The most interesting trend to break out in 2018? Data engineering for accountants. Yes, it sounds crazy and it will no doubt take a long while to reach the prime time. But the signs are already there.
The Big Four firms are already retraining accountants as data engineers to pull information from SMEs’ systems for reporting and advisory services. Even small and mid-size firms are getting in on the act.
Dan Beck, an accountant who now provides technology consulting services through the Toowoomba, QLD firm, made the transition to data engineer under his own volition. Dan joined me for the Accountech.Live preview webinar last Thursday and explained why this career path will become increasingly common.
Could data engineering be the missing piece, the bridge between compliance to advisory? Does it provide a data-driven approach that gives accountants the confidence to make solid recommendations to business owners? Accountech.Live explores these themes in detail. You can get your ticket here.
I hope you enjoy the following interview as much as I did!
Digital First: I think a lot of people will be saying at the expo, “What the hell is data engineering, anyway?” Can you give us a layman’s explanation of what it means to you?
Beck: Yeah, so this is a common question that I get. Most accountants do data analysis, whether they realise it or not. Data analysis is taking the data and analysing it for trends, looking for outcomes in data. A data engineer presents that data to you in a clean and consistent manner (so you can perform the analysis).
If you’ve had to build a house, you’ve normally got an engineer who makes sure that the structure’s right, that it’s clean, that it meets codes, and then there are builders who put other pieces together.
It’s a similar kind of thing. (A data engineer pulls) data together into a consistent format to sample and analyse it. It’s a skill that takes a little bit of effort but it’s very worthwhile. And without it, what we find is you can jump to the wrong conclusions (with reporting) because you don’t have clean data.
Digital First: There will be people on this call thinking, “Yeah, I do data analysis. I don’t need a data engineer to do it. I just open up an Excel sheet, and export from my accounting software, and analyse the data.” When do you actually need a data engineer?
Beck: Think of it this way. Say you’re doing self-financials. You’ve got no bank statement, you’ve got no bank clerk. You can start having a look, you can see what someone else has provided you, but how do you know that the data is quality and it’s consistent? Being able to pull data in a format that you can then consume and utilise, and making sure that you don’t accidentally delete data becomes massively important.
Digital First: How do accountants clean up their data for analysis in a spreadsheet differently to a data engineer?
Beck: All we’re talking about here is making sure that the data is in the same format. So columns, rows, everything else like that, that is essentially data engineering. It’s just about removing things like headings, titles, things like that don’t provide any value to the analysis point of view.
Digital First: But that just sounds like formatting a spreadsheet.
Beck: Correct, but how do you do that automatically in real time? How do you do it consistently, so that nobody ever has to touch it? And that is where it gets really, really cool. Some of the things that we have been doing with clients is how do you pool that financial information in real time, to present to them in real time, and then analyse that data?
We’re working with one client, at the moment where they need to know all transactions that come into their bank account. Easy. Someone could run a profit and loss report or we can simply load that data from Xero and present it in real time to them.
Digital First: What type of business was that? What were they doing with that list of transactions?
Beck: They were a removalist business. So they needed to be able to see, in real time, when the invoices were paid. They run very much on a cash payment basis, so that they could then see the data coming in real time to know, “Hey the client’s paid.”
We’ve used different things like pulling it from their financial packages, pulling it directly from their bank accounts and bank feed, to present the information in real time so we don’t have that delay in communication.
Digital First: But you can’t pull real time bank feed data from Xero, can you?
Beck: You can pull real time bank data in certain circumstances with certain payment platforms.
Every situation and every client has a different set of circumstances and requirements. And so being able to take something like Xero end file for one client might work. For another client, they might have an information system or ERP.
Digital First: So you’re kind of like a plumber. A data engineer is like a plumber who plumbs together all these different systems.
Beck: Perfect analogy.
Digital First: So what was the firm doing before you got into this whole data engineering thing? How would you have helped that removalist company in the past?
Beck: With manual work. What’s really interesting about this example was at first they came to us to say, “Hey, do you know anybody we could hire as a receptionist?” And our adviser asked, “What are you looking for?” They said they wanted someone to get information from one system and copy it across to another system, which took them three hours a day.
But the rest of the time they wanted the receptionist to do something completely different – customer service, possibly sales. All we had do was the data engineering piece, which was to connect the various different systems together so that they would talk to each other. And now we’re helping them find somebody who knows customer service and sales.
Digital First: So what skills do you need as a data engineer in general and to do that specific job?
Beck: I’d like to break it into a couple of different things. First is problem recognition. In this instance, the problem that came through we need somebody to perform the role. But looking at the problem, we’re not actually trying to find a person to do that function. We actually can do the function differently by looking at the problem in a different way. And this is why I think that for advisory firms, this is why (data engineering) becomes so important.
At the moment though a lot of firms go, “Okay, that’s too hard. Let’s go and find the receptionist.” What we do is build a connector using existing technologies. It started off as a consulting session, working out exactly what the requirements were, and then talking to the client’s IT provider. The accountant was there throughout the entire process. None of this stuff happens in isolation. What you need is a mix of skills. You talk to the IT guy, you talk to the accountant, you talk to the client.
Digital First: So what’s the bottom line for Power Tynan, as an accounting firm? What kind of services do you offer your clients?
