From the April 2012 Issue.
A few weeks ago it was my pleasure to speak with the members of the Alaska Telephone Association about the issues surrounding broadband in their state and nationwide.
No, I am not crazy enough to go to Alaska in January, when they are still trying to cut through the ice to get heating oil to the besieged city of Nome. The ATA held its annual winter meeting in Hawaii.
The salient point is not about my words of wisdom to the gathering, but the even greater wisdom of the speaker who preceded me, John Martin, CEO of the Southeastern Institute of Research. In a startling 90 minutes, John outlined the evolving cultural shifts in the United States and the differences between the four major generations alive in the United States today – the Greatest Generation of World War II fame; the Baby Boomers of the post-war years; Generation X; and Generation Y.
He spoke in particular of what is happening today, which has great relevance to both technology and to the accounting industry. A trend he calls, “The New Fru.” According to Martin, this is the movement driven by the economy of the past decade that has ushered in a new type of frugality.
We no longer buy a new car every year. Perhaps every decade, but not every year. We use our smartphones to comparison shop. We fix broken things instead of throwing them away in favor of a new one. And we demand products that can be fixed.
This is a startling departure from the past 50 years, decades in which planned product obsolescence and replacement was the central core of manufacturing. It drives a stake through the heart of the 18-month software development cycle, and the two-year replacement cycle for cell phones. And it could have an enormous impact on imports from Asia, where product quality is less important than lower cost.
Nor is this cultural shift expected to change as the Gen X and Y people become the dominant generations in our society. While it is not true that coming generations will have a lesser lifestyle than ours, it is true that their lifestyle will be different. Already, we have seen the impact as people stay home more, grow their own gardens, do their own home remodeling and even divorce rates fall. We’re not only holding on to our cars longer, but our spouses.
There is even a handbook to the New Fru – Chris Farrell’s The New Frugality, available on Amazon.com and as a Kindle ebook. It outlines the approach the new generation is taking to a wide range of activities, including whether to buy or rent a home; how to plan for retirement; which college to select for your children and grandchildren; and which charities to donate to.
The impact this will have on the accounting industry could be enormous, and I would submit we are beginning to see it played out now:
- Wealth management clients are taking a more hands-on approach to their portfolios. They are demanding a more active role in the decisions. They want better, faster, online updates to their plans.
- Mechanical accounting functions like payroll, bookkeeping, and bank recording are in decline. More small companies are doing these chores for themselves, and systems to help them do it (a.k.a. QuickBooks) are rapidly gaining market share.
- The majority of accounting software is moving online to a SaaS model. This is faster, more efficient, more accessible and more frugal than 18-month update cycles and patching by disk or CD.
- People are once again hanging on to computers for more than a two- or three-year cycle. That means that the emphasis is again on repairs, patches and updates for older systems and software. Windows XP remains the most widely used operating system in the world, even after being officially abandoned by Microsoft. Other software vendors are vexed by the failure of their users to buy and install updates.
- The hottest trends in accounting technology follow the pattern. Document Management to reduce storage costs and use of paper. Cloud computing for the same reasons. ERP and CPM to focus services on strong corporate decision making and effective communications with clients and vendors.
- Work with a non-profit? You had best read the book first, because charities and non-profits that ignore the changes in attitudes will see a sharp decline in donations.