XU: Could you tell us a little about your role with Xero - what you did before and what led you here?
GC: Well I’ll start with what it is now, which is looking after product portfolios. The way we organise products at Xero is with a series of Executive General Managers and each one has a product portfolio, which is a group of the products. The products that I’m looking after are the practice ones, which you know as Xero HQ, Xero Practice Manager and the associated things around that. We have a whole load of extra features we’ve packed into Xero HQ now, like Ask, Document Packs & Xero Sign. It’s basically the things accountants and bookkeepers use to manage their own practices, clients, staff etc. An important part of it is the practice ecosystem. We have a group of partners who have integrations with Xero Practice Manager and Xero HQ, who we have a lot to do with as well.
I’ve been doing that in my most recent run for the last 6 months or so, but before that I spent a year doing a slightly different role at Xero because I was looking after my own software startup as well. Before that I spent a couple of years at what became Xero Learn, the education version of Xero. We kicked that one off and it was great fun because it was all about what that was going to be and how to create it. Then an opportunity came up to look after the practice tools.
Xero keeps on growing and we have a lot of people working for us these days, so we’ve carved what used to be Practice & Compliance. My colleague Levi has got the compliance side, as there are so many people and products now... so many features. It makes sense to spread it out a little which means I can really focus on the needs of the accountants and bookkeepers. I spend all my time thinking about how I can make those work flows really efficient, take out any repeated drudgery that comes along with a job and get them to create space to focus on clients.
XU: That’s a good explanation of everything! Can you tell us about the next-gen practice in a nutshell?
GC: Absolutely. We’ve got quite a collection of practice applications. As I’m sure you know, Xero Practice Manager started life as WorkflowMax, then it was acquired by Xero quite a long time ago now. Xero Practice Manager is really a re-branded version of WorkflowMax. Under the hood, we’ve started the process of making Xero Practice Manager and WorkflowMax individual products. This means we can take Xero Practice Manager in it’s own direction and develop features specifically for accountants and bookkeepers, and the new WorkflowMax product team can focus on the features small businesses need and want. So now, we’ve set up bright futures for both products and they can go in their own directions which is exciting.
That’s one important precursor to what becomes next gen practice, which was an acquisition. Then we built Xero HQ, which started life as a client staff management tool. It was really hard to explain where Xero HQ sat next to Xero Practice Manager and we knew we needed to do something about it, so we built these things over here, we bought these things over there... The tax tools are heavily integrated into them as well. We wanted to pull them all together, as the feedback we always get and want to solve is that people don’t want to have to put data in more than one time across the applications, because that doesn’t make sense. If you’re an accountant or bookkeeper and you’re using Xero, you’d just be asking “Why are they making me put this in more than once?”. Those sort of double ups can cause all sorts of inconsistencies and it’s laborious, so we really wanted to bring all of that together.
It’s not just that of course, that’s the practice part. The thing about Xero and our application ecosystem is that you have buckets of really useful data on the clients of a practice scattered around the place. Xero Business is an amazing source of rich data that’s about the clients, all of their transactions and that sort of thing. Then you have the tax applications, which also have really useful information in them and you have our addons like payroll, expenses, projects etc. Then you have the ecosystem so there are all these partners who have repositories of data. With next gen practice we’re hoping to pull all of this together in a way that gives an accountant easy access, aerial view over all those bits of data that are scattered around the system. Beyond that they can also look across all of their clients and see which ones need the most attention. You can see at a glance all those little bits of data that are really important, whether it might be something simple like a financial period end, or a whole lot of unreconciled transactions, or an overdue payroll return...
Bringing together all of that information means that the next gen practice is giving you a customer relationship management tool, like a CRM. A lot of industries take this for granted. If you’re a corporate software sales rep then you have these really great tools where you can pull up a client and see everything that’s ever happened, everything they’ve sent or received, any relevant pieces of information. That’s quite hard to achieve for accounting and bookkeeping practices at the moment, so we want to do that all in the Xero universe where you have the power of the Xero Business applications, the Xero ecosystem and so on. Next gen practice is really having all the data in one place when you need it and making it flow the whole way through, for those unique needs of the very client-centric business that is accounting and bookkeeping.
XU: It sounds a bit like Practice Management 2.0, on steroids.
GC: It is!
