Can you both introduce yourselves: who you are, where you’re from, and a brief overview of your background?
Kendra: Oh, lovely. Well, actually, it’s lovely to be here, so thank you for having me on. Me, in a potted history, where am I at the moment? Maybe I’ll start with that. I’m Kendra. I lead the thinking and execution around how analytical data is used at Xero, so small business accounting firm. One aspect that’s perhaps relevant to this chat and this audience is we think a lot about how are we good custodians of all that beautiful, exciting, rich customer data that flows through our platform. My team thinks a lot about how do we use that better to create more intuitive workflow, simpler workflows. That’s where I am today, and that’s the space that I fill at Xero.
Kendra: Where have I come from? I’ve been commercially in and around data for 15 years. It’s what I do, it’s what I love. I’ve always worked commercially in the data space. A whole different bunch of companies, a lot of FSI, a lot of bespoke software, which is really, really interesting. Prior to that, if you want to go all the way back to the beginning, I was, as many data folk are, I was a scientist. I spent a very happy decade firing lasers at atoms and building quantum computers. So, there you go. Quite a journey from geek to the data professional to today at Xero.
Heather: Thank you so much, Kendra. And Clayton.
Clayton: Hi. G’day, Kendra. Hi, Heather. Thanks so much for having us on the call today. Yeah. My background, I started out actually doing accounting last century in the late eighties at Pricewaterhouse in Melbourne. Loved it. Great place to start. Really did accounting so I could have my own business one day, and I stayed in accounting for about 50 years. I felt probably trapped in the end. Then thank goodness accounting technology came along in the mid 1990s, so it enabled me to set up a software advisory division in an accounting group, and we focus on training, setting up, supporting SMB clients on actually utilising accounting tech. Obviously then grew to payroll and now add-ons. So, it’s been a fabulous, fabulous journey. I’ve been very thankful and fortunate to be in this industry. It’s been incredible for us, family, and helped a lot of people along the way.
Clayton: So, morphed more into perhaps a bit more on the educational side of helping accountants and bookkeepers set up their own, if they want to, software advisory division, or some of the things to watch out for, sharing some experiences over the last 30 years. So, I feel really blessed to be here still. We have these several waves of innovation and vendors that bring just new ways of thinking and working together. Ultimately, it’s really, for me personally, is about the collaboration between ourselves as accounting technologists and software vendors for the benefit and purpose to actually empower and help small business. That’s really the crux of it. Working together, we can actually be better and help them as well.
Heather: Absolutely. I am extraordinarily excited and grateful to have you both here on the conversation with me. We have all had conversations around data, and it’s a very exciting topic. Hopefully, for the next hour, we can chat about that and share some insights that really can help our extended community, be them accountants, bookkeepers, and also the app developers out there who are working with data.
What are accountants and bookkeepers’ data superpowers? Why should they be perceiving data as a superpower?
Clayton: Well, okay, I’ll start off. Give Kendra some thinking time there. Yeah, look, the data superpowers. I mean, for me, data is part of the story. I mean, data in its raw form is just a whole heap of bits and bytes and numbers. Really, it just means nothing on its own in isolation. That’s what I’ve seen in evolution of accounting technology, is we start to aggregate that data. We start to actually bring… information comes from that data that then start to bring insights. When we couple the accounting and bookkeeping professionals experience and also technical experience, but also life experiences in working with multitudes of clients, they can start to actually utilise that data to actually gain insights, which then can be lead to things like advice and recommendations, help with setting a path and a chart forward for their clients.
Clayton: So, it does start with the data, but it actually, when we can start to look at it through different lenses and ways of representing that information, and getting to the backstory, really, as to what does this really mean? What is this actually telling us? I think that’s the power of the accounting professional, a bookkeeper and accountant, to actually unlock those insights. With tech vendors actually enabling the visibility of this information and the aggregation, but also then looking at it through an ability to disseminate this data gives us all the ability and ultimately create better connections with our clients that actually can enable a future that’s better than what we’ve already got in their businesses. I think that’s part of it. We ultimately are storytellers. We are creators of new futures, and the data actually can help validate that, because we like certainty and we need something to anchor on. I think the data is that for us.
