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The Boomer Bulletin - 2013
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The Lessons of History

Posted By Mike Francis, Wednesday, August 14, 2013

Introduction

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 follows:

Mainframes
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 they today?

Mini-Computers
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?

PC’s
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 & Devices
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.

Conclusion

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 prices.

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.

The Profession

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 approximation.

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 nature inaccurate.

Value Pricing

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.

Final Conclusion

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.

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