Highlights from Sage Intacct’s Roadmap: Intacct Advantage 2019

ERP Software


Sage Intacct made some pretty major promises on stage at its annual conference in Las Vegas this month to get the crowd ready and amped for what’s coming in the next 12 months.

One of the biggest calls was the idea of automating timesheets. Aaron Harris, CTO for Sage and Sage Intacct, showed how you could drag and drop entries from your calendar such as a meeting directly into a timesheet, which would automatically add the client as well as time and date details.

Even more impressive, Harris claimed that the software could tell what document you were working on, and for whom, and use that to create a timesheet entry. It reads the name of a client within a Powerpoint presentation and adds the client’s details, and sets the duration for the time you worked on the document.

Harris also talked about how the company was using AI to eliminate the monthly close and move to a continuous audit.

I sat down with Harris and Dan Miller, VP of product, to get more details on Sage Intacct’s roadmap.

Digital First:  So this feature where you’re automating timesheets. How exactly are you going to do that?

Harris: That’s a real product you saw, in market with customers. We acquired the company about four or five months ago. We acquired a product, a team, and it came with customers.

When we took that into Sage, we effectively said we’re going to halt (selling this). Let’s make sure we really understand how to make this work effectively for Sage Intacct. Let’s make sure that we’re all really confident about privacy and security because this is AI getting very close, right to where the work is.

The work that’s going on right now is not building the product. We need to understand when we launch this to the Sage Intacct install base what are the things we have to tweak with it across a variety of areas.

And we also have to be ready. As a small startup that’s scrapping to build a customer base, they are limited in how fast they can grow. When we get this out into the Sage Intacct sales apparatus, there’s going to be an explosion of demand.

Digital First: How do you think Intuit feels about the US$385 million it spent on the T-sheets acquisition with this product coming out?

Miller: I think they probably think that that’s just fine because it’s targeted at downmarket.

Digital First: Yeah, but everyone’s going to want this product. I mean, no more with timesheets. That’s the headline for the next five years, right? When is it coming out?

Miller: Second half of next year.

Dan Miller, VP Product, Sage Intacct

Upgrading inventory

Digital First: What is the roadmap for how Intacct will compete against NetSuite? Are you broadening the product?

Harris: If we execute very well and we’re focused, we don’t necessarily have to broadly go after NetSuite in all the markets and all the industries where they compete.

We would argue that that more scattershot approach that NetSuite takes gives us that ability to beat them. We’re more focused on the footprint of the product, it allows us to go deeper, to innovate faster. So that focus, I think, becomes an advantage and I don’t think we have to compete.

Miller: Yeah, it’s actually what’s made us successful in the US. We don’t compete in every industry, we never have tried. There are plenty of customers to go after that are in the segments that we’re in. So we are deliberately making sure that we have a great product that’s clearly better.

So for Australia (and other markets), our focus is first on making the product. A great product that’s specifically built for the Australian market so that an Australian company looks at the product and says, “This was purpose built for us.” It’s not a US product that’s been dumped into another country.

Digital First: So what about expanding into other verticals? (Intacct CEO) Rob Reid says you’re going into wholesale distribution, what about manufacturing?

Harris: Within the mid market we are are primarily today focused on service based businesses. We will extend that out into product based businesses in the context of distribution. As it gets into advanced distribution capabilities, process manufacturing, X3 is the product that Sage goes to take to market for those areas.

But customers often want more flexibility in their deployment model. And they want some of it to be cloud and they want to control the MRP (material requirements planning). We are providing more flexibility for that by using the on-premise platform X3 at this point.

If somebody demands cloud, we have partners that do MRP that integrate with Intacct.

Digital First: Is MRP an acquisition target for Sage?

Harris: I wouldn’t rule it out.

Digital First: This goal to take Sage Intacct into 23 countries, is is it to upgrade those clients to Intacct or do you want net new clients?

Harris: If you can win on new customer acquisition, then you will also win on migration. And we want to make sure that we’re doing enough to keep those customers who are already Sage customers. We’ve made the path easier (to Intacct) than the path will be to somebody else.

Digital First: So you’re not going to try to upgrade them, because then they’re going to go have a look at everything on the market.

Harris: Well, let’s be clear. You have hundreds of thousands of customers that are on Sage products that we would love to get to the cloud, yes. But our philosophy is to create enough compelling value in our cloud products, that they will of their own accord see that value and choose to migrate to the cloud.

In the future, you will see that we’re going to get a little bit more deliberate. There will be more concrete plans and programs for those customers. But what we’re not doing is focusing all of our attention as a first priority into converting that install base on the older products.

Continuous audit

Digital First: Yesterday you talked about continuous audit. I mentioned this on Twitter and a couple of people come back and said you can do that already with Blackline and Inflo. Obviously for a lot more money. Where are you with continuous audit, what does that actually mean in the product and what do you need to do to get there?

