Thomson Reuters is following Wolters Kluwer into the next generation of cloud based practice management software. It is no longer enough to be the repository for accounting wisdom; TR and WK see the opportunity to be the world in which accounting practitioners operate.
Both are working on similar concepts. Instead of accountants switching tabs to look up accounting legislation in an online knowledgebase, the practice software will show snippets relevant to the industry or tax area. With a tight enough integration, one could imagine the software serving up templates customised for each client. But you can only do this if you’re developing the practice software yourself.
Thomson Reuters is pouring money into its Onvio platform which is currently targeting micro-firms with a handful of partners. However, this is just stage one. The product is being developed simultaneously for multiple markets and will eventually stretch to the largest of firms. This will take many years, but Thomson Reuters is playing a long game.
Thomson Reuters is betting that its vast tax content and other products can accelerate the compliance workflow – and make it more efficient than any pure software company could do. But can they invent software (rather than just acquire) as well as everyone else?
I caught up with general manager for Australia, Michael Horton, who spelled out Thomson Reuters’ game plan for accountants in practice.
Digital First: Why is Thomson Reuters getting into practice management software?
Horton: It’s a really good question. It is completely logical for us to move heavily into software and to connect the assets that we already have; in content, document management. We can do something which is above and beyond what we have seen in the marketplace. And it is also the global power of Thomson Reuters to be able to invest in millions of dollars to create superior solutions which we’re able to localise. Some of the localisation is extreme localisation such as with tax software. But others require little localisation, such as a practise management solution.
We need to make sure that the currencies and timezones, spellings and indirect tax, all those things are done. But that’s a light touch.
Digital First: Australia is one of the most over-serviced markets for client accounting software. You could also argue that there’s quite a lot of practice software given there’s only 11,000 firms or so. You’re not exactly going to make millions out of the Australian market.
Horton: We see there’s opportunity here, but we also see that this is a really important market too be because of the learnings in this market. This is a market that is as sophisticated as the US in terms of technologies. It’s probably more competitive than other markets around. In terms of the regulatory environment, it’s as simple and as complex as anywhere else in the world. If we can create really good solutions here, it will enhance our ability to [create] a suite of solutions globally.
Digital First: Are these the same forces driving Thomson Reuters into practice software as have driven Wolters Kluwer and CCH Australia? Do you see it as an inevitable step?
Horton: Yes, I do think there is logic in the continuum of both having a large array of accounting customers across the globe. That’s accounting customers in practices as well as in commerce. And Thomson Reuters has been in the software space around the world, both for practitioners and in commerce, for quite a long time. But particularly here (in Australia), we have had a really successful corporate software business for the past 12 years or so called [inaudible 00:04:56] account software business.
Digital First: So putting the skeptic’s hat on –
Horton: I can see you’ve got it on.
Digital First: Yeah, I brought it with me. Thomson Reuters has collected a lot of its software through acquisition as opposed to building from the ground up. I can remember Rod Drury (ex-Xero CEO) when CCH Australia (Wolters Kluwer) bought Acclipse. I said to Rod, “Are you worried about this? CCH has market power, size, funding.” Rod said, “You watch, I’m not worried at all.” And now, I can imagine him saying something similar in this case. Looking at Sage’s struggle, what would you say to critics that say, “Thomson Reuters is very good at buying and running software, but that building it is a different experience altogether”?
Horton: I think that would have been a really strong criticism and a reason to have some degree of cynicism about our development push probably five years ago. Back then the market expressly told Thomson Reuters, “Hey! You are growing through acquisition and we want to see organic growth.”
So for the last five years we have almost exclusively focused on organic growth and development of our own solutions. And the suite of solutions that we’ll be rolling out we developed organically. They’re not acquired. It doesn’t mean we would be averse to something which is fantastic to acquire. But if you go and research what Thomson Reuters acquired in the last five years, it’s a very limited array of things around the world and we have advanced our platform during that time dramatically.
We have brought it in-house and we have enhanced the skills, resources, the capital investment, the progress to be able to work in an agile way. The whole culture has shifted. We’ve organised the business into a tactical, professional, corporate and a legal unit, which is all about the customer as opposed to in the past where we had a very product centric structure. Now we’re really into (understanding questions such as), “What are the customer’s needs? How do we get the customer’s voice into our business?” And then how do we respond to that with big ideas, keeping things simple and moving agilely.
None of this is rocket science but the confluence of bringing all those elements together is actually something that is starting to really set us apart from all the markets that we’re operating in.
Digital First: So where is Onvio up to? I did have a look around the time of the Accounting Business Expo and felt like it was embryonic.
Horton: Onvio is a multi-year roadmap of global technology localised for local players. Our approach is to start at the very bottom of the market, with micro firms and sole practitioners, and meet their needs in terms of tax and then extend up with the practise management solution.
So that’s this year, we get that bedded down and then start moving up the market progressively. And we’ve got that mapped across the next three years: What are the features to enhance the suite, your financial reporting, etc.
We’re really looking at this as the tax professional platform for Thomson Reuters, globally. We then have a number of assets; content, legal documents, and globally there’s an array of other solutions. How can they be transformed from point solutions to being integrated into that entire workflow?
It will be really useful to see content in context say if you’ve got an issue that comes up while you’re doing your tax return. Do you want to research that issue quickly? You can then access the system and do that in situ. We can actually construct content to help you through this step of the workflow or the completion of this task. It’s really about helping you make your compliance work more efficient, more profitable, and help you transition into advisory. So we are looking at our products in the US to see if we can bring them here which really aid in that transition –
Digital First: What products?
Horton: There’s something called Practice Forward which is a solution for mentoring or consulting online. If you see a number of hooks that immediately come up from a return you can say to the client, “We completed the return, but here are the issues that we can work together on to optimise your position for future returns.”
Digital First: Which countries are you localising Onvio for right now?
Horton: It’s really probably the four locations where we are most advanced; the US, the UK, ourselves and Latin America, (mostly Brazil).
Brazil is where our business is most advanced and the size of the economy there is huge.
So we really look at our global roadmap and how it can be localised in multiple places. So for example, with financial reporting, it’s a joint activity between ourselves and the UK because of the centres of excellence. The fact that we’ve got XYZ Model Financial Accounts, which is kind of like the industry standard, really means that we’ve got a deep understanding and automation of that space. In the UK the digital business has really been delivering technology solutions for some time. So the confluence of expertise across the Thomson Reuters world is really advance that most rapidly.
Digital First: So is Onvio at the same stage of development in each of those four markets?
Horton: We have one Onvio platform which in some places has more advanced features. So for example, the financial reporting piece in the UK is more advanced than here. The tax piece probably in the US is more advanced than here. And the document piece is more advanced here than anywhere else in the world. So, it’s kind of like we’re moving forward in a uniform way, but with little bits in different places taking the lead and therefore coming out first in that location.
Each of the markets face different issues. Particularly in the US, there’s a huge existing instal based business, and they are very happy. That means that there are different considerations in terms of the route to market. Whereas with us, we have a nice, established business with small firms.
The NPS score for Software Assistant is in the 50s or 60s, which is just fantastic. People love that solution. And with the scale of that business we can really move forward quite aggressively.