XU: What happens for those accounting and bookkeeping partners that have 90-95% of their client base working within Xero, but might have a couple of fringe ones that are using spreadsheets or QBR etc. Will they be able to use it?
GC: Absolutely. That’s a cornerstone of the vision, to make sure it applies to not only clients on Xero, but all of the other clients too. Today, Xero HQ supports this notion and Xero Practice Manager does as well. You can have all of your clients on there, even the ones that are sitting on different kinds of ledgers or don’t have any software at all. That goes for filing taxes with Xero Tax, too.
That will continue to be the case and there will be some amazing opportunities as time goes by to join Xero ecosystem members with clients who aren’t sitting on Xero yet. We obviously hope they’ll all be using Xero eventually, but we recognise there are all sorts of reasons why you might have clients who are not on Xero at the moment, or they have other needs. Supporting that and still being able to gather together as much of the information as possible is a really important part of it.
XU: Within the ecosystem and various apps you’ve got linking in at the moment, will some start to fizzle out? For example, I’m thinking you’ve got other practice management software out there that currently integrates. Is there still a place for them?
GC: Absolutely. One of the principles we’ve operated under for a long time that I really believe in is the idea of an open platform where you have choice. The problem with insisting on everyone using the same application for everything is that it fails to take account of the fact every business is different. Accounting businesses are as different to each other as any other kind of business.
My background is all in creating software and I’ve worked in lots of different domains. I’ve worked in health, manufacturing… You see these different patterns again and again where someone comes along and brings a monolithic application that is very prescribed in the way that it’s designed to be worked. That means 10% of the businesses are going to love it, it’s the best thing ever and nothing will ever come near it. But for 90% they’re going to be really frustrated and they’re not going to have choices, so they’ll have to do lots of nasty workarounds to make things happen.
We believe what works instead is having that choice from the very beginning so that you can compose the system that will meet your needs. It’s the same with the client base. Some clients need really sophisticated expense or inventory management software and some don’t, they need something lighter. You really want to be able to plug all of those things together in the way that best suits them so you’ve got that flexibility. If it’s all locked down then that’s just going to be a real constraint for growth for most of the businesses. To make this happen we also hold the same principle for the way we work with apps, which is why we publicly launched our open platform principles to enable our app partners to have confidence in this too.
XU: That makes sense. What is the pathway for rolling out this vision? What can people expect to see coming out next?
GC: The things that have just started rolling out now…
We’ve got a lot of work going on in that client list space, so what we call Practice Client Insights. Inside Xero HQ today, you’ve always had a basic list of clients with simple information, but we’re turning that into a much more dynamic experience. Now, you can add data points alongside that client information such as the number of reconciled transactions. Soon there will be the type of bank feeds.
We’re going to be adding open banking information, which has become really important in the UK in terms of making sure the connections are working and are renewed when they’re meant to be. There’s industry codes, subscription types, contact information and as we go we’re slowly adding things like better filtering and data export. Again, it’s that flexibility. Yes, we’re trying to make this all singing and dancing, but at the end of the day we know that accountants and bookkeepers are power users of spreadsheets and there is always going to be times when you want to get the data out, into Excel to mess around with and then bring data back into the system. The idea of the client insights (that aerial view level) is very actively being worked on at the moment.
Document Packs are steadily rolling out. We had a pilot with our Australian customers, working with tax. We’ve added the ability now for Document Packs to include reports out of Xero and those get signed with Xero Sign, which is powered by Adobe Sign. It’s the idea of that compilation pain point, not making our users enter data twice and bringing all of those documents into one place. Your clients don’t want to receive 15 different emails with 15 different things to sign, they need all of it in one bundle. That’s really exciting stuff that’s going on there.
We’re working really closely at the moment with one of our document management partners, but again we’re keeping that choice there. There’s a range of document management applications for Xero. We’ve been working with FYI Docs on a closer integration with document management, really bringing it together with the other features of the practice platform, so we have a document management experience that links up with the rest of the things I’ve been talking about. Going back to the CRM pattern, one of the important things you really want is the communication element to be tracked as well, so it’s easy to get to those kinds of communications. It’s a steady process.
One of the things we’re often asked about is Xero Practice Manager and how that fits into the equation. If we’ve got this all singing and dancing portal of Xero HQ bringing the data together, what does that mean for Xero Practice Manager? It stays very important and Xero Practice Manager users don’t need to worry because it’s still there. We’re trying to make sure the user experiences that happen around recording time, manipulating jobs, assignment of tasks and that sort of thing are brought forward so they can still be accessed from that same central location. Under the hood it will still be Xero Practice Manager as the engine, but we’ll try and make that accessible from many places, so it’s really easy to record time regardless of what task you happen to be doing at the time.
