If you haven’t seen it, note yesterday’s Live Blog
We’re back for Day 2 at Xerocon Sydney. To get you warmed up, while we’re waiting for everything to kick off, check out this time lapse photo of yesterday’s exhibition area from our photographer for the event Alexander Kesselaar, if it doesn’t show then try clicking on this link.
Peter Switzer is back, giving a bit of kudos to the event, especially the audience, announcing some prize winners, a bit of housekeeping, a bit of self-promo (obligatory book being held up – bit of a laugh) and why not! A great choice for MC.
Let’s get on with the show!
Xero Australia Managing Director Chris Ridd is up and this will be both a celebration of what Xero and partners have achieved as well as where together we can go in Australia. Think of the first Australian Xerocon with 130 people compared to the crowd we have today, and as Chris says, it’s only just beginning.
He’s talking untapped potential both with the small business market and the advisor community. There are about 2.1 million SMEs in Australia – with an addressable market for small business accounting software of at least 1.2m.
Wow, 40% of our customers sign up from no accounting software. They’ve been using Excel, or doing it manually for example. So we’re expanding the market. and improving GDP across the sector.
In Australia accountants are the vanguard with 11% using Xero. Bookkeepers are even more exlusive at 2% and Financial Advisors even further at .7%. “We are very early on the journey with lots of upside potential.”
Now the numbers are really rolling – 1900 Advisors at Bronze level or above, at a rate of 30-40 a week – amazing channel growth, 90 staff in the Xero office up from 2 years and 7 months ago when Chris started. 30 of those are involved in developing payroll and tax features – we shipped TFN declarations on August 5th and 8000 have been lodged to the ATO since. Picked up iAward for financial services based on the payroll product.
Overall AU achieved 220% revenue growth year on year and has more than 270 Add-ons in the ecosystem, up from 25 when Chris started.
Now the biggy announced to the ASX today. We now have 200,000 paying business customers worldwide, of which 75,000 are in Australia. The Australian numbers are up from 51,000 at the end of March, so an almost 50% jump. Signing up 200-300 customers a day.
So what’s the Xero strategy for Australia to take advantage of the opportunity:
- Hire and develop great people
- Amplify the Xero brand
- Build complementary channels
- Deliver product innovation
- Develop the Practice Studio channel
- Step up cloud advocacy
Now talking about the team, recent appointments at leadership level and talking about the structure and covering the regions. Even have someone in Adelaide!
Chris is recapping the add-on market discussion from yesterday, that we’re helping with add-on reviews for a more informed marketplace.
We’re also building complementary channels to help grow the business, in cloud integration, financial advice, and banking sectors. Cloud integrators are coming through as replacements for the old system integrators – they have vertical expertise, are cloud specialists, will work with a suite of Add-ons, handle data migration, implementation and support, and are keen to partner with accountants and bookkeepers.
An example is SMB Consultants in Sydney, who specialize in retail and hospitality work with Vend, Kounta, Deputy and Shoeboxed to name a few, and provide a complete solution including network management. We see Cloud integrators coming together with accountants and bookkeepers for verticals across the market.
Financial advisors are also complementary. Their sector is going through enormous change where FOFA (Future of Financial Advice) is replacing traditional commissions with fee for services. Accounting firms are taking on financial planning arms and it’s another opportunity for using Xero, for wealth management, with the Cashbook product and add-ons like Sharesight and PocketRent and feeding into a range of other advisor/client tools.
Banking 2.0 was talked about yesterday but to recap for Australia. Direct feeds are dominant and we can do so much more. Less than 10% of our bank feed statement lines in the last 12 months went through Yodlee. Direct feeds are just the starting point, with opportunity for web services integration and 2-way feeds with payments that will make other data aggregator’s models redundant. We’re in talks with a variety of banks at this point on these higher levels of integration.
You may know about how Xero bought in payroll (Paycycle) and work papers (Spotlight Workpapers) and how we’re building Tax for Australia with a team in Melbourne that is now about 13 people.
