Connecting the Pieces in the Chunkified World of Business Processes

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Connecting the Pieces in the Chunkified World of Business Processes

Doug Sleeter | March 14, 2012 More

For those of us who make a living focused on desktop accounting software such QuickBooks, Peachtree, or any of the dozens of Windows-based accounting products, I see huge disruption, but also exciting opportunities on the horizon. As I look around at new innovations, new venture capital investments, and new successes in the market, I’m becoming more and more convinced that over the next few years there will be significant changes for those of us in the business of accounting software consulting (or teaching), bookkeeping, accounting, or tax preparation.

Driving my thinking around this topic are four simultaneously-growing trends that I believe will fundamentally change the way small business owners, bookkeepers, accountants, and even taxing agencies, will use technology in their everyday activities.

After reading this, you may conclude that some of these technology shifts are not altogether positive, and I am not suggesting that they represent a panacea. However, like many trends, they emerge regardless of their affect on any specific measurement, and therefore warrant our focus and understanding.

The four new trends that I see are:

  • Chunkification – Splitting up separate parts of the overall business management systems into discrete parts.
  • Zero Entry – Taking advantage of connections between the chunks using the Internet moves us closer to a zero-entry world, which dramatically changes the role of the bookkeeper.
  • Collaborative Accounting Services – Connecting accountants and clients to the same data, facilitates a much tighter relationship between clients and their accounting firm.
  • Mobile – Access to all information from a variety of mobile devices allows us to rethink possible, and developers are scrambling to capitalize on this new reality.

Let’s look closely at each of the trends:

Chunkification

In the past 30 years or so, the accounting software market has been dominated by large, all-in-one accounting products such as QuickBooks, Sage Peachtree, Microsoft Dynamics, Sage ERP Accpac, etc.

All of these products include General Ledger, AR, AP, Payroll, Inventory, and most of the functions needed by small and medium sized businesses. While these products were built to solve the horizontal needs of clients by providing basic features common to all businesses, most do not provide the vertical, industry-specific customizations needed by nearly every client.

The new crop of products and technologies, nearly all of which are cloud-based applications, are “chunkifying” those large systems into specific business processes to provide more specific functionality and verticalization. This is a double-edged sword. On the one hand it’s great because we can now find the best match for each business process for each client, but on the other hand, we now have to worry more about how each of the chunks will fit together into a unified accounting system.

Even with these new challenges, chunkification is compelling for accountants, clients and especially for software developers. With such broad adoption of the cloud and mobile devices, developers can now focus on deep functionality and integration that customers demand. And by focusing on smaller chunks, they can develop more profitable business models that allow them to continually improve, update, and customize their solutions to meet the evolving demands of the market. Clients gain incredible benefits from this chunkification because they can pick the best match for individual parts of their accounting system instead of having to compromise with the warts in some areas of whichever product they choose.

Some great examples of Chunkfication are:

Zero Entry

For several years now, we’ve been using systems whereby customers and vendors can enter accounting data for us when they place orders on our web stores, or when they send us electronic invoices. Compared with our old world of faxes and paper documents (both sales orders and vendor invoices) in which data is manually entered by the bookkeeper, this is a significant leap ahead for efficiency, accuracy, and reduction in the cost of bookkeeping. This is the trend that is at the core of what I mean by “zero entry.”

The key to zero entry is that it moves us away from data entry and towards connecting business processes with the accounting system via software connections and data flows. We’ll realize the goal of zero data entry by connecting customer-entered data, vendor-entered data, employee-entered data and automated recurring entries that free the “bookkeeper” from entering data. Although we’ll never actually reach zero entry, the dramatic reduction of data entry from this trend is compelling, and revolutionary.

Several new products as well as new features within existing products are using this zero entry concept. Some examples are:

  • Xero (www.xero.com) – Online Accounting
  • Mint (www.mint.com) – Online Personal Finance
  • Downloadable Credit Card Transactions and Payments within QuickBooks
  • Bill.com’s ZEN (www.bill.com)  – electronic vendor invoices automatically populate into A/P
  • Copanion (www.copanion.com) – Tax document automation that scans and populates tax forms

Collaborative Accounting Services

Accounting Professionals also must focus on how to collaborate with and serve clients in ways that were simply impossible just a few years ago.

In this new world, cloud computing provides the perfect platform for both accountants and clients to work collaboratively on the same data at the same time from anywhere in the world. By centralizing the client’s data in the cloud, surrounded by robust security measures (both physical and network security), we can provide clients with the same features and capabilities they used to get from their premise-based systems, but in addition, we can work collaboratively with clients and manage their business information.

Examples of products/services:

  • QuickBooks Hosting – Several hosting companies provide QuickBooks hosting to allow accountants and clients to access the same, live data anytime, anywhere.
  • Cloud accounting products like Intacct, QuickBooks Online, Xero, Wave, and Outright.
  • Bill.com allows accountants to provide bill-paying and/or accounts receivable management services.
  • Online Payroll services such as QuickBooks Online Payroll, Surepayroll, and Payroll Relief all provide online payroll that allow accountants to prepare and manage payroll for clients.

Mobile

Mobile devices have become nearly ubiquitous among business owners and they allow both accountants and clients to access data from anywhere. This is an area that is expanding rapidly.

A few examples are:

The Payoff for You and Your Clients – Lego Mastery

Although the process of getting from today’s world to this new, cloud-based, collaborative world may be disruptive to your practice and to your existing clients, in the end the payoffs will be huge.

The key payoff is that by focusing less on teaching clients to enter data, and more on helping them implement zero data entry systems, everyone becomes more efficient. Your clients can focus more on growing and managing their business and you can move up the value chain and provide high-value business consulting services including business analytics, real-time dashboards, and management consulting services.

Think about what it takes to become a “Lego Master.” These masters can quickly identify the right Lego pieces from thousands of shapes, sizes, colors, and textures, and assemble them using the right connections in order to create the most complex and interesting structures. These skills are a perfect analogy for what we must develop to succeed with clients in the new world of cloud-based, chunkified accounting software. By combining the trends of chunkification and zero entry, the role of the bookkeeper will change in dramatic ways. I believe the bookkeeper role will change from being the expert on how to enter transactions efficiently to how to manage transactions and other “data flows” between “chunks” of the system.

We will still use all the knowledge and experience we acquired as accountants and bookkeepers, but now we’ll apply that knowledge, combined with expertise in various software chunks, to connect and integrate data for each client to create a customized, efficient, accounting system. Very much like fitting together different Lego parts into a complete Lego masterpiece.

Connecting the Pieces

The new world will demand that we all learn how to connect pieces, hence the name for this column. In future articles, I’ll bring specific examples and tips for success in helping clients build “connected” systems.

Please add your thoughts/comments below on how these concepts are driving your firm, your clients, and your successes or challenges with these new methods.

 

 

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