Dealing with Digital Disruption - Nick Whiteside & Daniel Wyner

DEALING WITHDIGITAL DISRUPTION

Daniel Wyner & Nick WhitesideHead of Strategy, Mergers & Acquisitions

Key Business Development Manager Asia Pacific

AgendaSESSION 1 Presentation of Market Research Phil Hassey, CEO, capioIT Market Research

SESSION 2 What are the top challenges for your accounting practicesDaniel Wyner, Head of Strategy, Mergers & Acquisitions Asia Pacific

BREAK

SESSION 3 Ways to deal with digital disruptionNick Whiteside, Key Business Development Manager

Q&A

WHAT IS DIGITAL DISRUPTION?

Digital Disruption

Changes enabled by digital technologies that occur at a pace and magnitude that disrupt established ways of value creation, social interactions, doing business and more generally our thinking.

- The University of Sydney

Daily distribution of Australian screen minutes

TV; 125

PC; 102

Tab; 37

Phone; 132

Source: Milward Brown AdReaction, 2014

Phil Hassey CEO

CapioIT Market Research

What are the 3 key items that impact you & your

firm?

October, 2014

Phil Hassey CEO capioIT

Can the Accounting Profession keep up with clients and the cloud

Capture Understand Collaborate Innovate

Key Takeaways and Themes

© 2014 capioIT www.capioit.com15


______________________________________________________________________________________________________________________________

• Embrace, not fear, the cloud.

• Current business transformation is more than the cloud. Emerging digital experiences will define you and your clients business

• 69% of accountants surveyed use a cloud computing platform for accounting software

• The overall impact of cloud is quantifiably beneficial for the accounting profession. Your SME clients are net positive, but need more convincing

Methodology – Quantitative and Qualitative



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Quantitative Methodology • 200 Australia wide telephone interviews of SME organisations• 300 Australia wide telephone interviews of Small to Mid Sized

Accounting/Tax firms

Qualitative Methodology • 12 in-depth or one-to-one interviews of SME organisation employees• 12 in-depth or one-to-one interviews of Small to Mid Sized Accounting/Tax

firm employees

Methodology - Secondary Research



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Secondary Research • As part of the process, capioIT undertook secondary research and use

internal and externally published sources of information to help support the overall report.

• The sources include published and available data from organisations such as the Australian Bureau of Statistics, NBN Co, and other agencies.

• capioIT also had internal information that is relevant to leverage

Quantifying Cloud Usage for Accountants



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69% of accounting firms in Australia currently use cloud computing

(SaaS) based accounting applications

(sample size = 300 Accountants in Australia)

Quantifying Cloud Usage for Accountants



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• Australian accountants use an average of 1.9 cloud accounting apps

• 59% of Accountants operating cloud based software, use 2 or more cloud apps

• Xero and MYOB dominate the market.

• 98% of accountants using cloud use at least one of these brands.

• 49% of accountants using two cloud apps use both of these brands


Regional vs Urban Accountants



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• 26% of accountants were located in regional centres, the remaining 74% in the state and territory capitals

• 60% of accounting firms in regional areas are using cloud based accounting applications with their clients

• 72% of accounting firms in urban areas are using cloud based accounting applications with their clients

• Overall whilst uptake in regional areas is lower than urban, there is limited defining behavioural patterns differentiating the two locations

• This reinforces the universal client driven demands to go to the cloud(sample size = 300 Accountants in Australia)

Is There an Accounting Age Divide?



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Average age of an accountant using cloud accounting

applications = 36 75% of accountants under the age of 50 are currently using cloud accounting packages

Average age of an accountant NOT using cloud accounting

applications = 40Just 45% of accountants over the age of 50 are using cloud

accounting packages


Baby Boomers vs Millennials



______________________________________________________________________________________________________________________________ • This issue is clearly critical to how you communicate with your clients and co-

workers older and younger• You cannot use a one size fits all approach across the age divide. Younger

accountants understand the technology and the benefits • A critical qualitative issue is the way in which the cloud is sold to Millennials. • “Everyone is trying to sell cloud to our parents, not to us” • “Don’t sell us the cloud - Tell us why I should use MYOB not Xero”• “Help us sell to our clients, and create a cloud ecosystem for the SME”


Depth of Impact of Cloud Computing on Services provided to SME’s



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Will Services Provided to SME’s Be Impacted by the Shift to the Cloud

Consider it a significant negative impact

Consider it a slight negative impact

Neutral/No Opinion

Consider it a slight positive impact

Consider it a significant positive impact


Depth of the Impact of Cloud Computing on Services provided to SME’s



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Consid

er it a

sign

ifican

t neg

ative

impa

ct

Consid

er it a

sligh

t neg

ative

impa

ct

Neutra

l/No O

pinion

Consid

er it a

sligh

t pos

itive i

mpact

Consid

er it a

sign

ifican

t pos

itive i

mpact

0%

10%

20%

30%

40%

50%

Cloud UsersNon Cloud Users


Depth of Impact of Cloud Computing on Services provided to SME’s



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• On the scale of 1 (significant negative) to 5 (Significant Positive) • Users of cloud computing rated the impact of cloud on the

accounting profession as 4• Non-Users of cloud computing rated the impact of cloud on the

accounting profession as 3.5• A clear indication that the adoption of Cloud Computing is seen as

overwhelmingly positive • “The cloud is the most exciting “invention” for the accountant since the

abacus. It will make our job easier and allow us to add real value for our clients”

