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Expo preview: Agile small firms are gaining on larger rivals | agile chihuahua | accountingweb

Expo preview: Agile small firms are gaining on larger rivals


When it comes to implementing new processes and systems, larger firms are lagging behind small, early adopters. And it’s the big firms who are saying that.

23rd Nov 2022
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“Our smaller, more agile competitors have embraced technology much more effectively than we have,” commented Beever and Struthers tech strategy lead John Toon in Monday’s Insight Programme webcast. Because of these advances, he added, “They’re able to operate a completely different efficiency model compared to larger firms.”

The experiences of tech pioneers in large and small firms emerged from a series of recent online Insight Programme focus groups that examined the software challenges facing firms of different sizes and dispositions. 

First-hand feedback

The online episodes fleshed out the quantitative findings of our quarterly software survey and surfaced some of the most pressing issues facing large, medium and small firms at different stages of technology adoption.

There will be further opportunities to find out more at the Breakfast Briefing Insight presentations at 9am on both days of AccountingWEB Live Expo (30 November and 1 December). AccountingWEB head of insight Julian Green will reveal the trends emerging from the latest research with plenty of time for delegates to ask about the apps and trends that interest them most. Each attendee at these sessions will receive a PDF report to help guide their conversations with exhibitors at the event.

As well as the issues raised by John Toon and Dayle Rodriguez (from Kreston Reeves) on Monday, key findings from the recent online sessions include:

  • CRM is one of the priority areas for software upgrades among larger firms. Most big firms use practice management software of some description, but it doesn’t meet their requirements for CRM, explained Toon. “Larger firms are reacting because smaller, more agile firms like Ad Valorem have looked beyond the accounting industry. They don’t need a lot of traditional practice management functionality, but are really interested in treating clients like customers. You need a different set of tools to manage those relationships,” he said.
  • While QuickBooks and Xero usage is dropping among larger firms, Rodriguez suggested that FreeAgent might be gaining traction in this sector as a lower-cost alternative for shepherding smaller clients through MTD ITSA.
  • Early adopter small practitioners were coming to similar conclusions. For them, Xero’s pace of innovation has slowed, prompting them to look at other options.
  • Proportionally, small, early adopter firms spend the most on software (around £7,000 per year) and see automation as a way to increase their capacity rather than headcounts. This group also generates the highest proportion of fees from in-house bookkeeping. Getting accounts done more quickly to a better standard allows them to handle more clients and deliver higher-value services.
  • After a burst of popularity fuelled by Covid-support loan applications in 2020, specialist reporting and forecasting tools have slipped down the list of priorities for practices of all sizes and types. While change-aware, medium-size and traditional firms are embracing tools within their accounting platforms to do basic cashflow forecasts and management reports, pioneering cloud practitioners are linking Excel to their cloud engines to slim down the size (and cost) of their tech stacks.
  • A common source of surprise across all of the categories was the regular appearance of Sage as one of the most frequently used accounting brands. Yet four out of the five panellists in the business software focus group were using Sage software in some form. Those businesses that customised their Sage 50 systems had aspirations to move to cloud systems, but couldn’t find add-on apps that matched their current Sage-based functionality. Sage use was also increasing among practitioners, who appear to be responding to the developer’s 2022 cloud acquisitions and increased marketing presence.

Making Tax Digital challenges

Making Tax Digital (MTD) is a constant issue for practitioners of all types and sizes and continues to exert a strong influence on software-buying decisions – particularly around client communication. We’ve heard how larger firms and early adopters are exploring different apps, including CRM, to help them manage smaller/sole trader clients effectively. 

But in last month’s online focus group, small, traditional practitioners explained the difficulties they faced convincing and training tech-averse small business clients to use digital bookkeeping tools ahead of MTD for income tax self assessment (ITSA). As the 2024 deadline approaches, they may realise that they need to communicate more frequently and effectively with their clients each quarter to make the new system work. Interest in practice management and CRM tools may start to spread more widely within the profession during 2023 as a consequence.

From his vantage point as tech strategy lead at Beever and Struthers, AccountingWEB Live Expo speaker John Toon issued something of a challenge to practitioners who fear such developments. “Accountants don’t create value by typing information into a spreadsheet,” he said. “We create the most value when we engage proactively with our clients. The biggest challenge we face is how do we free our staff up to enable them to have those conversations?”



Replies (5)

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By Hugo Fair
24th Nov 2022 22:36

“Our smaller, more agile competitors have embraced technology much more effectively than we have” ... but how has that translated into profit margins, absolute market growth, etc?

The problem with this addiction to buzzwords (such as 'agile' which HMRC discovered 10 years later than everyone else but is now in their top 2 ten commandments) is that the person using them often loses sight of the message they are trying to convey.
A blindfolded cat released at the side of a 6-lane motorway and given an initial nudge into the traffic will evince all the traits of being 'agile' ... just not for long on most occasions!

