Case Studies: Business intelligence

As accountants continue to move beyond pure compliance services to occupy the valuable advisory role for their clients, some of the most powerful tools available to them are business intelligence solutions.

While the market is still young for BI software, progressive CPAs are testing the waters and finding endless analytical advantages. We spoke with two of these practitioners about their experience so far in using BI to advise their clients, and what’s next for their practices, as big data will only continue to get bigger.


Endearing themselves

Firm: Keiter

Users: Six “power users,” 20-30 users overall

Product: Sageworks ProfitCents

Commencement date: Circa 2005

On record: Founding partner Ted Gary, CPA, CITP, CGMA, and Fonda Lang, practice development manager

Process: ProfitCents, a financial analysis suite that provides industry benchmarking data with various ratios and metrics, is used at Keiter for the Virginia CPA firm’s marketing and consultative efforts. The firm uses ProfitCents and its real-time industry data in client proposals, identifying best practices and the prospective clients’ areas of weakness compared to industry benchmarks.

Ted Gary estimates that the analytics tool has helped the firm land three to five engagements over the last year, ranging in size from $10,000 to $100,000 in annual business per client, or a total of roughly $500,000 in new business last year. “Even if we don’t get the business, it adds value,” he said, explaining that prospects will remember that value-add and sometimes return to the firm at a later date and even engage.

According to Fonda Lang, who uses ProfitCents for this business development function, the tool’s greatest advantage is the amount of industry and especially private company data that it holds. Lang will run industry reports for prospective clients, limiting the data to relevant years and the key industry indicators for that industry. “We take that report and the two to three main points to discuss with them, and see if there are new ways to implement and grow,” Lang shared. “We narrow those to two to three goals of improvement and growth.”

The same philosophy applies when these prospects become clients, with data points varying by client and industry. “It’s an ongoing client situation where will we use [ProfitCents] most often to evaluate the current year’s performance, though it depends on the client,” Gary explained. “For clients that really like to get into the numbers, we share more information than [just] the report. A lot of times, the client is not as sophisticated, so we use the current financial information, areas where we think they can improve.”

Results: ProfitCents’ most vital function for Keiter lies in the advisory opportunities it provides.

“The best thing, in my opinion, is the consultative time in front of the client,” Gary said. “Getting to know them, what’s important, and what keeps them up at night. It’s a value-add that differentiates from the pure compliance side — it’s how we endear ourselves.”

The knowledge sharing goes both ways, he continued. “Part of our job is educating the client … on the different industry KPIs, identifying and knowing them. The tool helps with that. We do a lot of hotels, [so for those clients, we look at] room turns and occupancy as key KPIs and we have that information provided by ProfitCents.”

The firm also uses ProfitCents to forecast future performance using “what-if” scenarios. For example: If sales grow, what kind of line of credit would that client would need? The endless possibilities are advantageous, but can also present a time-management problem, according to Gary, who explained that he could easily spend 24 hours exploring them but typically limits himself to one.

Keiter has found some difficulty in integrating ProfitCents with CaseWare, the platform the firm uses for assurance services. “It doesn’t map as friendly,” Lang said, though Sageworks “has been trying to enhance this feature.”

Next steps: Looking ahead, the firm wants to push greater internal adoption, according to both Lang and Gary.

Additionally, “We suspect we have clients that would like to have this that we’re not providing it to,” Gary said. “The thing that keeps me up at night is losing a client to another CPA firm because they provide it.”


Serious toys

Company: Micro Accounting Partners

Users: 1

Product: Microsoft Power Pivot

Commencement date: Spring 2014

On record: Owner Doug Binkley, CPA, CGMA

Process: While at a state society conference in Oregon in late 2013, Doug Binkley attended a session led by Microsoft employees touting the benefits of Power Map (then called GeoFlow), a tool for mapping and interacting with geographical data, and Power Pivot, an Excel add-on that extends the application’s pivot table capabilities with greater data capacity, advanced calculations, and multiple points of data importation.

With accountant-friendly Excel at the front end, Binkley felt comfortable exploring Power Pivot. When he started working with a client the next spring that had an Amazon business, the data possibilities of Power Pivot were a natural fit.

