I read an interesting article penned by Xero founder and CEO Rod Drury in the February/March 2017 edition of the Acuity magazine, which discussed how Xero have unashamedly embraced technology to extract efficiencies and free up accountant’s time – read the full article here.
As Rod states, “There’s never been more opportunity. It’s the golden age of services business”. How Xero have embraced technology and adopted a thought-leader position has many obvious parallels with other services industries, and particularly resonated with me given our similar approach in the share registry industry.
A key aspect of Xero’s method has been to leverage their cloud-based technology to eliminate many of the manual, low-value accounting tasks, which frees up their users to be devoting their time and resources on high-value work.
“A Xero survey released in November 2016 found 83 per cent of chartered accountants believe understanding technology is as important to their job as understanding accountancy. It also found 71 per cent think knowledge of automation in the financial sector will be crucial to their success over the next five years.”
Drury explains that leveraging the computing power available via Amazon’s web services platform has allowed Xero to interrogate ever-larger amounts of data, eliminate mistakes from otherwise manual processes (I remember fondly my own days of using T accounts when I first entered the workforce!), embed controls to deliver higher integrity and in turn provide users real-time insights and access to their data. Drury sees this leading to a brave new world for accountant users, allowing them to focus on quality control and certification of the automated processes that Xero provides as opposed to manually putting accounts together – a shift to higher-value, more insightful use of the accountant’s time.
Interestingly, he sees that this can potentially lead to giving stakeholders such as shareholders read-only access to the company’s data. The transparency that is on offer Drury sees as building trust and removing surprises.
“If investors can log in and see what is going on, to see expenses are being managed, they can see what your cash flow is doing, what your deals are doing, if people are flying business class around the world… all that sort of stuff is open. That makes it much easier for investors to trust you.”
“And if things are going wrong, they can say let’s look at changing strategies before the money runs out. So there are no surprises.”
Drury also addresses how cloud systems are more secure than desktop systems, and the need for balance between private and public interests in terms of the sharing of data and privacy. In our own industry, privacy of data is paramount and technology allows us to be far more responsive and secure in dealings with our clients, stakeholders and regulators – similar benefits that Xero’s platform provides over the traditional use of spreadsheets.
From my perspective, the most poignant statement he makes is in his conclusion, and this is where I have borrowed the title to this blog.
“Some businesses are happy to keep doing their own thing but technology is changing the world. If they won’t change, then their businesses will be worth less when they go to get out. If you are an accountant and you don’t have a cloud strategy then you’d better hurry up. Young firms will go in, market and grab those customers.”
“There is no doubt end customers want this. When they see it they want to work this way. This stuff is way past the tipping point.”
His statement can be overlaid across every service industry. The cloud is here to stay and innovative businesses such as Xero will continue to differentiate from their “old world” competitors and leverage technology to deliver users with ever-increasing and sustainable tangible benefits.
Author: Jon Cooper, Senior Executive Client Services, Automic.