Interview with David Jones
Director of Innovation, Lewis Brownlee
In the second part of our series of interviews with practice owners in the digital arena, I met up with David Jones of Lewis Brownlee to find out some more about the imminent launch of their new brand LB2 and to understand David’s thoughts on the future of the accountancy profession with regards adoption of digital technologies.
CH - Thank you for speaking to me today. I understand that you are in the process of launching a new division within your accountancy business that will concentrate on app stacks and digital transformations, can you tell me what led you to do that? DJ - Yes that’s right, LB2 will focus on providing a full digital transformation service, including an app-stacking consultancy, to clients and other accountancy firms. There are thousands of accountancy firms within the UK, and while some of them have app-stacking nailed, the majority either don’t have the desire or time to keep up with technological changes we are currently seeing. Through this new division, we can provide a full service from end-to-end to enable businesses to benefit from the latest technological advances. Likewise, we take the worry away from local accountants and allow them to make money from an entirely new business stream. CH - There are quite a few accountants offering Xero with Receipt Bank but very few other apps. Can you give me an example of what sort of things you could offer them as a white-label solution for their clients? DJ – It's essential to understand that we are not just talking about Xero here. You also have Quickbooks Online (QBO) and Kashflow by Iris who are gaining territory. So when thinking about app-stacks, we need to consider them all. As an example of how advanced app-stacks can be, one we recently created involved 18 separate apps within three distinct layers, all inter-communicating. You have your primary layer which immediately surrounds the accounting software, a secondary layer communicating with Xero via the primary layer and then the third layer adding even more capabilities. That’s an incredibly complex stack, and we appreciate that most accountants don't want to have to learn those skills, but they may want to be able to offer it to their clients. So, they could instruct us to develop the solution for them.
CH - An app stack with 18 apps and three layers – that sounds very complex. Does that mean it is limited to bigger clients? DJ - That particular app-stack was for a boutique hotel chain and the entire app, after everything had been bolted on, was cheaper than they were paying for their antiquated, old-fashioned system. Every month they were paying about £800 a month for their basic property management system (PMS), and once we'd finished, they were paying about £550 for the whole package. Yes, it costs considerable money to install it, but it has given them far more functionality and far more reporting than they could have ever imagined. It has also provided full staff management, purchase order approvals, links through to Online Travel Agents (OTA’s), loyalty cards, smartphone ordering in the restaurants, table management, and kitchen bump screens so the chefs could see what was being ordered, all feeding back into Xero. That's the sort of thing that we're talking about. We don't expect accountants to all rush out and learn how to do that, because it's taken me over a decade. Likewise, while it would be fantastic for them to become our clients, we are also focusing on educating accountants to develop and provide simple app-stacks of maybe three or four apps, which they can then sell on to multiple clients. CH - So, will you be writing the code yourself to get everything to talk to each other? DJ - A lot of it already exists, there are over 2,500 products that already link to Xero, and we then use some "middlemen" (as we call them) which are software packages that enable even more apps to talk to one another. So, by using “middlemen” applications, there are about 8,000-10,000 products that already link together without us writing any code. That said, we do have an in-house Python & Ruby developer who can write API's as needed. The massive downside to this is that they take much upkeep over time, which costs clients an ongoing fee.
CH - What we’re talking about here is going into a business, really understanding the complete operation of the business and saying “we are going to automate, transform and completely digitalise the entire business from start to finish”? DJ – That is spot on. Because we’re accountants, we understand the flow of numbers and not just the tech. There are a lot of different integration firms which exist but they are predominantly IT people or coders, and that's great, but they don't necessarily understand how the numbers should look when they end up in the accounting software. We do, and so, that's what makes us different and where we can add value. We are also happy to work with those development firms on mutual clients. The other thing we do is work with fresh start-ups, both equity / VC backed, and OMB's so that we can build their systems from scratch. We try to get involved while they are still in Stealth Mode so that we can shape the offering around their rapidly changing strategy. CH - Can you give me an example of where you have done that? DJ – We have worked with a specialist VC backed beauty business since 2013, where we created the whole back office system connecting all of the EPOS and other systems. We worked very closely with them in London for months and got them to a stage where they could go live and open their stores and e-commerce offerings. Their business model is incredible. In their stores, you are handed an iPad, and you just choose what look you want, and you come out half an hour later with that look! Their online offering is an on-demand app, a little like Uber, where you can book beauty treatments or hairstyling on the app and a beauty therapist arrives at your location within minutes or at your desired time.