Harris: So first of all, we are not trying to say that this will replace the traditional audit industry. The global audit and assurance firms that are going in and providing services – we’re not disrupting that. What we’re saying is, we can use technology to take what is a periodic activity and do it continuously.

The Big Four firms should make more money in this world than they do today because there’s more value in continuous assurance.

The advantage we have over the Blacklines and anybody else trying to do this is that transactions are processed through our system.

I spent a lot of time on this when we start first started building these capabilities. The problem is that everybody who’s looking at this is still looking at it as a “point in time” activity. Whether it’s the guys creating tools for auditors are still tied to to that audit event, right? Because the data is actually flowing through our system, we have the ability to test it in real time.

We actually pulled back for what we showed in the keynote. The way we’ve built this is that on every transaction that runs through the general ledger we run several machine learning tests.

Digital First: What type of tests?

Harris: Tests for fraud markers, tests for abnormal combinations of attributes. There’s several of these tests that they look at specific things. We have the ability to kick off the test as the transaction runs through the system. We score it.

We really want to help users understand the relation their relationship with AI. We could take what is now a human review process and completely hand it over to AI, which can handle a million transactions and 10 million transactions a month.

Instead, we are focusing on what humans are reviewing today, show how the AI scores it, show what the AI found, as a step towards developing the trust that’s needed. Once we’ve established that trust, there’s a level of accuracy we can start to broaden through AI.

Digital First: So what does does that future state look like?

Harris: A future state looks like transactions are tested against multiple machine learning models in real time. As we find things that achieve some threshold we’re flagging controllers or reviewers in real time that there’s something to look at.

Digital First: So exception reporting. It sounds like firms will need less auditors.

Miller: There is a parallel from a business or BPO perspective. We’ve been in a transition for quite some time where BPO evolved from being data entry to doing more advisory, a partial CFO or controller role.

That kind of transition will happen with audit as well. Auditors’ roles will shift from, “I’ve got to figure out how to pull all the data and get it into our formats”, to saying, “Here’s what the system says. This is what this means for your business.”

You get that as part of the audit today. But it’s like an afterthought in the way it’s often presented. That becomes centre, just as the role of the CFO is shifting to be the advisor for the company.

The role of the auditor will become advisory, say, for best practices across the industry. “Here’s what you guys aren’t doing very well. Here’s how you can improve.”

And that becomes really valuable information that they get through the audit as opposed to being a real pain for them to go through that process.

Digital First: That’s a good analogy. This is due second half 2020? And it effectively removes the need for Blackline?

Harris: It’ll be in 2020. I don’t think it replaces the Blacklines. We’re only focused right now on journal entry review. I think there’s going to be a proliferation of technology products that are now taking advantage of the ability to do real-time assurance.

Our customers are going to have an ecosystem of solutions that span all kinds of categories with very specific areas of focus. At Intacct, your general ledger is your compliance system of record. We can build a very nice fence around that to ensure that only stuff that’s valid and trustworthy gets in there.

But the whole idea of applying AI to assurance should seep through the entire ecosystem solutions that customers use.

Products like Blackline don’t just look at what’s going on in the core financial system. You’re looking more broadly across the accounting and finance operations of the system.

I’ve said loudly and boldly that I want to eliminate the financial close. I’d like to see the Blacklines partner and help me eliminate the financial close.

We’re never going to completely eliminate it, right? At some point we’re going to have a 10 minute close and if we can all be okay that we’re really at about a 10 minutes gap from from real time…

Aaron Harris, CTO of Sage and CTO of Sage Intacct

Digital First: What’s your time frame for the 10 minute close?

Harris: You’re not going to pin me down like that! [laughs]

For every prospective customer, our sales team ask about the three priorities they want to accomplish with a new solution. One of them is getting the close done faster. If you look across the business cases on our website you’re going to find example after example of, “our close was three weeks and now it’s a week”.

I talked to a really, really large conglomerate in Chicago a couple months ago, and they’ve got the close down to three days. And this is a hundreds of millions of dollars a year business with hundreds of legal entities. It’s happening.

The other data we know is that roughly 70 percent of all the activity happening in Intacct is automated. In other words, if we allocate computing capability, only 30 percent allocated to humans doing work through the browser.

That to me is a proxy for how far we’ve come on eliminating the close. The next 15 percent of that 30 is going to be harder than the first 70 percent, but we’re making progress.

Document capture

Digital First: What specifically are you releasing to improve the close?

Harris: Number one is you have to capture all financial activity as close to real time. The one that I really expected there to be more excitement from the audience was the acquisition of AutoEntry. There’s still a lot of paper that’s captured out in the field. The idea that you can just snap a picture of that with your phone and it goes into the system for OCR and machine learning and enters the accounting system directly. That’s a huge investment towards capturing more transactions.

Digital First: It’s not a new concept, exactly. It has been around in small business for a long time.

Harris: It’s new for us. The advantage is that we own those accounting systems. So what today is treated as a separate function that eventually feeds into your general ledger, we can build it in as a capability that sits right next to the GL.