That small-business client sells custom toys on Amazon using the “Fulfilled by Amazon” program and was growing so fast, the owner couldn’t keep his books up to date. Binkley accessed the company’s data from Amazon, which provides copious but “ugly” data. He exported it to a text file and then ran it through Microsoft’s Power Query tool, another Excel add-on that combines and shapes the numbers into digestible information.

Of the “tons of data” Binkley had access to, including types of transactions and customer data, the sales information was the most immediately actionable, and he put together a small prototype and dashboard with Pivot to analyze it. Amazon provides this data on a biweekly schedule, which Binkley uses to update his model with fresh information. His client can view, but not change, the latest numbers on a hosted Microsoft SharePoint Web site.

One element of the sales data Binkley identified as especially useful were the sales opportunities through Amazon’s “buy box.” Only sellers that meet performance-based requirements can compete for placement of that button, which customers click to make purchases — usually resulting in higher sales. Binkley built an analysis tool into his model that told him and his client how many sales opportunities were lost when the buy box didn’t appear: During the holiday season, a prime time for toy businesses, he discovered the client lost $30,000 in potential sales.

While Binkley’s model helps him identify these key areas of analysis, his client will always be the best source for discovery: “My client told me about lost sales, and where I should focus my attention. Another thing, his latest pain point, is filling up ocean containers. He knows each of the products, their weight and size, and was doing it manually.”

The client’s spreadsheets were not uniform and were missing information, so again Bink­ley developed a model, this time that would take each inventory item’s metadata and calculate the best configurations for placing them into the containers, giving them “one version of the truth.”

Results: The certainty of these numbers has been a valuable way for Binkley to advise his client, though the process has not been without its challenges. Binkley is a Windows user, and his client has a Mac shop. He solved the compatibility issue by hosting his Power Pivot dashboard on the hosted SharePoint site, but difficulties remain in the Microsoft ecosystem.

“Microsoft makes great stuff, but it’s hard to figure out,” Binkley said, borrowing a quote from Rob Collie, the “father” and founding engineer of Power Pivot: “When you get stuff from Microsoft, it’s like buying a Porsche that comes in a box of parts with no directions.”

Binkley has borrowed more than quotes from experts like Collie, seeking out mentorship and training from business intelligence and Power Pivot experts. Matt Allington, Collie’s partner in developing Power Pivot University, an online training course for the product, taught Binkley that he should “blow up” his model every six months. Binkley did just that with his first model, starting over and building a new one that was one fifth the size of his original, optimized based on everything he learned from the training course.

This continual effort to optimize and refine means Binkley’s biggest investment in business intelligence is time, as his Microsoft Office 365 plan, which includes Power Pivot, runs him $12 per month.

Next steps: Binkley has delved into forecasting, and will continue to build out that function in his future models. “It will help clients forecast sales next month, which products are doing well and not doing well,” he shared. “We can use that information to develop marketing and operational strategies.”

Binkley also plans to provide deeper analysis into inventory management. The sophistication of these models will serve him well as he aims to build up his Amazon FBA client base. His toy seller client is one of two for which he currently offers BI services, out of about a dozen total clients Binkley has. With his cloud-based accounting services for small businesses, Bink­ley’s niche has always been entrepreneurs. That fits the profile of FBA sellers, which he says currently number 2 million globally. “I really see what I want to focus on — there’s a tremendous opportunity with these resellers.”

Online sellers also need sales tax support, which Binkley anticipates he will provide with Avalara, integrating the sales and use tax solution with his Xero and Power Pivot solutions. “I have a couple more prospects in the works and I’m working hard to have a complete dashboard for Amazon FBA clients. I’m adding on to it the Xero functionality, and with Avalara, trying to develop a one-stop shop.”

Binkley will also be exploring Microsoft Power BI, a more advanced business analytics tool that became generally available in late July.

“I want to try to have a business plan to develop small entrepreneurs that are successful at e-commerce and need the accounting back-end and analysis, a virtual CFO type,” he said. “They need that back office to be more successful … my one differentiator is providing a little more of an analysis capability.”

Binkley also expects the combined power of e-commerce and BI to democratize business: “Big companies do this all the time, big companies sell on Amazon and have all the business intelligence information. Why can’t small entrepreneurs have just as much? ... It’s within our grasp to provide the teaching power of BI tools — connecting the dots and getting that part into the clients’ hands.”

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