• “Cloud will find out poor bookkeepers, but for most it is a very positive part of the industry as it allows us to focus on supporting the client”

Which Accounting Business Processes Impacted by Cloud Computing – Remembering it is considered positive



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Don't Know

Business Mentoring and Executive Board Services

Corporate Financing, lending access and advisory

Personal Financial Planning

Technology strategy and enablement advisory

ASIC Reporting and Corporate Secretarial

Self Managed Super Fund Establishment and Compliance

Business Establishment and Structuring

Business Planning, Forecasting and Cashflow support

Business Advisory

Tax Planning

Financial Reporting and Taxation

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

No CloudCloud


Which Accounting Business Processes Are Impacted by Cloud Computing



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• Overwhelmingly the number one accounting process impacted by the cloud is “Financial Reporting and Taxation”. This was cited by over 40% of respondents.

• This is regardless of whether the respondent is a current cloud user or not. • Other key processes impacted include:

• Business Planning• Forecasting and Cash-flow support• Business Advisory• Tax Planning

• In general there is an alignment between cloud and non-cloud users in terms of their perception of impacts

Key drawbacks for Accounting firms when Using Cloud



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Security Concerns17%

Client Concerns15%

Downtime 15%

Being Tied to One Supplier13%

Lack Of Support11%

Data Location 11%

Loss of Client Integration 9%

Overall Cost 8%

Other1%


Key drawbacks for Accounting firms when Using Cloud



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• Whilst the accounting profession is very positive about the cloud, there is a range of drawbacks for use of the cloud

• Security Concerns were the number one drawback of cloud for 17% of respondents

• Client Concerns was ranked second. Qualitatively and anecdotally we also know that the client concern is largely security related.

• Data location is only an issue for 11% of organisations • Cost is a non-issue

Is Government Red Tape Reduction a Challenge? – Accountants say NO!!



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Is government concern over red tape a threat to Accountants?0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Consider it a signifi-cant negative impact


Neutral/No Opinion


Consider it a signif-icant positive im-pact


Future Cloud Investment



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• Current users of cloud computing are very confident that they will increased usage of cloud computing in their business

• 76.3% of current users are “very likely” to increase their expenditure on cloud computing

• A further 19.8% are “quite likely” to increase their expenditure on cloud computing

• Increased investment in cloud is anticipated across all age groups• “There is no way back for cloud computing. We are embracing it all the way”• “We are partnering with a firm who provides CRM SaaS support to enhance

customer outcomes”


SME Investment in the Cloud for Accounting Services



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Are you, or your Accountant using a Cloud Computing Based Accounting system for your Financi...0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Currently Use a Cloud Based System

Have Considered Using a Cloud Based System

Have Not Yet Considered Using a Cloud Based Sys-tem

(sample size = 200 SME’s in Australia)

SME Investment in the Cloud for Accounting Services



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• Currently 27% of SME organisations are using cloud based accounting services

• 60% of organisations have not yet tried to shift to the cloud.• This is a significant untapped opportunity• “We embraced the cloud a couple of years ago after our accountant

suggested it to us”• “The real benefit for us is the improved software. Cloud was secondary”• “We will likely go to the cloud at some stage as these are the firms who are

innovating. It is hard to avoid Xero, they must be doing something right”


Who Makes the Cloud Decision? – Not the Accountant



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Respondent Someone Within Organisation Accountant Third Party 0%

10%

20%

30%

40%

50%

60%

70%


Brand of Cloud Accounting Package Used



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MYOBXeroSaasuReckonCCHIntuit/QuikbooksOther


Key Drivers of Cloud Investment by SME’s



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Key Drivers of Cloud Investment Security 44.4%Functionality 42.6%Price 5.6%Pricing Flexibility 3.7%Scalability 1.9%Quality 1.9%Data Location 0.0%Frequency of Updates 0.0%None / don't know 0.0%

• Cloud investment for SME’s is all about focus on security and functionality

• Get this correct and your clients will thank you


Perception of the Security of the Cloud Platform



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0.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%

SME

Accountants Us-ing Cloud

Dr Google – Do you use it?



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Don’t be surprised if your clients do the same



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Consumer Data is transforming business experience



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What Facebook (and/or Google) Enterprise Will We Help Create



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If you don’t transform you will be SMAC’D by clients



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Digital Business

Engagement

Mobility

Cloud

Social Business

Analytics

What your Clients will demand from SMAC’D



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Cost Scale Hustle Secure Agility

A successful Accountant has to build a business around these ideas


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• Business Outcomes based opportunities

• Drive Business Agility • Transform Business and Technology

Engagement

SMAC’D

• Cloud based • Scalable/Cost removal• Cross Industry • Business Outcomes based

opportunities

Business Platforms




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Embrace, not fear, the cloud. Cloud and emerging digital

experiences will define you and your clients business

(

Contact Information



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capioIT is an advisory firm focused on helping organisations to understand emerging technology in emerging markets.

