The Quest for the Right Accounting System

The Landscape

As you may have heard me talk about many times, one of the biggest battles out there is the competition between QuickBooks Online and Xero. Xero stormed onto the US scene in early 2012 with a product built for the cloud that was stable, beautiful, and already a market leader in other parts of the world. And let’s face it, they forced Intuit to step up their game lest Intuit be trampled to death in accountants’ desire to get to anything close to resembling a decent cloud accounting system.

Here we are four and a half years later, and the contest is far from over. Xero continues to gain traction in the US and has gone from virtual anonymity to being “the” competitor to QuickBooks Online.

I’d say it’s fairly common knowledge that QuickBooks Online started with a pretty crappy product. When Xero came along, Intuit suddenly threw tons of resources into it and began adding “me too” features into their product (i.e., Xero has bank rules?  Me too! Xero can attach files to transactions? Me too!). The end result is that the race between QuickBooks Online and Xero continues to be neck and neck.

Being that we’ve been a Xero partner from pretty much the get-go, this has been really fun to watch.

The Accountants

It’s been equally interesting watching the development of the accounting community as accountants have been discovering Xero over the past several years. Over time, I’ve had discussions with accountants who had never even heard of Xero (2012) to people who talked about trying Xero (2014) to people who have embraced Xero (2016).

When I spoke at Xerocon in San Francisco last month, I could not believe all of the prominent trainers who were historically tied to QuickBooks but whom I now saw walking the conference halls… or even teaching the group sessions.

The Missing Shift

I’m glad that people are open to change and are trying out new things.

However, I’m seeing a trend in the community as people are testing and choosing the software they are using. In an effort to provide clients with the best possible service, accountants are straddling the fence by offering services using both systems.

Specifically, I’m reading and hearing comments that go something like this:

"Not all businesses are the same, so I don’t want to force my clients into only one type of software. I want to choose the solution that’s best for *them.*  
"I feel like I need to be familiar with *all* types of software so I can best advise my clients on the optimal solution for their businesses."

Now, this all sounds well and good, but in my opinion, technology has shifted, and their thinking hasn’t yet shifted with it. They are applying 1990s business practices to today’s technology, and there’s a sizeable gap here that they’re missing.

Now, keep in mind that this isn’t about pushing an agenda. I think it’s fair to say that there are at least as many die-hard fans of QuickBooks Online as there are die-hard fans of Xero. Every firm who has decided to become 100% Xero or 100% QuickBooks Online can give you reasonable explanations as to why they have made their choice, and I have lots of friends in both camps (although, in my opinion, the Xero-only ones tend to be smarter, funnier, and better looking. ;) Just kidding, of course).

No, the problem with offering both systems has to do with something completely different… utter lack of efficiency and depth of expertise in an API economy.

Today’s Economy Is Not Yesterday’s Economy

Fifteen to twenty years ago, there were basically two accounting software systems to choose from for any small business… Peachtree (Sage) and QuickBooks. Maybe there were a few others that I’m not remembering, but that’s not really relevant to my point. These were pretty much the main ones for do-it-yourselfers and small companies.

If you were looking to hang out your accounting shingle, you expanded your opportunities by being well-versed in all desktop systems because you didn’t know which system a potential client might be using. And there were only a few of them out there, for Pete’s sake. It wasn’t a huge time investment to learn new systems.

Fast forward to today’s new API economy.

Accounting systems are no longer limited to all-in-one desktop software that upgrades annually. Instead, today’s accounting systems are complex building blocks of a whole variety of tools.  Cloud accountants everywhere are Lego-blocking apps like crazy to create robust and effective systems that are vastly superior to standalone desktop software of the past.

Ecosystem.PNG

Counter-intuitively, I would argue that the accounting industry is no longer about the software at all. It’s about the client.

Yes, it should’ve always been about the client, but that’s not the point. In the past, everyone used the same thing. It was easy to be all things to all people. Just know the software they’re running, and adapt yourself to fit the client. Done.

But in today’s economy, a company could engage ten different accountants who might create ten different systems to achieve the same end result (i.e., QBO + Time Tracker + QuickBooks Payroll vs. Xero + Gusto + TSheets (and so on)).  And even more surprisingly, all 100 solutions might work sufficiently well for the client’s needs.  (Although, I would argue that the most effective solutions would show at least some overlap by using the most common Best of Breed add-ons.  But I digress.)

Accountants and small businesses alike are on app overload. Go check out the QBO and Xero app marketplaces. There are literally 500+ apps that connect to each of them. Even if you wanted to, there is no way on earth that you could become an expert on every marketplace app in addition to becoming an expert on all accounting system platforms like Xero or QuickBooks Online. That doesn’t even include the fact that most of these cloud tools are adapting and improving every few weeks. Even if you could learn every tool, the features would change by the time you got back around to using them again.

Specialization

Small businesses are looking for people who understand their business. Chances are, they have already started on their own app search and came to you because they got swallowed up in an overwhelming sea of options and complexity. You’re the professional, so you should be able to help.

Accountants with a 1990s mentality are still trying to be all things to all people.  But you cannot  be all things to all people and be effective in an API economy.

Every new client that you try to serve will send you on a quest to find the “perfect app” to fix their problem. You are dedicated, committed, and want to help your customers, so you accept the challenge and go on a search.  Today it’s an attorney, tomorrow it’s a non-profit, and the day after that, it’s an ecommerce business.

Oh, hell, no.

Every new client brings a new set of tools, and before you know it, you spend most of your time researching and testing apps and little of your precious time providing the real value that your clients want… advice.

You will be swallowed up by the avalanche of approximately one to two gazillion apps, your firm will be insanely inefficient, cross-training will be a nightmare, and you will be thoroughly unable to properly serve your clients.

In an API economy, you must specialize, and this is why.

When you serve one particular niche, that group of clients will have very similar needs. That means that you can build a standard collection of tools that you feel best serves your market, and that collection becomes manageable. You can build standard, effective, repeatable processes. You can easily train and cross-train your employees. You can teach your clients and adapt to change.  

But most importantly, you can become an expert. You will live and breathe the successes and challenges of your clients, and you will see what works for them and what doesn’t. And when you are an expert, you become increasingly valuable to the very same businesses you were trying to attract in the first place.

So when accountants say this:

"Not all businesses are the same, so I don’t want to force my clients into only one type of software. I want to choose the solution that’s best for *them.*"

I would counter by saying that by choosing a niche, you can choose the best tools for all of your clients at once. You’re not forcing them into one type of software. Instead, you are sharing your expertise about the best solutions that meet the needs of all the clients you serve.

Everyone wins.