Latest / The Accounting Podcast / Two future career paths for accountants, how billable hours drive away Millennials, and more
Transcript
- David Leary: Nobody told her about the billable hour. That would've been great, if that was the question. Did they ask the Miss America pageants these really in-depth questions? It could be, "What is your opinion of the billable hour?" Blake Oliver: Welcome to the Cloud Accounting Podcast, a show for accountants, and bookkeepers using cloud technology to make their jobs more strategic, and impactful. I'm Blake Oliver-. David Leary: And I'm David Leary. Blake Oliver: So, Dave, what's new in the world of cloud accounting this week? David Leary: I think an article came out about five minutes ago. This is [00:00:30] on Insightful Accountant. It's talking a little about QuickBooks, but I think it's a little bit bigger of a story here. It's about how the new bank feeds are gonna use tokens. A lot of you have used apps with your cloud-accounting apps, or your accounting-software apps. You authorize the app. You would say, "Yes, Bill.com can read, and write my QuickBooks data, or my Xero data." You're actually granting them a token to do that. Well, just the opposite's gonna happen now, where your bank account ... If I have a bank account with [00:01:00] Chase, I'm going to grant Chase access ... I'm gonna grant QuickBooks access to my Chase bank account. Instead of giving Intuit my Chase username, and password and then, Intuit, every time they need to get the bank feeds, basically, is mimicking you going to the website, in a strange kind of way. It's scraping that off their site. It'll issue a token, so the connection will be more reliable; it'll be more long term. The banks are happy, because they're in a little bit more control. It's just higher security. Then, ultimately, [00:01:30] in the most token-based models, you can disconnect. I'm sure, somewhere on the Chase website, I could see all the stuff I've granted access to my bank account-. Blake Oliver: Rather than having to change your password, in order to make sure that everything's disconnected, if you get rid of an app, or something like that. David Leary: Exactly. It's usually more of a standard web model, a token-based model to connect. Blake Oliver: It's kinda crazy, actually, that the old way of doing it, like actually giving your username and password for your banking has been the [00:02:00] way that we have granted access to software to our bank feeds for so long. It's just so not secure. David Leary: Yeah, you're giving it to a big huge company, like Intuit, or Xero to get your bank-feed access, or there're some third-party providers that provide that. If you really go before services like that existed, accountants, and bookkeepers were just keeping it in a QuickBase, or they were keeping it written down in a folder. They were keeping their clients' usernames, and passwords, which was really on the crazy side. You're right, if you think about it, in the long, bigger picture, yeah. [00:02:30] Blake Oliver: I actually remember this being an issue with Hubdoc. I think that's still how they do it. Periodically, I will get alerts from Bank of America that somebody is logging into my bank account from Canada. It worried me, at first, and then, I realized what was happening, that they're flagging Hubdoc logging in. David Leary: Yeah, which is great you're being alerted of that, but the problem is it also ... How do you know, [00:03:00] that one time, it wasn't fraud? Blake Oliver: Right. Also, customers, clients of a firm that's using a solution like that have no clue what's going on, and that worries them a lot. They get scared, and then, they change the password, and then nothing works anymore. David Leary: This'll probably roll out to the bigger banks, first, that are big enough to have their own APIs, but then, when you talk about the mid-sized banks, and even the credit unions, and some of the regionals, a lot of those use tech stacks [00:03:30] they purchased from somebody else. Once that tech stack ... All the sudden, outta nowhere, 2,000 regionals all have the same technology stack, cuz they're using somebody else's software under the covers. You're probably gonna see this, first, with the Chases, the Bank of Americas, the Wells Fargos - the big players - first. Ultimately, the banks - I think we've talked about this before - they wanna be in the API business. They wanna provide API [crosstalk] Blake Oliver: They should be. It's crazy that they don't want access to more data. Cool. Well, hey, speaking of ... Since we started with software news, feature [00:04:00] releases, and whatnot, I've got one here. Sage Intacct has revealed that they acquired Budgeta - I think that's how you say it - back in, I think it was 2017, and they didn't make an announcement at the time, but now, they are announcing that they did, in fact, acquire Budgeta, which is a budgeting and planning application. They have released a version that they are calling Sage Intacct Budgeting and Planning; very similar [00:04:30] to the TSheets getting acquired by Intuit, and Hubdoc getting acquired by Xero. This is now Budgeta getting acquired by Sage Intacct, this time, in the mid-market. I think