Fixed Assets announcement
Now we’re announcing that we are building a team to do Fixed Assets as a module to extend the Practice Studio vision – this will focus on Australian needs and looking for some quick wins for you.
Now talking about how Xero supports the channel of service and implementation providers with practice expertise. Have employed a BDM to assist. Two new Microsoft certified partners.
Now looking at Xero’s activity in industry leadership – being a member of the AIIA, promoting high speed broadband, input into the Cloud Protocol for Australia, being in the Broadband Today Alliance, and on the DBCDE Telework initiative.
Finally, and Chris gets a real kick out of Xero being involved in this so we hope you do too. Xero is partnering with the Foundation of Young Australians, supporting the Worlds of Work program, attracting high schools students into accounting and arming commercial and social entrepreneurs with financial literacy skills. Let’s all get involved – the opportunity is there to really make a difference.
Big digital picture
This is the first Xerocon for Xero’s Chief Revenue Officer Stuart McLean and he’s taking a bigger picture view of the opportunity in a digital world. Talking of which, great picture of someone swinging their kid, but who’s holding the camera? The point of the slide is it exemplifies three elements of our world today – speed, motion, exciting, our future and why we do what we do. The photo was taken with Google Glass.
Companies are able to grow more rapidly today than every before, so the greatest risk is complacency. The companies that are innovating today embrace how we enjoy technology in our consumer lives – using mobile, the cloud and social media. 65% of Australians own a smart phone, 70% are using cloud, and 14 minutes of every hour is spent on social media – that’s a bit mind boggling.
In the future many won’t own a PC, they won’t buy shrink-wrapped software or use “thick clients”. They will access the web and “live” in the cloud. People will bring the devices they love to work. Although note, work use to be a place, now it’s anywhere, any time.
People used to go to work because the internet was better than at home! Now it’s anywhere and we have to learn to switch off every now and then.
Applications are now designed to connect people. Xero is part of the new way, financial data and docs in the cloud, accessible from anywhere, anytime. From the ski field, the Barossa Valley, out on Sydney harbour!
Everyone’s using multiple devices too, often at the same time but usually varying by time of day. 52% of information workers use 3 or more at work. Mobile traffic is ever increasing. Whether you use Apple devices or other, everyone wants a consistent view and cloud web and mobile device apps are delivering it. Let people bring their own device to work.
Survival in the new world is about innovating, having a mission that matters, thinking big but starting small, continuous development and innovation, getting ideas from everywhere, sharing, using imagination, being a platform, and not failing to fail (fail fast and know when you’ve failed).
Final question from Stuart – your digital world – more data, more devices, or more time. It’s not if it’s when – learn about mobile, cloud and social – and make a decision.
Digital disruption: Short fuse, big bang
Now a keynote from ICA President and Deloitte Private CA Tim Guillifer.
Where do you sit when it comes to technology and innovation? And importantly, where does your client sit? Guillifer has the classic adoption curve up – innovators, early adopters, early majority, late majority and laggards. Once was a “digital immigrant” now we say we are all early adopters.
More people using mobile technology than toothbrushes – that gets a laugh.
Now we’re looking at one of the big tech changes – mobile – should be passing desktop next year. All this change is about a shift in the way people think, not about technology but about business. Entry barriers are down, the individual is in charge. Consumers have more choice, businesses have no choice. TIm’s slide show has some subtle picture choices.
How will you respond to technology change for your business? Different sectors of the economy are facing different levels of disruption. A third of the economy faces the short fuse and big bang of digital disruption – in ICT, media, arts, finance, real estate and professional services. This is about business not technology. We need to reshape, replenish and recalibrate cost structures.
Check out Deloitte’s digital disruption video.
Big focus on Recruitment, Training and Retention. Deloitte seek people who are engaged through contacts and pay referral fees to their own staff, that ensures engaged staff are the ones doing the finding.
For the accounting sector that was once about crunching numbers, it’s involves technology capability and out-of-the-box thinking. Firms are increasingly recruiting students with a diverse background from philosophy to English, and reaching them through social media.