Kendra: I completely agree with Clayton around really good advisors are storytellers. I think I come at it from a slightly different way, is I’ve in a lot of different industries. One of the things I really, really like about working at Xero is that so many of our users are quantitatively minded people, so I love working with the accounts and bookkeepers because they’re not afraid of numbers. There are a lot of folk, unfortunately in our community, who for whatever reason are. So, as a deeply, deeply nerdy person, which I am, I’ve always loved solving problems for people. To be able to work with accountants and bookkeepers who are really detail oriented people and actually like asking why, that is a super fun place to sit in.
Kendra: So, I think if I was to say what is their superpower, the superpower of an accountant or a bookkeeper with respect to data, it’s that they’re actually not afraid of detail. They’re not afraid of complexity. Too many folk are. Given that that’s a real superpower of accountants, one place that I think that accountants and bookkeepers can put that to really, really good effect is take that ability you have to be a very detail oriented person, and educate yourself to become a really, really savvy consumer of data services. You’ve got that naturally curious, naturally inquisitive mindset. If you can bring that to bear on understanding technology, to Clayton’s point, and understanding how that data and technology can augment your customer experience, you’re sort of acting as that bridge. You’re a numbers-savvy person who’s comfortable with quantitative things, maybe some of your customers aren’t. If you can act as that bridge to really help your small business customers feel comfortable using data in more, I guess, deeper and more productive ways, I think that’s magic. I think that’s a super power.
Heather: I so agree with that. I see a lot of people, there’s a lot of focus on the accuracy of actually producing accurate financial statements, which we are achieving through all of the automation. I’m like, “You’re getting to that point. Take it further,” and that’s exactly what you’re talking about here. It’s that taking it further, and it’s that understanding those trends that is really highly valuable. It shouldn’t be that hard, but we’ve got to take it that further. Use your superpowers to do that. We have touched on this, but I want to throw this question out as well.
What are the opportunities, benefits, and insights we can access and explore through accessing data?
Kendra: I’ll have a crack at that one. Maybe if I start in generalities and then maybe a specific. It’s a great question, and it’s one that I spend heaps and heaps of time talking with my team about, right? Because we’ve got an extraordinary plethora of things we can do, and we’ve got to use our time on this earth in the best way we can. So, how do we best use data and how do we best use the savvy processing of that data? So, machine learning, to augment humans. The way I look at it is machines are extraordinarily good at pulling patterns out of large amounts of data. They’re just very good at that. One way you hear people talking about that is sourcing the wisdom of crowds, if you will.
Kendra: In the accounting world, in this particularly small business accounting, there’s so many places where that plethora of patterns exists, and we can use machines to do the heavy lifting to winnow what is those useful insights and benefits, and then to present them to the human so that you’ve taken some of that heavy lifting off the human. What do I mean a little more concretely? Amazon might say, “Hey, you’re buying ice cream. Why don’t you buy ice cream cones?” Or Netflix might say, “Hey, I know you like Gothic horror. There’s this new Gothic horror flick that other people have watched who have similar habits to yourself. You might like to watch it too.”
Kendra: Those are the sorts of things in my head around opportunities, benefits, where machine learning and processing of data can bring a lot of benefit. If I give you a Xero specific example, hopefully many of your listeners will have heard about the analytics plus product, and right in the very heart of the analytics plus product is a forecasting algorithm that says, “Hey, Heather, do you realise that your bank balance might dip negative in the next couple of months because, hey, payroll’s going to hit just before this big invoice that you are expecting comes in from one of your clients.” That to me is the sorts of benefits and insights that we can use, because we have enormous amounts of data in the world about what happens, but then crunching it and turning it into a useful insight to a human. That is the sorts of things that I live and breathe, I guess, and am really, really excited about being able to build and share with the small business community.
Heather: Thank you.
Clayton: It’s sort of that proactive personalisation. You know?