they're still leaving Budgeta as a standalone application, but now, you have a deeper integration with Intacct. If you're an Intacct user, you can more easily go, and implement a budgeting and planning tool. David Leary: That makes sense. It kinda goes to that ... After you went to Intacct's conference ... You [00:05:00] came back, and you said that they're kind of adding more consumer-facing features, if that's the right word, in it, right? Blake Oliver: Yeah. David Leary: I imagine this is going to lead to dashboards, and graphs inside their product ... Blake Oliver: In Intacct, they do have dashboards. That's one of the big selling points of going to their solution, as you can ... You don't have to have a separate dashboard solution; it's all in there, totally customizable, but they did not have the budgeting/planning side of it. It's interesting. I'm [00:05:30] curious what this means, say, for competitors like Adaptive Insights, Host Analytics. I imagine that it'll be very similar to these other acquisitions that have happened, where nobody tries to muscle out the non-owned add-ons, or the third-party add-ons. It just doesn't make sense. Just another example of how ERP's cloud-accounting solutions are trying to broaden the services that they offer, or the features that they have, while still allowing [00:06:00] for integrations. You get to have your cake, you get to eat it, too. You can use the built-in budgeting and planning on Intacct, now, or you can go get some other solution that maybe fits your needs better. David Leary: As long as everybody keeps their APIs open, the future will continue down that path, absolutely. Blake Oliver: Yeah. Hey, speaking of API, speaking of wars, the trade war is going on, still - tariffs, and all that - with China. I just heard something about it on the news, [00:06:30] but it didn't have anything to do with cloud accounting, so I wasn't really paying that attention. Then, I also recently saw an article in The Wall Street Journal about how tariffs could actually increase costs on cloud computing. I didn't really think that was possible, because cloud computing ... Hey, it's in the cloud. We're talking about data. It doesn't ... These are not physical things that we have to purchase, right? I figured tariffs are limited to cars, and cell phones, and whatnot, but it turns out that part of [00:07:00] the Trump Administration's proposed tariffs on $200 billion of Chinese goods includes levies of up to 25 percent on routers, switches, and servers that will raise prices for cloud services in the U.S. That's according to Wall Street Journal. What is the actual cost of this? Well, if there were a 10-percent levy on all of these imports, all these hardware devices that we use for cloud computing, in our data centers, that could slow U.S. economic output by 163 billion, over the next 10 years. A 25-percent levy would slow [00:07:30] output by $332 billion. David Leary: Got it. It's not the actual cloud accounting, the servers ... The companies that provide cloud-accounting services aren't really involved in the tariffs. It's the hardware that all this infrastructure, everything's built on [crosstalk]. Blake Oliver: Yeah, the hardware that Amazon buys for its Amazon Web Services data centers, or that Salesforce buys, or Oracle, or Microsoft. Basically, if that [00:08:00] substantially increases the cost to provide cloud-computing services on the back end, theoretically, that will get passed through to businesses, and then, ultimately, to those businesses - either business customers, or consumer/end customers - at some point. I guess it just depends on how much the cloud-computing vendors can absorb, or if they'll pass it on. David Leary: Yeah, it'll be interesting. We're obviously focused on small businesses, and accounting, and [00:08:30] accounting technology here, but it'll really be interesting ... All the free services, all the consumer stuff that's just free out there; advertising-based models ... Are advertisers gonna have to pay more, or some of these free services just ... Maybe, at X, they were able to offer these services for free, and that this new price, X + 5, they just can't. It'll be interesting to see the impact. You could see prices go up, possibly, and small businesses could afford to pay $2.00 more a month for a SaaS app, or something like that, but, it's these free apps that will be interesting. Can [00:09:00] something go from free to paid, because it just costs more to provide that service? Blake Oliver: Yeah, or are advertisers gonna have to pay more on Facebook, that sorta thing? That affects small businesses, because, if you're an accounting firm, or a small business, you should be advertising on social media. It's a no-brainer, at this point. David Leary: We'll see, we'll see. We'll have to keep an eye on that, and I think everything ... Who knows where things are headed, come November? Midterms are right around the corner. Blake Oliver: That's true. David Leary: I have [00:09:30] another one, kind of swinging all the way back to billable hours, again. Blake Oliver: My favorite topic. Love the billable hour. David Leary: Let's try this article out for ya, "AI and Machine Learning Could Empower Your Accounting