Australian small businesses that are digitally engaged are seeing an average increase of 20% in annual income and are more likely to be hiring and increasing investment.
You can’t ignore it and hope it will all go away. Deloiite’s approach is to go beyond embracing technology to “creating a new experience” – single shared system, advising throughout the year, more frequency, deeper engagement, more sales.
The Deloitte Private Connect service is about working side-bay-side with the customer in the cloud.
So what are you doing? Create an active digital strategy, challenge the status quo, think about people and talent, benefit from the competitive advantage of cloud. Cloud is a threat to those that are focused on compliance, but a huge opportunity for those that embrace it.
Now moving to morning tea and then into streams
Stream 1 – Transforming your practice
Greg Sheehan CEO of RightWay is right on the way to Accounting industry stardom, getting a name for forthright analysis of the state of the industry and a leader of change by example. He’s humble though. Here he is giving an autograph:
Greg is provocative. He wants to get under the audience skin but still have a beer with them tonight.
The CFOs role is to manage the performance of the organisation. As their virtual CFO you are there to help the small business customer with their whole performance. You should own this space.
So question your customer. Ask them do you believe that your accountant knows how to grow their own business? If their answer would be no, then what credibility do you have?
You’ve worked too hard to become a relic, so you need to be prepared to make changes.
Greg loves the Accounting profession and one day there will be a mini-series, just like those lawyers and doctors – imagine it! We need to get young people thinking accounting is THE place.
Our profession is littered with people who want to be professional – this is great. A lot of people love the fact that in a profession they know the complexity and charge handsomely for that.
What the customer wants
But the internet is here, the information is available. More and more the customer wants solutions.
The other thing is that as Accountants you worked your butts off and now people from anywhere are jumping in and doing business coaching. We have to ask ourselves the question – what does the customer want and what are we giving them.
It’s so easy to start businesses and loads of young people are doing it. The cloud is providing incredibly cost effective solutions for small business.
The SME market is growing up. Gen-Y is starting to get into business. They are savvy. Who is your competitor? It’s not always obvious as we saw with iTunes.
Start with what your customer wants, and work backwards. Clients are getting savvier – want new ways of working. You need to think about who your competitors are now. Be a coach to your clients. Yes they want low cost compliance, but also help to grow and your ongoing attention and experience.
Simple things like being available for a quick call on Skype, help with strategizing, ideas on where to get funding, when to hire next, regular management reporting. Meetings focused on growth. In our team we carry headphones in our bag for any quick conversations.
Greg’s talking about the classic accountant called “Wayne” who loves the shoebox – it’s like a roast dinner to them. That is what customers often get, someone who uses complexity against them. Customers don’t want problems, surprises, a poor attitude, unwillingness to adapt, or information that is reactive and historical.
Customer number one is your business – do you give your business the best service and advice that customer number one should have? “Change and improve or Die” -–that’s pretty strong Greg! Message received.
Now for the gold, Greg is going through the RightWay model – it’s building block stuff as it was built from scratch – customer at the centre, create great products, have a scaleable corporate model (not partnership), go 100% cloud, hire the best people, a structure that splits between operations and customer relations (regional partners who are out and about), don’t constrain yourself to traditional accounting products, build a brand, and most importantly get your Sales and Marketing mojo together or he’ll grab your customers.
Sounds like he’s got a good thing going – get past high staff management overheads, controlling of workflow and grunt work. Have a special ops team as a central resource. All paying off in great incomes.
What’s the simple version? – efficiency with the Xero single ledger, get all your clients on, build Ledgers up through Cashbook to Business, use report packs. You don’t need to get out and sell lots of stuff, you don’t have to move away from time and cost.
Good points now about looking after yourself and the firm by creating capacity, making yourself replaceable, empowering your team with a great culture, getting a Board and strategic plan, appointing a COO. This is a company – ban the word “practice”.
Jumping into even more detail now – if you are loving this you should have been here. Otherwise, Greg needs to write an e-book.