"There are a lot of different integration firms which exist but they are predominantly IT people or coders, and that's great, but they don't necessarily understand how the numbers should look when they end up in the accounting software. We do, and so, that's what makes us different and where we can add value."
CH - Do you find that some clients are wary because they don't like change and are therefore apprehensive about a new system? DJ – Absolutely, but we are experts at change management. We can slowly integrate apps across a year or two years. The first move is getting them onto an appropriate accounting system. The second move is to add in the more familiar apps. Then the third move is to find some of the more specific apps which will add real value. By doing it very slowly, you get the trust built up between you and the client, and it makes the entire process far slicker. CH - So, from an accountant reading this magazine and thinking that this looks amazing but are worried about how they present this to their client, what advice would you give them? DJ - If you’re an accountant who knows very little about technology, then included within your affordable monthly fee we can provide your clients with an initial telephone consultation where we dig deep into what the client wants, look at the systems currently in place and make a recommendation as to how we think they can change. We map it all out for the client and show them their accounting software in the middle and what is possible and recommend a couple of apps to start with. Accounting software providers such as Xero have produced some great booklets, that says ‘these apps will help with these industries’, but the real added value is in the bespoke side of the app-stacking world, actually getting to know someone’s business and coming up with suggestions. CH - What would say are the main benefits for the accountancy firms of implementing app stacks with their clients? DJ - As an accountant, it gives you far more clarity and confidence in the numbers - you’re not fixing mistakes or human errors all the time! You not only avoid errors that occur from manual data transfer but also, for example with EPOS systems, rather than running a nightly manual upload, by using an EPOS system that talks directly to accounting software, all of those errors disappear and it also cuts out a significant amount of both admin and accountant time.
The other thing is reporting. Clients and accountants can now have dashboards that can collate a substantial amount of data from multiple sources, which, in the past, would have taken an unfeasible amount of time. CH - What do you look for when you are recruiting members for your team? DJ – I'm not that fussed about someone's financial experience or coding ability as that can all be taught. The trick is to find staff members who think faster than your average person. Someone who can think outside the box and have incredible problem-solving capabilities. They need to be able to amass a significant amount of knowledge. The only way to make digital transformation services profitable is to design and create stacks efficiently. CH - Do you think many accountants are missing an opportunity with regards to earning digital transformation fees? DJ - The ones that get it, the forerunners, are already on the bandwagon, and they are already getting there to varying degrees. But the ones that don't get it, which is still the majority of firms, need to catch up and realise that this is happening, it is not just a fad. The digital world is changing, and if people don't want to lose their jobs, they've got to do something about it, and that means learning the new technology or utilising a firm like LB2. They do not have to go and learn how to code. They do, however, have to be open-minded and know that these technologies exist. You need to feel comfortable enough to sit in front of a client and give a high-level overview of what app stacking is. The Xero app marketplace is a perfect starting point for people to learn about the more popular apps. CH - For a firm that thinks this looks really good and they’ve got some basic apps, can they start doing any more complex app-stacking themselves? DJ - It’s not easy, but they can do it themselves. Some apps automatically link to each other, and it's nice and easy to do. Some of the middlemen software can help you automate things as well, but that takes a bit more programming.
The more automation that you want to happen, the more complicated it gets. If you want something that does more than just push data back and forth, it's more automated and, therefore, it becomes far more complex. CH - Looking at accountancy in the future, obviously, the tech is coming in, do you think app stacking is what accountancy firms are going to be doing more of in the future? DJ - Yes, app stacking is one part, and you will also be focusing on data manipulation. Within ten years compliance is going to virtually disappear, yes it will still exist, but you’ll either have HMRC doing it directly or you’ll be expected to do it cheaply because everyone’s offering it. The main point is that accountancy firms will need to become consultancies, providing clients with a mass of data and explaining what it all means. Clients will see data as critical for their survival and growth, even more so with Gen Alpha on the horizon. They will look to you, as their accountant, to provide it. I'm not talking about quarterly or even monthly management accounts; I'm talking daily bookkeeping with data being updated hundreds of times per month. Virtual Financial Controllers and Virtual Finance Directors are where the world's going and anything that helps those two, i.e. technology and innovation, is what’s going to push businesses forward.