work that is more valuable to your clients.

Better organisation of internal processes

Working now in one of Australia’s top mid-tier firms rolling out cloud technology tools internally and to our clients is really no different than in businesses with a few staff. Where I’ve gotten the biggest buy-in with the team (by far) is around helping them choose applications that will help them manage their WIP, keep track of leads and organising passwords effectively - the simple stuff!

Embrace The Cloud With Open Arms

Laurel Grey

RSM Australia

Laurel paints a clear picture here. The simple stuff can have the greatest impact on your firm. Look at how you have all your files and folders organised. Are you still carrying and holding files and folders from the past 20 years. Well you don’t have to do it that way anymore. It's possible to have everything digitized and catalogued electronically. Allowing you to find records faster, and maintain the integrity of your data.

Access from anywhere

If your team is used to using desktop applications within your practice, the idea of operating fully within a browser can be a daunting thought. The cloud journey, after all, is about remapping our neural connections (completing ingrained processes in a brand new way) and letting go of control around every step (you mean the system does that automatically?).

Cloud Software

Connecting your bank account feed to your accounting system, removes the need to code from a bank statement. And better yet, you’ll start to see the system automatically trying to help you code these bank transactions including memorisation. Which is the first instance of Machine Learning, in which the computer is learning how you would code a transaction and remembering that for the next time that transaction comes into the system.

Get a 360° view of your practice

The customer benefit of using cloud solutions, whether that’s for your clients or for your team, are noticed almost immediately, as you’re now utilising and operating with real-time data. You’re not looking back on what’s happened in a client file, you can start to look forward and predict what could happen.

You'll have a full view of:

  • What your team is working on
  • What work needs to be completed
  • Your revenue forecasts
  • What your cash flow looks like
  • Firm’s metrics, KPIs and targets

Your clients will share in the benefits as well.

Current software landscape of the cloud

For the cloud newbies out there, here's some software to start out with:

  • G Suite: the paid version of Gmail, giving you full collaboration within your team on emails, contacts, calendars, files and more
  • LastPass: enterprise level password storage and sharing system for you and your team
  • Asana: amazing project and task management software that is free for up to 15 users
  • TextExpander: snippet expander for storing and quickly typing commonly used text
  • Toggl: easy to use time tracking system for keeping track of billable hours

There are two key things I recommend you ask yourself when you're reviewing cloud technology for your practice:

1. Will this technology improve my customer/employee experience?

2. Will this technology improve my processes OR give your business a competitive advantage?

If you can answer one or both in each piece of technology you review, than it is well indeed worth your time. If you get one yes and one no, then you will need to measure up the opportunity cost as to whether it is a vital piece to your firm. In most cases I'd say no, but every scenario is different.

Start with the simple stuff like implementing a password manager and work your way into bigger solutions around practice management last. This will allow for a smooth transition and allow you to see some results quickly, which can be great for team morale and showcasing why you’re making the journey to the cloud in the first place.

We sat down and created a diagram for what an ideal cloud practice could look like. Bare in mind that every country will have country specific apps that can replace in some of the other solutions.

Cloud Software Landscape For Accountants
Cloud software landscape for accounting and bookkeeping practices.

Our diagram is based off of multiple accounting firms and is a good representation of Guy’s firm, Interactive Accounting, and the technology stack they use. 

If you’d like another great example, I’d recommend checking out Steph Hind’s (Growthwise) technology stack. As it’s a great example of both accounting and non-accounting solutions they use to run their practice.

The key to these solutions is that they are all in the cloud, and they integrate back into the cloud accounting ledger that you are using in your practice or with your clients.

How to get started with the cloud

Getting started with the cloud will require a little bit of prep work. You need to be able to evaluate what is your current reality, or current environment. Work through where are the gaps in your firm or where can you get the biggest lift in efficiency. Once you’ve mapped this out, you’ll know where you can start to implement cloud solutions.

Using cloud based accounting ledgers is an absolute must. Whether it be QuickBooks Online or Xero, this is an essential key part of your cloud strategy. Secondly to that, review your email systems. G Suite or Office 365. Look at your calendar booking systems. Look at every aspect of your client relationship and all the interactions you have with them. 

As we mentioned earlier, the last thing you should be switching or changing is your practice management system. Generally this is a huge piece of software and you would be better to streamline your smaller internal processes first before moving away from the core part of your firm’s operations.

If I can make one recommendation, look at getting your entire office onto Slack. It is a perfect internal communications tool and will allow you to collaborate with your team and even your clients more efficiently. This will deliver almost instant results for your efficiency.

Finding efficiencies

This leads us into what our next chapter is all about, finding efficiencies. We’ve given you a deep review of why you need to embrace the cloud. It’s the one thing that will allow you to grow and scale your firm into the 21st century. And if you want to find efficiencies within your firm, you need to have the right set of tools and technologies available to you.

We look forward to taking you on the journey to chapter 3. Let us know what you love about working in the cloud and how it’s helped your business. You can catch me on Twitter and LinkedIn. We can’t wait to hear your story! 


NEXT CHAPTER

Map and Automate Your Business Processes

Learn how to map out your processes and find out what can be automated with software.

Embrace The Cloud With Open Arms
Trent McLaren

Trent has had an explosive career in the accounting industry, working for the biggest global cloud software provider as well as Australia's most dynamic payments provider. He's an award winning thought leader of the year and avid marketer.

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