XU: So over time people would start to lose contact directly with Xero Practice Manager?
GC: We definitely won’t be making anything harder for our users. When we’re doing the product development we engage users and partners and do a lot of research first. We’ve just run a big project we called ‘A day in the life of an Accountant’. We did really in depth interviews with a lot of different practices around the world to try and understand what a typical workflow looks like, right down to the first thing you do in the morning when you get to the office, or when you’re setting up in your home office. What is the variety of work? How does it change over the day? What keeps you up at night? What do you get really excited about?
We start with those kinds of activities and then we reach a point where we were like ‘Hmm… wouldn’t it be interesting if this workflow over here that you’re doing today with Xero Practice Manager was actually introduced through Xero HQ instead?’. We’ll prototype that up and take it out to a group of partners and test it out. It’s a really interesting experience because the prototype is a clickable one so we’ll actually give it to them, record them and ask them to do tasks and watch to see what happens with the prototype. It means we haven’t had to build and ship the software yet, so we’re not spending millions on the software development, but we can test it and see if it makes any sense. It’s amazing the things that you learn that way. As a software developer, you can convince yourself you’ve created this amazing user experience and everyone is going to love it, you put it in front of a few different accountants and then they can’t find things or it doesn’t make sense and they hate it or they preferred something being somewhere else. So we use that as input to decide what to do. It may be that Xero Practice Manager plays less of a part directly, or it might be, as it is today, that Xero Practice Manager plays a hugely important part and we just improve that experience in Xero HQ. It’s just not something we can figure out until we’re out there testing.
XU: That makes a lot of sense. One of the things I hear asked about a lot, especially in the UK, is related to companies secretarial activities. If we’re entering changes into the single source of data this side, is there going to be the ability to pass that on to external bodies, such as Company House in the UK and it’s equivalents elsewhere?
GC: We have a number of partners already in the Xero ecosystem who do corporate secretarial. One of the things I think will work from a workflow perspective is taking our app partners who are operating in areas such as engagement and onboarding, and integrating between Xero Practice Manager and out again to things like corporate secretarial applications. If you imagine an onboarding workflow, getting that key information upfront digitally from the new client, taking it through to the middle, creating some new jobs from it and going out to the corporate secretarial to prepare some of the returns and things that are required to be filed, and then using the document management and Document Packs. That’s the kind of thing we’re envisaging. We really value the things our app partners do and corporate secretarial is one of those places where it’s really important to have owned by someone who knows the space really deepy and would integrate with the likes of Companies House in the UK, or Companies Office in Australia and New Zealand and so on.
That said, we do have integrations with Companies House in our tax products and we would imagine we’ll have similar sorts of things going on as those APIs open up. The UK is a fascinating space right now in terms of making tax digital, you’ve really got that innovation and opening up of the data. There are some quite well managed development experiences. I was pleasantly surprised. I’m signed up to all the developer programmes in New Zealand and the UK so I can get all of the communications as they build that stuff. It’s a really well managed programme. On the surface it looks like what you’d expect from APIs with a nice piece of Silicon Valley technology, so I think if they keep on churning out quality pieces of technology like that it will make it a lot easier for Xero and our ecosystem to integrate with them.
XU: A lot of accountants are using it as a good excuse to say to their clients that they’ve actually got to give you all of their data now because you’ve got to submit it all, you can’t just fill in boxes.
GC: Exactly! You can’t just hand me a wad of paper.
XU: Is this rolling out the same speed globally and what are the challenges you’ve faced from different countries you’re in?
GC: It is a challenge having to cater to a lot of different jurisdictions. One of the nice things about my portfolio is that it’s actually a lot more similar than you might think within different regions and countries. Tax authorities and the way clients do business vary dramatically across regions, but in the end when servicing clients to do compliance and advisory, their workflows are pretty similar. This has helped us speed up the process for entering new markets, as well as solving complex challenges that arise with regulatory change.