Career Path." This is an article from Levi Morehouse. Levi has an accounting firm, Ceterus. It's very, very, very automation driven. Everything is high-volume clients, all automation. His article really talks about there's two [00:10:00] paths. It's not the only path. His firm's like that, and there's a path for people that are gonna automate everything, and take on large numbers, high volume of clients. There's still another path, as we go forward, and that's gonna be that advising-tech path. That's gonna be more similar to like what Jason Blumer preaches with Thriveal, or I guess Chris Farmand's really doing that with Small Batch Standard, which he's only focusing on breweries, and he's nailing it, with just 40 [00:10:30] breweries; just unbelievable. There's kinda two paths in that. Here's a good paragraph, or quote in here. Let me read that out-. Blake Oliver: Oh, I've got it right here. David Leary: You got it? Okay. Blake Oliver: I love this quote. Levi says, "Accountants can either become communicators of critical business data, and information, empowered to advise key stakeholders on business initiatives, based on keen insight, or they can become experts in redesigning traditional industry processes to be more efficient, by leveraging modern technology." Like you said, there are two [00:11:00] paths to the future for accountants. You can become that adviser/business coach/communicator of financial information/storyteller is how I like to think of it, or you can become a process/automation/technology person, and you focus on getting rid of all of that data entry, and stuff like ... That's basically what I was doing a lot of at my firm. It's great, cuz there's something for everybody. David Leary: Yeah, except for, I think, the third [00:11:30] path, which is kinda flap around in the middle, between those two paths ... It's the danger zone. You're gonna have, or have to have a super-highly-efficient firm that takes on thousands of clients, or a firm that is a super-super-niche, and you're super-super-expert- Blake Oliver: Right, super-hands-on. David Leary: -and you have to do amazing advising, and you're super-hands-on, exactly. If you're kind of in the middle, it's tough. It's gonna be really, really tough. Blake Oliver: Right. Ideally, your firm, if you're big enough, you do both. You have people in the firm [00:12:00] who are experts at IT, and process automation, and then, you also have people in the firm, who are really good with people, and you let them do what they're good at. Don't make them do everything. David Leary: I think I've spoke to some people that have that, but they have those two parts of their firms very, very separated; almost like they run separate entities, because they just ... You get a lot of conflict [crosstalk]. Blake Oliver: -need to work together. David Leary: You have to work together, but it's really tough, because it's a tradeoff. You [00:12:30] can't give that level of service to 1,000 clients that you can if you only have 40. For the price, you just can't, because if you're taking that model of 1,000 clients, and you're only charging them 150 a month, or whatever, you're kind of doing that super-efficient technology model, you can't provide thousands of dollars of advising [crosstalk] this point. That's where it's a Yin and a Yang, I think, on ... You can't be stuck in the middle. You've gotta start picking a path you wanna take your firm. Blake Oliver: Speaking of career [00:13:00] paths, and the future of the profession, and whatnot, I've got an article ... It's another article from The Wall Street Journal about Amazon's Jeff Bezos. He was at a forum, a panel discussion of some sort, and he gave some advice, or he talked a little bit about his methods; how he works. The thing I love that he said is that he never tries to schedule a meeting before 10:00 a.m., because he likes to have his mornings cleared to think, [00:13:30] and to get ready for the day, and all that stuff, which I really like, because I have trouble with early-morning meetings. As you know, David, I was late getting into the office, so we could record this podcast. David Leary: Traffic. LA traffic, right? Blake Oliver: Yeah, I can blame LA traffic, but, honestly, it's me. I like to use my morning to read, to catch up on the news, to get ready for the day. I'm gonna take this advice, and we're gonna move all of our podcast recordings to after 10:00 a.m., Pacific time, if you are okay with that. David Leary: That works. Blake Oliver: The other [00:14:00] thing that Bezos says is that he doesn't try to do a lot. Every day, he tries to make a small number of high-quality decisions, daily. If he makes three good decisions a day, he's happy with what he's done. You think about that, and this is completely the opposite of how a lot of us operate, and how we learned to operate in accounting, which is get up at 6:00 a.m., and work until [00:14:30] God knows when. Work constantly; put out as much work as you can, and do a lot, every single day. If you wanna be successful, you ... I think Warren Buffett's another guy who's like this. He doesn't try to do a lot, and he saves a lot of time for just reading, and learning, and educating himself. I'm convinced