AccMan

Innovation

FreeAgent has signed up five firms of accountants which will act as partners for the FreeAgent service.

Partnerships of this kind are usually regarded as ‘tick on the box’ arrangements designed to show that professionals have some interest in the service. On this occasion, the situation is different.

Each of these firms specialize in or have business units devoted to servicing the freelance community. That makes FreeAgent a good fit for these practices rather than using the scattergun tactics that other vendors choose.

The goal is to assist professionals in providing a streamlined service that shifts the emphasis to value add. At the same time, FreeAgent is engaging in a limited amount of co-development that will see the service improve in areas like error trapping and provide intelligent information for the professional to assess expense deduction validity.

Links to practices:

Quay Accounting

Nixon Williams

BlevinsFranks

SJD Accountancy

3CA

SaaS

Earlier in the week I wrote that SAP Business ByDesign will be delayed. Today’s earnings announcement confirms that will be the case. Information I received yesterday suggests that investment in the new on-demand suite is being cut by €100 million this year with no accelerated spend in 2009. That suggests the company is trying to come to market at a higher margin than originally planned. Given what we know about the economics of on-demand systems, I find that surprising. I could speculate as to the reasons but prefer to keep those opinions to myself until next week, when hopefully the position will become clearer.

The reasons for the delay remain clouded in mystery. On the one hand, Hasso Plattner seems to be saying that there is more work to do. Others (un-named) inside the company assert BBD has technical problems. The official line is:

Since last September’s announcement of SAP Business ByDesign, the Company has been working closely with early customers and partners to validate and fine-tune the solution. As a result of this process, SAP has elected to modify the rollout strategy for SAP Business ByDesign to ensure a more focused and controlled ramp-up process.

That’s PR fluff of the first order.

When I met with SAP executives last September, I questioned the company’s partnering strategy. It struck me at the time that SAP was very woolly about how it would bring partners on board. Leo Apotheker, co-CEO said at the time the company intended investing heavily to bring partners on board. That included financing the creation of sales ’shops’ as opposed to consulting operations. It makes sense given what the company was saying at the time. That strategy now seems to be in tatters.

It is becoming increasingly clear that SAP’s target customers will require a degree of customization SAP is trying hard to avoid. Last year, the words ‘over my dead body’ were uttered by several SAP executives when that suggestion was made.

My personal take is there is no way to avoid the problem. Vanilla offerings will get them into the game but won’t take them far. There are techniques SAP could employ that would make life relatively easy. You only have to see how quickly CODA has managed to get out the gate with CODA2go to understand this. However, whether SAP has the appetite to embark on what for it would be a radical change in direction remains to be seen.

As my good friend Vinnie Mirchandani says:

…it will likely be the focus of many questions at Sapphire coming up this weekend.

In the meantime, SAP has given Salesforce.com, NetSuite, CODA and others a head start in seeding this important market. Further delays will put SAP on the back foot in the race to win market share.

This year’s SAPPHIRE could be a difficult event but full marks to the company for at least admitting difficulties. Getting them out the way at this time will be uncomfortable but as Josh Greenbaum says, if Leo Apotheker can provide solid answers and demonstrate strong leadership of the kind we’ve come to expect from SAP, then this week’s events will fade into insignificance.

Tax/Ethics

A Counting School has the full details of three out of the Big Four finally poneying up for overtime they’ve illegally witheld from non-CA staff in Canada - those outside of skinflint Quebec that is. The only firm conspicuous by its absence is Deloitte? Why? You can’t tell me that they’ve been paying up all along and have nothing to do. Krupo’s incredibly unscientific summary of reactions to date:

Well that sucks, because I’m a CA so I get nothing, and will continue to get nothing extra

I’m from Quebec and I’m not a CA - my provinces rules mean that I’m not getting anything anyway. Oh nuts.

I’m happy for my non-CA friends - good for them!

Well the firms are just doing what they’re supposed to do, no big deal - they should’ve known about it already and done this sooner.

The firms are doing what they’re supposed to do, but they’re doing it well - addressing the problem as soon as they learned about instead of wondering if it would go away.

I’d add a final one: The firms are doing it before the bad publicity gets out of hand and the legal fees top the payouts.

Finally - congrats to our intrepid correspondent who is now officially a CA. As we say in tech circles: w00t!

GRC

Courtesy of Damien Wild, I stumbled across Anton Colella’s blog. For those that don’t know, Anton is president of ICAS. In a surprisingly candid post, he discusses the gap between perception and reality as it impacts reporting:

The discussion about the impact of current “thought leadership” compared to [Making Corporate Reports Valuable] MCRV was revealing. The audience felt that the proliferation of research in the past 20 years has not gone hand-in-hand with a rise in quality. Quite the opposite. It was also felt that the aim of advancing the profession was being poorly served because many of the proactive projects are at best piecemeal and at worst, self-serving.

Most significantly for me, the overwhelming view was that there is a disconnection between the needs of users of financial information – investors, analysts and the wider public – and the people who are shaping the research and recommendations. In other words, current “thought leadership” pays very little heed to what may actually be the big issues that require solutions and development. When a lot of effort is being put into work that is doing little to serve the needs of the market and the public interest, maybe it’s time to ask – what’s the point?

Part of the answer may lie in the fact there is no transparency in the report’s production or dissemination. Try a Google search and you’ll see what I mean. I see other issues.

• At the risk of sounding like a broken record, the continuing problems among the Big Four tax and audit practices do little to inspire confidence. I believe there is a direct connection between the profession’s ability to clean itself up and the confidence it earns among stakeholders.
• Corporations, especially Global 2000 companies, are so complex that it is impossible to know what’s going on without sophisticated reporting systems. The Big Four struggle to understand what these systems do. With the exception of Deloitte, the others divested themselves of their technical consultancies in the post-Enron fallout. They simply don’t have the skills. Without those skills, it is difficult to see how the profession can compete on the global stage in the development of world class reporting systems and techniques.
• The last year has seen a sea change in the visibility and importance of stakeholder interest in reporting around sustainability issues. Organizations as diverse as Business for Social Responsibility (BSR), Transparency International, World Wildlife Fund, the Global Reporting Initiative, Intel, HSBC and SAP are actively discussing issues around materiality in the reporting of sustainability measures. Much of that attention focuses on software but there are wider issues at stake that spill into those discussions. I know the Big Four want a piece of it as they see the assurance element as a natural part of their turf. The fact is, they are barely visible.

In short, the profession is increasingly marginalized around discussions on issues of importance that demand thought leadership.

Next week, I am privileged to be attending a BSR event in Boston where we will discuss issues that matter to stakeholders. Later in the week, I am participating in a panel discussion at an SAP sponsored event on similar issues as they relate to corporate social responsibility. As a former practitioner who has watched the erosion in confidence of professionals, I have plenty to say.

I see the potential for delivering value both to stakeholders and business. It is in understanding and navigating between the two different agendas that solutions will be found. It is necessarily a discussion that focuses on materiality, both financial and practical. Next week will see positive steps taken to move the agenda forward. I have been told that I am free to write about those meetings.

Endnote: The image at the top of this post shows the relationship between materiality from both stakeholder and business axes. It makes for interesting reading.

Disclosure: SAP and BSR are funding my T&E