Now into panels
Meanwhile I have some notes about what is happening over in Stream 2
Stream 2 – Your business in the cloud
Xero Product Specialist Matthew Peng has been showing how Practice Studio can help bookkeepers be more efficient and profitable, with a live demo. This includes job management, work papers, and activity statement lodgements. These tools are not just for accountants, there’s a lot of value in a bookkeeping business.
Gold Partner Charles Klvana from Eye on Books. His focus is a “Day in the Life of a Cloud Bookkeeper” – filling the job funnel, managing/recruiting staff, and using the tools. He’s got some interesting thoughts about what part of your business is delivering what percentage of your income and what dollar rate. His thinking – actively network, do seminars, sell peace of mind. For teams – inspire, empower, recruit on motivation not skill.
And his quote for the day “Always plan more, love what you do and share the love”
And then Practice Studio partners – Tina Kaye, from Abacus Solutions, HubOne Solutions’ Trevor Shoenmaekers and Tim Callcott from Focus Growth Strategies who can all help bring people along on the journey.
Lunchtime – must eat (and network of course)
Back into the streams
Stream 1 – Solving client business problems
Xero Add-on program manager Ronan Quirke is up. Add-ons are so important in providing additional functionality to meet business solutions – for example reducing data entry, advanced reporting or automated invoicing.
Accountants are key to the Add-on ecosystem as recommenders, enablers, and implementers. As it all evolves globally we’re seeing a lot of cool stuff happening with Add-ons connecting to each other, and moving into the various markets.
Definition-wise an Add-on is commercially available software that integrates with Xero through the Xero Applications Programming Interface (API) and has been certified as such. There’s a process to become an Add-on, involving review, collaborative beta testing, developing documentation and marketing information and certification.
The web Add-on directory defaults to list all the Add-ons by popularity and it’s a regional view that can be further filtered. They are also user-rated with a star system with reviews that were launched about a month ago. Very useful to leave reviews with detail about what worked and didn’t in particular applications.
So what else might affect your choice of Add-ons to recommend or support? Consider your time investment vs payoff and what will be required for any given app – some are easy to setup, others need training and implementation. What training and webinars are available? What is the support on offer? Xero can certify apps but you need to own your due diligence.
Finally, there are too many Add-ons to get to know them all. Focus on those most relevant to your practice. Find out how your clients use them. Check out what the community are saying.
Time for some random pics from the last two days (click to enlarge):
Meanwhile over at Stream 2 it looks like bookkeepers are soaking in useful information. I’ll summarize from their slides.
Stream 2 – Getting new clients and talking tech
First Class Accounts Principal Serge Crismale is looking at the subject of Bookkeepers moving to fixed fees. First Class started using Xero in 2009 and reached Gold Partner Status last month with 85% of clients on Xero. A first step is to identify what services you’ve been offering and what you have been charging for them. As you move people to Xero get off hourly charging and take the opportunity to believe in and value your knowledge and expertise not just your time.
For your existing clients you’ve got an opportunity to smooth out your income by using regular fixed fees. For new clients tailor your packages based on need, market and value. Learn where they are hurting and apply what you know of similar clients.
You can start to move to fixed fees now by beginning with the client you know best and doing it one at a time, learning from feedback as you go – that’s low risk!
And fixed fees doesn’t mean no time tracking. You still want to understand your own performance and see the long term profitability. “We can’t create more time just use it more effectively.”
Bookkeepers of Melbourne’s Anyce Grayly is gearing it up by turning the question around. “What has it cost you NOT to be selling Xero to your clients?” Starting from a base of knowing the Xero feature set, Anyce presents Six Steps to making people want to sign up to Xero without even trying it. Developing the right mindset, identifying your target market, tailoring your packages to suit your market, identify the cost of the client’s current problem, connect the client to the feeling of not having that problem anymore, get their commitment.
