For many years, Tom Hood, EVP Business Engagement & Growth at the AICPA has helped accountants stay “future ready” as the profession continues to change at breakneck speed. Back in 2014, he was banging the drum about how the exponential growth in computing power had introduced a “Cambrian explosion” of new technologies and software. And he was spot on. The apps were valuable and helped streamline A/R, A/P and everything in between. However, the sheer number of apps are overwhelming to even the most ardent technophiles. The stage is now set for consolidation.
Two primary forces are driving app consolidation: 1) Platforms are absorbing productivity “widgets”, and 2) “Vertical” solutions are replacing “Horizontal” solutions.
Platforms are absorbing productivity widgets
Many of the most successful innovations of the last several years were narrow-slice productivity solutions that were terrific for solving point problems such as time tracking or document collection. We’ve seen some of the most popular solutions get snapped up by the large platform players. For example, Intuit purchased TSheets and Xero purchased HubDoc. More will follow.
Outside of the accounting sphere, we’ve seen SalesForce acquire Slack, Facebook acquire WhatsApp, and so on. This trend will continue as platforms jockey to protect their market position while adding new growth engines and capabilities.
And many platform players will replicate important features and innovations. Microsoft does this with great success as evidenced by the addition of Teams, Teams Voice, and Teams Video to the Microsoft 365 suite. By bundling all of these features together at a terrific price point, they represent a major threat to the collection of standalone chat, VoIP, and video players in the market.
Vertical solutions will replace horizontal solutions
Over the last decade or two, we witnessed the “unbundling” of paper-based processes. For example, instead of physically mailing a brick of documents to clients for signature and record keeping, accountants shifted to online tools. DocuSign replaced physical signatures, ShareFile replaced courier services, and email replaced the paper cover letter, envelope, and stamp. Splintering the physical process into several digital systems forced firms and clients to juggle a host of apps -- increasing both cost and chaos. Since these digital systems are designed to serve as broad an audience as possible (i.e., they work “horizontally” across industries), the ability to tailor them to the specific needs of a vertical such as accounting is limited.
In contrast, a new generation of software solutions are working specifically to optimize the productivity and efficiency of the accounting profession. By being hyper focused on a single industry, these “vertical” solutions unlock value that horizontal players can’t match -- including replacing several horizontal apps at a time. Great examples of this in adjacent industries include Mindbody for wellness, Toast for restaurants, and Shopify for eCommerce.
As platform players strengthen and vertical players emerge, firms and their clients will be the biggest winners. Fewer, stronger players will allow for deeper interoperability via modern, robust APIs. Client communication will be consolidated in a single place, leading to much happier clients who send in documents on a timely basis, with no badgering or chasing required (at Liscio, we call this Client Experience 2.0tm), and countless hours will be saved by decluttering the app stack.
As we transition from the Cambrian Explosion to the cycle of rebundling, it is important to understand where we are in the cycle and for you to align your vision with your vendor-solution criteria. Ideally, your current and prospective vendors will be able to illustrate how their roadmap will simplify your app stack. Your checklist should include interoperability with your mission-critical systems, ease of use for your client-facing applications, and completeness of vision for the next several years. By making the right choices today, you’ll be able to say bye-bye to the app chaos of the last several years and move into the exciting new era where everything just works.
To learn more about tech stacks that help position you for success while delighting clients and staff in the process, check out this article.