Beck: Power Tynan has an undocumented catch-cry which is “Yes, we can”. What we started finding was that more and more we weren’t getting hit with financial issues. They needed to fix an operational issue. Clients said, “We know that there’s a way to fix it, we just don’t know where to start.”
And that’s as simply as to how it all started. We took a business problem and turned it into a business solution. We started from a low base – probably a higher base than a lot of other firms. I had a few skills in IT and a few skills in advisory, but on the whole we learnt as we did.
Digital First: How do you market and sell that service?
Beck: It’s a hard thing to describe. What we often do is sit down and talk about pain points.
Digital First: Fascinating. So that’s really the pitch isn’t it? You can’t really go and say, “Hey, we got this data engineering service, you really need it.”
Beck: To tell you the truth, we don’t really pitch it as a data analytics or a data engineering service. We’re actually pitching it around process and efficiency improvement. Because as soon as you start talking about data engineering, most people will go bye-bye. It’s a bit like anyone starts talking about machine learning and AI. People immediately go, “Okay there’s gotta be some rocket scientist that looks after that. It’s not for me, let’s move on.”
Now what if you had all the information you needed to be able to do that analysis? What if you had all that information right when you needed it and automatically?
Digital First: So you mentioned you’re already working with firms who use your data engineering service. How do they get to the point where they realise that the firm can do more analysis than what’s in the Profit and Loss? “You know what would be really cool, if we got that data from that system over there.” Is that a certain type of firm that’s ready for that?
Beck: Most of the firms that are doing it are medium sized firms, multiple partner firms who have got the want and the need to see what is there beyond the future. A lot of them are doing compliance and they’re wanting to do advisory type services. They don’t know what it is, but they know that their clients are asking them for more information. And what they don’t want is another firm to come and offer the service and then lose the client to the other firm. So they want to skill up their team to offer some of these services and learn how to use the tools that are in the market at the moment.
One firm had a client who needed to bring together inventory, a franchise system and HR data together. The firm was saying to us, “We don’t know how to do it but we want to learn.” I run workshops for them, and if they have a problem with a client they give us a call to talk about the client, what the client and data requirements. We’ll jump in and help them if it’s too big for them to source the data, they still do all the analysis themselves.
Digital First: Power Tynan has roughly about 50 staff, yeah?
Beck: Yeah, correct.
Digital First: Do you expect that firms of a similar size will inevitably develop or hire somehow, someone with data engineering skills?
Beck: I think that we’re going to see this as a trend that increases over time. I got a phone call two weeks ago from another firm that has said, “Hey, can you help us find someone to bring on to the team and start building these skills and capabilities?”
I think absolutely it’s going to be a major area. I get questions when people start talking about this who say that as we get more cloud technologies, we’re going to need to do less of this stuff. My response is I think that the need is going to actually increase. Yes, we’ve got these cloud technologies that all talk together, but we still have to pull the right information at the right time for the right purpose. And that’s what a good data engineer will do. They’ll be able to identify what the problem you’re trying to solve, what information is needed, and when. For instance, there’s no good pulling information every 30 seconds if you’re only looking at it at a point in time. It’s no good pulling information once a month if you needed to know for a meeting that’s coming up in the afternoon.
Digital First: Do you think it is possible to deliver quality advisory services to SMEs without some type of data engineering going on?
Beck: I’m gonna have a biased response to this answer. Do you need to a data engineer to delivery advisory services? I’m going to say no, you don’t. Everything comes down to time, effort, and money. Do you want to do a cost-effective service? Then I think you need to add that (data engineering) element into your business. We’ve got friends out there who are doing things like pulling together information from inventory systems, financial systems, HR systems, other operational systems, but they do them semi-annually. They pull the data once a month and it gets delivered two weeks later.
This information doesn’t happen weeks later it happens now, and when I say now, like within the last hour. We do our firm reporting hourly at times. It’s not waiting to a mystical end of month or end of quarter period.
Clients are used to getting their data regularly. We had this massive transition from bank statements to bank feeds. We used to get a bank statement once a month and we’d reconcile it. Now if you’re not getting it daily people are wondering how the hell you manage your business. And I see the same kind of thing happening and why we will see this as a field that keeps growing is to pull that information together quickly and more accurately.
Digital First: You get some reports in your firm hourly? Is that just a humble brag or is there an actual use for having it?
Beck: Absolutely! We do it for things like when we’ve got workflow issues. When somebody is getting stuck on a job and you can see and analyse that data in real time to know, “Hey buddy, you’re stuck on this, we can see you’re stuck on it.” There’s no pride in sitting there trying at a problem that we can help you do it. So absolutely we do data analysis in our firm hourly.
Digital First: And you use an app to track workflow versus staff satisfaction? How does that work?
Beck: We use an app called Everperform to upload data from our practice management system on a regular basis. Now where this stuff gets really cool is that can you also have a series of non-financial KPI questions about how the team’s feeling, and how they’ve got everything they needed to deliver. We’re actually able to do a little bit of trend analysis and sentiment analysis, and see the correlations between how they’re performing and how they’re feeling. So we actually start addressing (staff) issues before they start becoming (workflow) issues. It’s truly remarkable, once you’ve got that flow of information, the insight that can come from it.
Session: How a regional firm uses data engineering in advisory
Presenter: Dan Beck, Director, PT2
When: 4:25pm – 4:55pm, Tuesday 13 November