that we, as accountants, have to figure out how to do less, but do more, at the same time. David Leary: Yeah, that's that treadmill, right? You [00:15:00] get up in the morning, you're sitting there, checking your email, and next thing you know, 14 hours later, the day's over, and you're like, "Oh, I didn't do anything today." Right. Blake Oliver: Yeah, you did a lot, but you didn't do the things that were really important, the priorities. You didn't work on your firm's marketing, or you didn't build in some automation to a process that you do every single day, and if you just automated it, you'd save yourself 5 minutes a day, 10 minutes a day, right? David Leary: Yep, and it's that adage of making your bed when you wake up, so that way, at least, at [00:15:30] the end of the day, you're like, "I accomplished one thing. That got done at least ..." because-. Blake Oliver: I feel like those firms, like Jason Blumer's, where they focus on a small number of high-quality clients, you can have that lifestyle. You can start your meetings at 10:00 a.m., because it's not like you have a million people pounding down your door. David Leary: Well, that, but I think it's carving out your time, and controlling your calendar. I think it's a bigger personal-development issue; less how you run your firm. If you can't do it to [00:16:00] yourself, first, there's no way you're gonna really implement this in your firm. Your own time is valuable, and how do you protect that? I've struggled this, with myself, really bad, but I totally understand. Blake Oliver: We're still talking about CPA firms, or we started talking about them. I've got another article about billable hours, if you're up for that. David Leary: Jump in. Blake Oliver: This is called "Focus on Billable Hours Drives Millennials Away." It's by Garrett Wagner. There's been a lot of talk about billable hours, and why that's a bad idea. Ron [00:16:30] Baker's the prophet, and there are many of us who are followers of him. What I like about Garret's article is that he takes a different perspective on it, and he says that the reason that you need to get away from billable hours, or at least another great reason, is that millennials don't wanna work for you, if you're evaluating them based on billable hours. As it gets harder, and harder to recruit talent, and find good CPAs, we're gonna need to be able to recruit them, and if they don't wanna [00:17:00] work with us, because we force them to have a timesheet, or record billable hours, then it's gonna become a big problem. David Leary: Yeah, well, especially if a lot of millennials are coming out, and if they've been using cloud software; maybe they're familiar with a little bit of automation tools, and their Gmail ... They've been using some things to automate their life. Really, that technology, and being more efficient makes them ... I can see where they're conflicted, like, "What? You're gonna pay ... You want me to bill X amount of hours, but if I just do the job in five [00:17:30] minutes, because I use these five or six tools, instead, to make my job more efficiently ..." I'm sure it's hard for them to reconcile. He's right, people are gonna ... You don't wanna be judged like that. You wanna be judged on how efficient- how fast you got things done- Blake Oliver: Right. Just think, millennials, we are digital natives, a lot of us. We, at least, experienced the wonder of collaboration tools in college. A lot of us got Google Apps in college. We understand the value of not having to [00:18:00] email stuff back and forth, and whatnot, just to give a small example. If I automate a process, as a millennial, in a firm, I cut my billable hours, and now, I don't make my goal, and I don't get my bonus. I think that is ridiculous. I just made the client happy. I made everything faster, and better, and yet, the firm's incentive structure is completely against that. David Leary: Yeah, it's really how they measure value. Blake Oliver: Yep. David Leary: If you're still measuring on the billable hour, and [00:18:30] that's how you're measuring the value of your staff, you're just not gonna keep millennials on your team. They're gonna go to more forward-thinking firms, ultimately. Blake Oliver: Yeah, or they're gonna leave public accounting; they're gonna go to an industry, where they don't have to fill out a time sheet. I think that the big firms, in particular ... Or they'll go to small firms, where they don't get evaluated based on the billable hour, so much. I think the big accounting firms are gonna have a real problem, if they don't make the switch. They're gonna have a huge talent issue, and I don't know how they're gonna recruit [00:19:00] new partners. I mean, if you're smart ... The really smart ones ... If you're really smart, why would you wanna be part of that culture, when there's so many good alternatives now? David Leary: Maybe, you wanna go ... This is our next article. Maybe they go to work for PWC. I'm smart, but I want extra training. PWC announced they are going to train, in the next ... It's like a digital skills program for the next two years. They're gonna train 1,000 employees on technology; everything from drones to blockchain. The [00:19:30] interesting thing about this article was the 46,000 PWC employees ... 