Welcome to the first in a series of profiles about larger firms who are benefitting from the cloud to better serve clients and find new revenue opportunities. In this new article, we spotlight Cody Page of Peterson Sullivan, LLC, a Seattle-based firm. Stay tuned for more Firm of the Future profiles and continue visiting our blog often.
Mindy King: Hi Cody! Tell us a little about you and Peterson Sullivan LLC.
Cody Page: I’ve been a chief operating officer for four years, around the time Peterson Sullivan merged with another firm to become the largest local accounting firm in Seattle. About 18 months ago, I noticed a trend at every conference I attended: doom and gloom predictions for accounting firms that didn’t adapt to the trends affecting the industry.
Then, earlier this year during our partner retreat, there was a desire to do something about the issue. We acknowledged that growth of traditional compliance work had slowed while costs continued to climb, and that in order to continue growing we needed to launch new service areas to remain relevant. We surveyed about 6,000 clients to ask them what additional services they would like to see us offer and found that they had two very specific needs: our mid-size clients are looking for IT systems assurance and our smaller clients are having a hard time recruiting internal finance and accounting staff. We saw an opportunity to fill those gaps by launching new service lines, including an outsourced accounting and CFO service to clients. We see QuickBooks® Online (QBO) as the core of our technology stack offering and have moved away from the billable hour model in this service line. We see the service line as critical to the future of our firm.
MK: Can you tell us a little about Peterson Sullivan’s journey to the cloud and what prompted your firm to switch to QBO?
CP: Peterson Sullivan is 100 percent in the cloud; however, like many other cloud accounting applications, we had been using QBO to improve remote access and client collaboration. It wasn’t until we understood the concept of the modern accounting technology stack (with QBO as the core), and a pricing model change, that we realized we could transform our bookkeeping group into something that would lead the firm into the future. We also realized automation could be used as a tailwind, instead of fearing it as we (and others in the industry) have been doing.
MK: What percentage of your clients have moved to QBO so far, and how did you get them interested in moving to the cloud?
CP: It’s been a harder sell for clients on the legacy bookkeeping business model, as they see it for more of a convenience for us. Any new client we take on is already onboarded in the cloud and our new outsourced accounting services business model. We’ve seen huge demand for this offering and have chosen to focus our energy this direction – more specifically, a handful of legacy clients and 100 percent on the new business model.
MK: Seattle is one of the country’s top tech cities, but did you encounter any resistance from clients when transitioning them to the cloud? If so, how did you address their concerns?
CP: We’re taking a phased approach: many of our clients fall within eight industries and we identified a couple we’re targeting with this business model. One of them is tech companies –and they get it. In fact, they’d reject an old model if we were to propose it. Those companies get it right away, so we’re starting with them.
MK: Did you encounter any hesitation within your firm as you transitioned to the cloud? How did you address those concerns?
CP: After some initial concerns about data ownership and security, there aren’t any real concerns about the cloud. The biggest hurdle is changing the operating model, which is now just starting to be led by our managed accounting services service offering. This shift to a business process as a service provider is unlike anything our business (or the industry) has seen, and eventually the audit and tax teams will have to recognize their model will also need to change. Right now, people are excited, but it has yet to really hit them. Ask me again in a year.
MK: What are some of the biggest benefits and/or timesavers you’ve seen so far after having switched to QBO?
CP: Standardization of chart of accounts, which is virtually impossible in the current model because they’re on different platforms, and even taking a vacation makes things hard due to the various number of tools. Change will make it easier because there will be a consistent process for clients. It will be a qualitative change for the better.
MK: Peterson Sullivan serves a vast number of industries, including dealerships, nonprofit, real estate, construction, hospitality, financial services, technology, life sciences and professional services. Which of these industries have benefitted from QBO the most?
CP: Professional services, such as law and architecture firms, because they already understand that outsourcing mentality. Additionally, they have a hard time hiring accountants to serve them while being cost competitive, so they have this very specific need they need filled.
MK: What are the benefits these clients are experiencing? What do they like most about being in the cloud, in comparison to their previous desktop experience?
CP: First, it allows us to automate after-the-fact (payroll and compliance) activities and free our staff to be forward thinking. Clients are begging for guidance and no longer just want a number cruncher. Secondly, from a staff perspective, I recently read in the Journal of Accountancy that accounting professionals are worried about their job being taken away. Anyone at Peterson Sullivan will engage with clients in a very forward-looking way, which helps to address employee concerns about the future.
MK: Does your staff use apps?
CP: I have no doubt there will be a stack of apps, which will vary depending on the industry. Mainly, we’re using QBO and Bill.com.
MK: As Peterson Sullivan’s COO, what piece of advice would you offer to other accountants or firms hesitant to move to the cloud?
CP: Start with two to three industries and figure out a way to take it step by step and how to deliver the message to the clients. This is the most important aspect of transitioning. At first, I admit I also didn’t get it. Until you change your price model, you will never be incentivized to be more efficient. A good analogy is Uber vs. cab companies. Metered fare doesn’t encourage the driver to take the shortest route. As soon as the price is set with the fixed fee, the behavior changes very fast.
MK: Thanks Cody!
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