Miller: This is typically embedded in a point solution like an AP workflow product or an expense management product. The advantage of having that technology be core to what we do as a financial system, is we can plug it into each of the workflows where there’s paper or documentation that needs to be fed into the transactional system.

Expense management and AP purchasing documents.. So on the customer side, on sales invoices. There’s things that we can do across workflows that are valuable.

Digital First: Okay – can you attach documents to transactions in Intacct?

Bank feeds and bank rules

Harris: Yes. So that’s one piece. The second piece is continuous reconciliation. A big part of the month-end process is reconciling your accounts, reconciling your receivables, doing your inventory, cycle counts, whatever.

Sage is doing a lot here with the banking cloud to connect directly to banks so that you can match transactions coming in from the bank.

Digital First: Again, coming from Xero and QuickBooks Online, these systems have bank rules, automated bank rec. A lot of this is already out there. It’s strange that it has taken a long time to get into ERP. Why have Intuit and Xero invested so much in bank feeds and bank rec, and ERPs like Intacct haven’t?

Miller: Look let me tell you a little bit about why that is. My background, I was at Intuit for 17 years prior to coming here.

Intuit is dealing with a different user. Their personal bank account is their GL, essentially. Whatever money is in the bank, that’s how much money the business has. So it’s a much simpler process for the owner.

There’s a lot of investment that has gone into solving that problem for the small business. In the mid market, we have learned that we are actually unique in the way we’ve approached it. We’ve taken the small business approach where we provide direct access to the bank.

Digital First: But Yodlee has been around for forever. Xero’s using it in a lot of different countries

Harris: …Yodlee doesn’t work.

Digital First: There probably is a higher tolerance in small business for mistakes in bank feeds.

Harris: Exactly. When you’re dealing with a more sophisticated finance, where there is a finance department in a business, accounting needs to be captured before the fact not after the fact.

In a small business you can get away with doing it after the fact. I’m going to download all my transactions from my bank and my credit card and with my ecommerce partner and work it out. When you get to medium sized businesses, capturing after the fact is a problem.

So it’s not about bringing in the transactions from the bank and getting them into the system. It’s about exception handling. It’s a completely different rationale for connecting these systems. Not to say it’s not valuable – it is. But the order of value is different than it would be for small business.

Digital First: The special thing here is that Intacct is collecting bank feeds on behalf of the customer, rather than the customer doing it themselves?

Miller: It’s built directly in the system just as it is in Xero or QuickBooks. You just select your bank, and it works. That’s what’s unique. There are competitive products that have the ability to connect to a bank, but it’s a customisation to connect to your bank.

Harris: Another point is that customers start to demand that in the mid market when they get bigger. And it becomes a point of efficiency. There are great treasury products and financial close products like Blackline and Info. So for all those reasons it just wasn’t as high a priority as for the small businesses.

Digital First:  Okay. It did feel like there was a whole lot of consolidating ecosystem partners into the app. So on the financial close side and the new reporting in Intacct looks a little like Adaptive Insights.

Harris: Let me talk about the value because I wouldn’t say that we’re grabbing things in from the ecosystem. I would say that the traditional footprint of what we consider to be accounting is reshaping.

A company of Sage Intacct’s size, roughly 800 employees, has over 100 cloud native products that they use internally to run the business across finance operations, marketing, sales, HR, etc. I would wager that that’s about five times the number of solutions that a similarly sized company would have used 15 or 20 years ago, if not more.

And so what that means is there’s this massive proliferation of high value solutions that are allowing companies to increasingly become more efficient and perform better.

We are not in any way going to be able to – nor do we want to – take all of that into the core. And we also are recognizing that some of what’s getting built in the ecosystem is actually eroding Intacct’s footprint, right?

There are other really strong solutions for spend management, expense management, purchasing, and on and on. At some point, as a customer grows, those functions become quite important. There are brilliant solutions on the marketplace that they can use and they will effectively graduate from that part of Intacct. So it’s evolving.

Digital First: So what’s in the core and what’s not?

Harris: We’re going to be super protective of the core, the general ledger, financial reporting, and everything around that.

But I also see now that there’s opportunities with technology for things that were traditionally thought of as being separate that actually should be part of the core. Financial planning and analytics is just a really good example to me.

If you want to do your planning, you should plan on your system of record. I’m not saying there’s not a future for planning products. But when a CFO needs to get an answer from data that lives in the accounting solution, I want the CFO to get the answer in the accounting solution.

It bucks the conventional wisdom that to do any sort of rich analytics you have to lift your data out of accounting and use a different tool that’s configured on a different set of data. I think it’s an antiquated idea.

And so that’s where things are going to come into the footprint that traditionally everybody just considers they should be separate.

Disclosure: Sage paid travel and accommodation costs for Sholto Macpherson to attend Sage Intacct Advantage in Las Vegas, USA.

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