3,500 employees applied, but they only have spots for 1,000 in this program. That's a big funnel drop, down to only 1,000 employees get to do this. It also ties to the article last week, as far as if somebody has blockchain on the resume, they're X percentage more likely to get an interview into that next round. Obviously, this is in demand, so this is like ... Okay, maybe you still judge your employees by billable hour, but maybe, if you give them extra training [00:20:00] on some of these new technologies, maybe they'll stick around. Blake Oliver: Of course, we don't have a lot of details as to what this program is, but we do know the time commitment is pretty intense. It's 10 hours per week, for 18 to 24 months. PWC is not skimping on, at least, the hours for this program. I do wonder, if you participate, if those hours are gonna come out of your pocket, or if you're gonna have [crosstalk] David Leary: -hours come from? Blake Oliver: Yeah. Am I gonna have to work 60 [00:20:30] hours, instead of 50, or 70, instead of 60, in order to be able to do this program? There's a quote in here that I really liked, and I'm gonna try to find it. David Leary: While you do that, there's a graph in there that's really interesting. Microsoft Excel has been downgraded to the least important skill set for new hires. Blake Oliver: Hold on, hold on. I hate this stat, cuz this always comes out. All the FP&A tools like to say that Excel is not valuable anymore, or, they try to imply that it's been downgraded. Now, this is true. CFOs are not saying [00:21:00] that Excel skills are as important as being adaptable to new technologies, according to this chart, and of course, it came from Adaptive Insights, but, if you survey CFOs on if Excel skills are important, it's not like that's changed. Excel skills are still just as important as they ever were, it's just not what they are primarily looking for, anymore. David Leary: I think it's table-staged. You just have to have Excel skills, but it'd be nice if you could also collaborate with others and communicate well. It'd be nice if you were able to easily [00:21:30] adopt other new technologies. I think it's that you have to have some base level of Excel, just to get your foot in the door, now. Blake Oliver: Oh, and here's a quote that I liked: "As long as we're teaching people the right skills, it'll keep them agile. Gone are the days of being done learning, after getting your bachelor's." David Leary: Has there ever been a time, where that was the case? You could just stop learning? Blake Oliver: I feel like, in the accounting profession, other than your CPE, on tax, or audit regulations, or whatnot, yeah, kinda. You could really [00:22:00] easily just not learn new stuff, as long as you just kept up with those professional CP requirements. No, not possible, anymore. Tech is still such a tiny, tiny part of the accounting curriculum, I can't believe it. It's just absurd. It was one elective, when I was going through school, and I'm a career changer, so that wasn't that long ago. One elective on QuickBooks. David Leary: Wow. You have to do it yourself, or at least PWC's making an effort to bring it to everybody; well, to [00:22:30] a small percentage of their employees, anyways. Blake Oliver: That's all I've got this week [crosstalk] David Leary: I think I saw an article ... It may have been Miss America just happened, or something, and I think Miss Missouri was an accountant. Blake Oliver: Oh, yeah, I did hear about this. I saw this on [crosstalk] David Leary: Other than that, I didn't see ... I think she didn't win, so I don't know if it's ... If she woulda won, it would've been much bigger news, I think. We would've lead with that story, but I think I saw that, so it's ... Hey, good job. Blake Oliver: She wants to continue her education, and become a CPA, I believe, so that's [00:23:00] great. David Leary: Nobody told her about the billable hour. That would've been great if that was the question. Did they ask the Miss America pageants these really in-depth questions? It could be, "What is your opinion of the billable hour?" That would've been ... Blake Oliver: Well, I hope she would say that she thinks it's crap, because it's not like they evaluate the Miss America contestants on how many hours they put into their preparation. David Leary: No. Blake Oliver: Right? All they care about is the results. David Leary: That's true, that's true, that's true. Good point. On that, I think- Blake Oliver: Maybe firms should be more like Miss America [00:23:30] Pageants. David Leary: That's a whole blog post in there. All right, Blake, we have a whole week to go through. Maybe we'll see some new news, new, exciting stuff, and we'll be back here on Friday. Blake Oliver: Sounds great, David. This was a pleasure. Where should people reach you if they want to say hi, send you a story? David Leary: Twitter's gonna be easiest: @DavidLeary. Also, on LinkedIn. You can just find me on LinkedIn: David Leary. Same handle. Blake Oliver: I am @BlakeTOliver on Twitter, and you can also connect with me on LinkedIn. David Leary: Awesome. Have a good one, and we'll see everybody next week. Blake Oliver: See ya.