The variation tends to be more the mix of apps and integrations, like the things you mentioned with Companies House. It’s those places where those variations happen. In terms of the actual practice itself and what next-gen practice looks like, that’s a reasonably universal concept. As we’ve been talking about, it’s that ability to compose bits of an ecosystem together, that’s what gives us a lot of flexibility to do that. We’re focusing on the core and making that a really strong platform and then let that choice happen around the edges. It actually takes away what could be a really painful experience. We’re helping cater to a million different authorities and workflows all on one platform.
XU: Is there anything you’re really looking forward to over the next few years? A new direction or features you can see will come into place, or will you wait for the feedback and see how it goes?
GC: That’s definitely part of it. In the background we have a big data team who are working away, bringing really interesting insights into the data that we hold. We’ve done a lot of work on cash flow forecasting for example. So it’s applying the techniques of data science and machine learning to those sorts of things with the scale of data we have these days. If you bring one of those little insights forward for a list of clients, suddenly you’ve got these really interesting indicators that tell you things which are very hard to work out.
Today, I feel like we spend a lot of time reflecting things that for 90% of the time the accountant or bookkeeper will go “Yeah, yeah I already know. it’s good to have it there, I can see the trusted information, but I’ve got a pretty good feel of where my clients are at.” When we get into the real data insights where we’re actually making predictions and pulling together things that are at a really large scale in terms of benchmarking and so on, then we can start to surface insights that are new information.
If you imagine you sit down, you’re looking at Xero HQ and your list of clients, you’re doing work on this client and then- “Oh wow, that’s interesting. I didn’t know that there’s a new piece of tax legislation which is coming out that wasn’t going to affect this client, but now it is. Oh, and by the way it looks like they’ll be getting into a little bit of cash flow difficulty in three months and we need to do something about it”. It’s when we get into that really amazing future world of bringing those insights together with basic business information, but presenting it all in one place so advisors and businesses can act on the most important insights. That’s when it gets really interesting.
XU: Do you think there are any apps now, or over the next 12 months, that could really help on the journey of what you’re releasing? Any new, different styles or forward thinking apps?
GC: Well, we have many great apps but one that is interesting and part of this next gen practice is FYI, from a document management perspective. It’s one we’ve had a lot of good feedback on from partners who are already using it. Document management is traditionally tough, it’s hard. It’s one of those areas that can be a real source of inefficiency for practices and clients alike. That’s one of the places that could make a really big difference.
XU: They’re a good team too, they’re nice guys.
GC: Yeah, Rob’s lovely.
XU: What are you doing to fit in with the new ways of working whilst people are more remote and not in the same office?
GC: I can only imagine what it must have been like to be the practices which are still looking, waiting and watching to see if they should be on the cloud and realising that their server is in the cupboard and they’re not in the office, so they’ve got a real problem there. We do know there was a fantastic survey done where the findings were that unsurprisingly the practices who reported finding things were going okay for them through Covid were the ones who were already well and truly on that cloud journey. I think if you’re caught short with that kind of thing and everyone else is at home as well, it’s pretty difficult to get a digital transformation project going and get stuff onto the cloud. There’s an awful lot of questions about how that will work and steps to take.
We also know from our customer and small business perspective, the ones that are already ahead in terms of ecommerce and inventory are able to get their businesses pivoting and moving way faster. If they’re got advisors who are already using cloud software then their staff are at home, inactive. One of the things we always tell people is that for a small business, an accountant is not just an accountant. They’re a port of call for all business advice because they’re the first relationship and anytime anything interesting happens they’re the ones they have to go to.
As the governments rolled out their various assistant packages then there are obviously going to be a lot of questions like whether you’re going to be eligible to apply, how do you get these numbers together, what do you do… There was a tremendous volume of work just in that for the advisors. For those practices that are already on the cloud and using Xero, there’s no problem. The ledgers are already there on the cloud which means the practices can focus on running their practices and the small businesses can focus on running their small businesses. They’re not spending all their time focusing on what happens next in terms of the rapidly changing world. It’s hard, but it’s considerably easier when you’ve got those things taken care of.
XU: Are there a few next easy steps you can suggest in terms of next gen practice?
GC: There are two Xero On Air episodes you can watch on YouTube- the first episode goes through the vision for our Xero partners and the second episode goes through some recent enhancements we’ve made to specific workflows. The call to action at the end of those episodes is joining our Xero Insiders Programme, for our existing partners who want really early access to things like features we’ll be rolling out as next gen practice, and they can be part of the feedback.