If you require further information, please contact Phil Hassey, CEO capioIT.

Phone: +61 (0) 422 231793Email: [email protected]: PHasseySkype: phil.hassey

www.capioIT.com

26 Aboud Ave, Kingsford, NSW 2032, Australia

mailto:[email protected]?subject=capioIT%20Capture%20Point

Daniel WynerHead of Strategy, Mergers & Acquisitions

Asia Pacific

48

What are the top 3 challenges that technological advances are creating for your accounting practices?

Three Emotions

http://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=wOKm1wDFym-tnM&tbnid=vFDDbjzEM6ZxXM:&ved=0CAcQjRw&url=http://www.transpanish.biz/translation_blog/that-little-funny-word-thats-truly-universal/&ei=mHcyVKzYKNC68gWD4ICACg&bvm=bv.76802529,d.dGc&psig=AFQjCNH4h62-xbADIbv6Wmz9MqJ7HFsxQg&ust=1412679907676153

http://www.google.com.au/url?sa=i&source=images&cd=&cad=rja&uact=8&docid=D1_nPsZIvrGRmM&tbnid=MraMW8wZ6TiazM&ved=0CAgQjRw&url=http://flyingscotsman.tumblr.com/post/3449268021/nobody-told-me-i-had-the-same-birthday-as-steve-irwin&ei=k3kyVP2UDoH98AXe9YGgCg&psig=AFQjCNFpz2vzz5ohl-6ED7ruRaNgiEWazw&ust=1412680467307436

Key take outs

1. Proliferation of SME cloud solutions

2. Services Impacted by cloud computing

3. Lack of understanding of Governments actions

4. Education not prescription

Proliferation of SME cloud solutions

Services Impacted by cloud computing?

I told them advisory was the future!

1…2….3….

Compliance

Accountant

Compliance!

Don't Know

Business Mentoring and Executive Board Services

Corporate Financing, lending access and advisory

Personal Financial Planning

Technology strategy and enablement advisory

ASIC Reporting and Corporate Secretarial

Self Managed Super Fund Establishment and Compliance

Business Establishment and Structuring

Business Planning, Forecasting and Cashflow support

Business Advisory

Tax Planning

Financial Reporting and Taxation

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

Which Accounting Business Processes Impacted by Cloud Computing – Remembering it is considered positive

No CloudCloud

Compliance 72% Advisory

26%

Don't Know2%

Services impacted positively by the cloud- Cloud users

Lack of understanding of Governments actions

Is government concern over red tape a threat to Accountants?0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Is Government Red Tape Reduction a Challenge?

Consider it a signifi-cant negative impact


Neutral/No Opinion


Consider it a signifi-cant positive impact

Nagative Impact12%

Neutral48%

Positve Impact40%

Is Government Red Tape Reduction a Challenge?

What Changes?

• Automation of Individual tax returns (iReturns)• “…developing a light touch or no touch income tax experience”

• ATO no longer sends Cheques on iReturns• BAS & IAS changes

• If you lodge via ELS or Portal say bye bye to paper BAS/IAS

• 12 months away from no physical NOA’s to Tax Agents

Privacy Act 1988 - Tax File Number Guidelines 2011Guideline 6 Storage, security and destruction of TFN information

6.1 TFN recipients must take reasonable steps to:a) protect TFN information from misuse and loss, and from unauthorised access, use, modification or

disclosure, andb) ensure that access to records containing TFN information is restricted to individuals who need to handle that

information for taxation law, personal assistance law or superannuation law purposes.

Computer and network security – by adopting logical barriers and measures to protect computer systems and networks from unauthorised access, modification and disclosure such as: • user identity checks and password controls• separately storing, processing and transmitting TFNs from other information handled by the TFN recipient• systems including audit trails to detect unauthorised access.• Communications security – by protecting communications via data transmission, (including email and voice communications), from interception, and preventing unauthorised intrusion into computer networksOffice of the Australian Information Commissioner http://www.oaic.gov.au/privacy/privacy-resources/privacy-fact-sheets/other/privacy-fact-sheet-6-the-binding-tax-file-number-guidelines-2011-and-the-protection-of-tax-file-number-information

http://www.oaic.gov.au/privacy/privacy-resources/privacy-fact-sheets/other/privacy-fact-sheet-6-the-binding-tax-file-number-guidelines-2011-and-the-protection-of-tax-file-number-information



Respondent Someone Within Organisation Accountant Third Party 0%

10%

20%

30%

40%

50%

60%

70%

Who Makes the Cloud Decision?

Key take outs

1. Proliferation of SME cloud solutions

2. Services Impacted by cloud computing

3. Lack of understanding of Governments actions

4. Education not prescription

Dealing with Digital Disruption - Nick Whiteside & Daniel Wyner

Technology

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