She’s gone into the detail of each of these points and provided some great questions and points. Now it’s about how to answer the questions without overloading people with detail, doing a demo that solves their problem directly. If there are objections get to the nub of them, run through what it’s costing to have the problem and learn what it is you’re missing.
FlourishFM’s Melanie Pollock and Kerry Lee talk about using client events to get more clients and business. First establish exactly why you should run an event, then you get to what to talk about, who to invite, how to get people along, where to have it, and the call to action result you are looking for.
Here’s just some of their useful suggestions – pick a topic area, share your passion and keep it real. Get a client to share their experience. Use your clients and networks to reach out to potential customers. Use event management tools and give clear information about the event with follow up and reminders. Make sure you allocate time post-event for reviewing feedback and follow up.
Love this “Getting new clients and more business is not your why, it is the result of sharing your why!”
To complete Streams 1 & 2 , Xero Add-on master Ronan Quirke is bringing his earlier ecosystem message to bookkeepers and Baz Gardner is bringing his earlier social media tips to accountants.
Time for some more pics!
Now for the finale – the Xero Leadership Q&A with Chris Ridd, Rod Drury, Stuart McLean, Andrew Tokeley and Oliver Furniss
A round of applause for everyone for being here for two days.
Here are some of the questions and answers, abridged.
Question for Chris – Cloud integrators – how real is the need for them?
There are accountants and bookkeepers who are becoming very tech savvy and cloud does make integration easy. But we do see a role for more technical firms for some time yet before all accountants or bookkeepers could do that. They are complementary.
Question for Rod – what are you doing to get into education.
It’s a well proven approach but we can’t just copy lots of discs as we are in the cloud. We have a vision for teachers being able to set up all their students and be able to play with fake bank feeds for example, but first we need to finish the products. We want to do a full learning platform but there are students using it on a case by case basis now.
Question for Rod – Given the politics around security in the US is there any intention to have data hosted locally in Australia any time soon?
It is a perceived issue and if you are Kim Dotcom you should worry about it and use MYOB! We work with the CEO of our hoster Rackspace and with privacy commissioners and take security very seriously. Rackspace are now hosting in Australia and we are hosting some servers there and there is more opportunity for that going forward.
Question for Rod – What do you say to advisors and add-on solutions who are concerned with putting all our eggs in the Xero basket?
The vendor landscape is changing and one reason we do this is so you can see us, and learn to trust us. Unfortunately I don’t think you’ll end up with multiple players, due to network effects. We love being a public company because it is transparent and you can see who owns the company.
Question for Rod – People wonder if as you get bigger will you still be lovable?
As I have got bigger I have become more lovable!
Question for Rod – If a client does leave Xero can they access their last 7 years without them exporting to a spreadsheet?
If someone stops using Xero the data is retained and if they come back it is there. They don’t have to keep paying but there is a small reconnection fee. We do provide plenty of ways for people to pull data out but is hasn’t been a big driver.
Question for Chris – How well do you think MYOB is contributing to and assisting the growth of Xero in Australia?
We are focused on what we are doing and the great thing about the cloud market is that all the things we are doing are where the market is headed. It’s a fantastic opportunity and there are incumbents who haven’t responded as well and we are benefiting.
Question for Tokes – Great to see you’re doing all the things for us to trust you, what about to help us trust your add-on partners?
There are hundreds of potential partners who would like to join the ecosystem so we have a certification process to make sure they are following good processes. You do have to rely on their T&Cs and you can’t make us responsible but we do our best to help.
Question for Tokes – Can a gold partner get more votes in the community?
There is a lot of merit in the idea that those with more customers have more sway and we’ll look at that over time.
Question for Stuart and Rod – Are you going to look after bookkeepers better as Accountants keep getting the tick after we do the work?
It’s a great example of how Australia is educating us and leading the world, as it is more mature for bookkeepers. We have a good awareness of the issues now and it is something we can fix over the next six months. We can explicitly model that there is accountant and bookkeepers that needs to be recognized.
It’s all over now and Chris is wrapping up. It’s been a fantastic two days.
Thank you for reading the Live Blog.