Thanks (2)
Replying to Hugo Fair:
By Tornado
25th Nov 2022 13:22

I am still not that sure what 'agile' development is but as far as I can make out it means there is no preconceived step by step structure to a project other than that it should all be working by a going live date. It suits the generation that craves constant change and relies on group hugs and unconditional faith in serious wishing to achieve the results they want.

This is obviously why HMRC are so convinced that MTD for ITSA systems will be ready when required even though all evidence indicates otherwise.

Agile is a good description for smaller businesses that can make decisions on the go and adapt to changing circumstances very quickly. There is nothing new about this and used to be described as being adaptive and flexible, but Agile is a fair alternative.

Thanks (1)
Replying to Tornado:
By NotAnAccountant2
25th Nov 2022 17:55

Tornado wrote:

I am still not that sure what 'agile' development is

Agile is supposed to solve a number of issues with more traditional development models.

In particular, "customers" are apt to think change is cheap and establishing their requirements isn't something they need to spend much time on up front.

Nobody would expect that on seeing the first two stories of a five story building going up they could then say, 'actually, can we have another 30 stories on top, just repeat the second story 20 more times' but they will ask that a 'single user booking system for the secretary to manage the boards calendar' now be connected to the internet and accept simultaneous updates from all over the world and manage the calendars for all 100K employees.

Agile should allow you to get something in front of the customer early and tease out these things before too much work has to be thrown away.

Agile has a second goal, dividing a big project into short deliverables so as to try and discover technical issues and give them exposure to all stakeholders. Many difficult technical problems can be eliminated with relatively minor requirements changes. Often they occur because a relatively rare real world example doesn't fit the original model but simple changes can keep the existing workflow almost unchanged while making the difficult case just a slightly more complex version of the original workflow.

The shoehorning of the MTD property submissions into a single set of boxes for ALL cases is an example here. Many people, even those with multiple properties, will want to work like this, but for some, it's going to lead to ridiculously complex calculations and data gathering outside of MTD. A relatively simple change to allow - but not require - people to segment their MTD property submissions would finesse almost all of the completely arbitrary complexity that MTD has introduced for these people. HMRC have uncovered this problem with only 100 of the simplest cases in the pilot - a resounding success of agile (end sarcasm)

And from a backend POV segmenting the submissions makes no difference. All that has to happen is that the numbers have to be added together - the only real issue is that it's a bit too simple to give as an intern project!

(and, of course, if parliament ever decides that losses from one property cannot be offset against profits from another then current MTD is screwed anyway. Maybe that's not likely but perhaps more per property restrictions on mortgage financing might happen)

Thanks (2)
Replying to NotAnAccountant2:
By Hugo Fair
26th Nov 2022 00:09

An excellent introduction to 'agile' software development ... if only those in charge at HMRC had read it rather than the marketing proposals from consultants.

At the risk of simplifying your explanations (and showing that nothing is truly new under the sun) ... your first aspect used to be called 'prototyping', and the second 'structured incremental development' (a bit like object orientation).
What is actually new with 'agile' is neither the word nor what it represents ... it's the way in which it's been assumed that it's the full story (thereby removing the need for any subsequent full specification + testing + change management procedures)!

Agile development is to a finished & stable product what a few slabs of concrete & some steel supports are to a completed tower block - a start but not the end.

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Replying to Hugo Fair:
Dayle Rodriguez profile picture
By Dayle Rodriguez
07th Dec 2022 09:45

NotAnAccountant2 definition of Agile development is fairly apt, there are methods like the Scrum Methodology that aren't particularly new 1982 that are agile development methods.

From reading the comments post I think there might be a merging of two ideas that, whilst have overlap, are distinct. Agile development is a methodology employed by IT/Web developers, it is different to business agility, as in the ability to pivot, change direction and/or implement.

"but how has that translated into profit margins, absolute market growth, etc?"

I don't have exact metrics but I think it is quite evident if you look at the market there is a talent shortage, larger firms are trying to recruit at a certain level but can't and you are seeing a lot more small/boutique practices/firms cropping up Gravitate, Smooth, Nephos, Golding etc.

Firms like these have 1 maybe 2 directors and maximum 30 staff, if they like a new piece of software and it fits they just do it. In a larger firm with 40+ partners it is not easy to implement. Another example is newer firms having a Director model not a partnership model, again the very structure of the organisation allows fro more agile changes in the business. As for profit margins, I don't think many people share their profit margins...but market growth, I defer back to my original comment about more smaller practices/firms starting up and scaling which has been evident over the last 5-10 years.

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