We live in interesting times, extremely interesting
times. There is an ancient curse that
says, "may you live in interesting times”.
By reference, are we then cursed?
We are only cursed if we do not learn the lessons of
history. Mankind has an uncanny habit of
repeating his/her past mistakes over and over again. This is happening in both the IT industry and
the Accounting profession. The lessons
that are plain to be seen are not being acted upon.
A Brief History Lesson
The world of information technology (IT) as it is known at
present would appear to work in major and minor cycles. These last for years or maybe decades,
however what was once good, is generally replaced over time.
These cycles in the author’s opinion are basically as
At the start of the technology age, all computers were
mainframes, either custom built such as Colossus, Eniac, etc. or were ranges of
machines such as the IBM 360 and beyond.
At this time there were numerous suppliers of this equipment - all
well-known names in their day. IBM,
Burroughs, Sperry-Rand, Honeywell, Siemens-Nixdorf, ICL, Fujitsu and
others. The question to ask is where are
In the mid to late 70’s, a new phenomenon in the world of
computing emerged – the mini-computer.
These were essentially small mainframes, and anyone who worked on an IBM
S/34 will confirm it was not mini! This
equipment used cut down operating systems or embraced the new open system of
Unix. Suppliers such as IBM, Burroughs,
DEC, Data General, Wang, ICL, Honeywell, HP, Sun Microsystems and others were
all active in the industry. The same
question is asked- who remains?
In the late seventies and early eighties, yet another of the
main cycles began. Rising out of hobby
approaches, the personal computer was born.
Leading the charge was a small firm named Apple. For the operating system and tools side, a
small startup named Microsoft burst on the scene. By the end of the eighties, both had grown
into huge multi-million dollar organizations, and spawned a completely new
industry. The number of clone manufacturers that sprung up was crazy, and very
few of these remain. Where is Novell,
and does anyone remember Banyan Vines?
GUI & WYSIWIG
The evolution from text to GUI & WYSIWIG interfaces
occurred during the time of the PC.
Whether it was an improvement in terms of speed and ease of use has
never been judged. There were many
excellent systems, general and specific to the accounting profession that were
text based. Those that did not transfer
to this new style have all disappeared.
Remember WordPerfect, probably the most widely used word processor. It did not move to a GUI in a sensible time
or style, and has disappeared. The same
for Lotus 123. These products owned
their markets and disappeared in short shrift.
The World Wide Web
Everything changed with the ascendance of the web. Leading the charge was a browser named Netscape,
which again owned the market. The
communities of CompuServe, AOL and MSN withered, and with a change in
direction, Internet Explorer basically killed Netscape. The web world has been expanding ever since,
with new entrants such as Google, Yahoo, Skype, Facebook and the like.
Mobile & DevicesConclusion
This is the current cycle, and we are still fairly early
into it. It includes SaaS and the Cloud,
and will no doubt spawn its own winners.
The very simple conclusion is that not all suppliers will
weather the changing paradigms. This has
been seen time and again in the past. Large
and successful organizations have disappeared, simply because they did not
change quickly enough or radically enough.
Microsoft has just announced a major internal revamp. The shipment of PC’s is down for the second
quarter. Many of the providers in that
sector have announced less than expected second quarter 2013 results. Investor confidence is reflected in share
We are living in interesting times.
Throughout all of these changes, many of the incumbents
tried to ensure that their old systems were usable in the next cycle. Terminal emulation for the PC so it could act
as a dumb terminal on the mainframe extended the lives of both mainframes and
mini computers. Inevitably these systems
have been changed, mostly into client–server type applications.
These client server applications are being extended by the
costly and environmentally unfriendly use of terminal servers and desktop
virtualization, all of which create a server PC for the attaching PC. This means more electricity being used, and
therefore heat being generated. Whilst
they undoubtedly work, it is using emulation to extend life.
The winners will be the applications that can be happily and
simply consumed on all of the devices that are being used today. PC’s, Laptops, Tablets, Smart phones are all
candidates. When one can buy a full
powered consumer device for $45 (Raspberry Pi) which runs free Linux and
supports a browser that can consume input, we are looking at a completely new world.
We are being freed from the shackles of the GUI thought
police, where all applications had to look and work the same, to amazing User
Experiences, normally being achieved on the mobile devices. These improved UX’s, including use of anime,
will usher an era of jobs again being fun.
This history lesson should not be lost on the
profession. Suppliers who do not move to
the new world will disappear, history tells us this. The profession has embraced technology to a
greater or lesser degree, and has generally been very well served with choice.
What has been a singularly common thread throughout this
amazing ride is the profession’s stubborn approach to how firms manage
themselves. Production is deemed to be
the true measure, and hours times rate the ultimate way of managing.
The move in the technology arena has allowed this
calculation to be performed ever more quickly on ever larger volumes of
data. All of the KPI’s surrounding this
measure, usually relating to issues such as utilization and realization has been the mainstay for many firms.
The simple truth is that this measure has not moved the
profession forward at all. If the Boomer
Technology CirclesTM metrics for the last five years are looked at,
these measures have remained largely static.
No amount of measuring seems to improve them.
The Billable Hour
This has been the keystone for the profession for the last
50-plus years. Everything has been
measured on the most unreliable metrics in the equation.
Hours entered via timesheets and other devices is partially
accurate. Some team members may be close
to 100% accurate, however for most people entering this data, it is an
The charge rates used are calculations based on salaries,
with fixed cost and profit components added, and often flattened to a grade
rate to avoid anyone working backwards for salary comparative purposes.
Thus two highly inaccurate elements are used to run firms,
and an inordinate amount of time is spent analyzing data that is by its very
The argument as to whether to use value or fixed or agreed
pricing is largely over. Value, Fixed or
Agreed Pricing is the way forward. Does
this mean we need to stop keeping records of what happened on an assignment? I think not.
What is now more important is the correct scoping of the
job, and ensuring the delivery of the end product to a high standard within the
agreed timings and price.
It is critical that firms listen to the message of history,
both as it relates to technology, but equally to the best approach and processes
to running the firm. Constantly being
hypnotized by the wrong things will not move you forward.
Mike Francis is CEO & Founder of Practice Engine. Practice Engine is the major supplier of practice management systems to 10 partner plus firms in the both the UK and Ireland. Practice Engine was also voted as the leading product in our sector in the 2004 ICAEW Survey of IT Products. Learn more by visiting www.praceng.com.