Clayton: It’s been stuff that… and I’ve been in accounting circles for nearly 30 years, and I see the great accountants do this, they’ve done it through a lot of heavy lifting, some of them have tried to automate it in their firms with varying degrees of success. Excel was their base where they would do a lot of this. It was an extra, it was a value add that they were actually working with clients on. Now to see some of this actually come into play in the base camp, we’re reaching base camp, really, you talked a minute ago about timely and accurate data, that bedrock of accounting. Is it accurate and timely? Well, technology and machines should be able to help us actually do that. In some cases, we’re still not quite there yet, even. You know? We’re so close, reaching base camp.
Clayton: Then from that point, we’ll be able to see further. So, I think, yeah, that proactive personalisation, the technology being able to understand the business owner and operator and what’s important to them, and giving them those insights exactly on the cash flow piece, which on first glance, it looks fairly simple. You know? Why has it taken to this point to do this? But the fact is that it’s been hit and miss until this time. So, I think we’re going to be moving beyond just automation with data entry and, and accounting and compliance to actually gaining these insight. That’s been a long to term dream and long term promise, really, of tech for decades. It’s sort of had this promise to keep. I’m excited to see that we are actually getting there.
Clayton: It’s been mixed up with all sorts of… I’m not talking about Xero specifically, but the industry has sort of got ahead of itself in terms of spin and marketing and so forth over perhaps the last 10 to 15 years. But we’re now gone through that trough of over inflated expectations, trough of disillusionment, the Gartner hype cycle, and now we’re coming to that plateau of productivity that we go, “Ah, yes, this is now starting to actually deliver on the things that we perceived and believe that tech would enable us.” So, I think that’s a great, very exciting future opportunity where we can add incredible amounts of value back to the small business owners and operators. The things that keep them up at night are these things.
Clayton: Cashflow is the number one, cashflow and staffing is probably the number one and two issues that keep small businesses anxious, or small business owners and operators anxious about their business. So, how can we help alleviate that pain, partner with them to give them these insights, and empower the professionals, so these proactive alerts around, “Hey, here’s the flag.” So, you’re actually managing by exception, if you like, your dashboard in the morning to say, “Look what’s happening in my client base today. I can see visual alerts as to what’s actually going on.” It’s almost like a triage as to who you work with first can actually be enabled and empowering us to actually deliver that to our small business clients off the back of technology that pays attention to that.
Kendra: There’s just one thing I’d love to augment that with, if we have another sec, Heather, and it’s I agree with you, Clayton. A lot of the tech in this space is matured. Being a data person, I’d just love to put in a plug for the fact that tech and data, while, they’re really closely related, are not synonymous. The reason I belabour the point is if there’s one thing that some of our listeners today can do is one of the reasons why I totally agree we’re in that Renaissance. We’re in that place where really interesting time saving, insightful stuff is really emerging at quite a clip, is because it takes really high quality data.
Kendra: So, if there’s one thing that you as an individual can actually do to try and push along the pace of development of the time saving and insightful stuff, weirdly enough, it’s actually paying really, really good attention to the quality of the data, and how careful you are with entering it, and how often you do your reconciliation, because it’s actually that extremely high quality, clear clarity of data that enables firms like Xero to build the really insightful, useful products. You can’t have one without the other, so it’s just an interesting thing to ruminate on in the shower.
Clayton: Yeah. It does remind you, because years gone by, some of the largest scale tech vendors around the world tried to actually systemise or really retrofit their own pattern and make everyone adhere to it in terms of maybe it might have been standardised chart of accounts, it could have been all sorts of things. But the reality is there’s varied. Businesses are different the world over. They call the same thing differently, even across the street, the terminology that’s used in that. That’s probably taken this to actually understand that and get it ready so it is cleansed and sanitised in a way that it actually makes sense. Otherwise, you’re trying to provide a future path and insights off the back of something that isn’t quite stable enough to be able to do that.
Kendra: I think that’s right, and I think we’ll stop, I promise, Heather, but I think where the technology has caught up is that ability to be a bit more forgiving of… humans are really different. Humans call different things different things, and the machines and the algorithms and the technology have caught up to the point where they’re complex enough that they can accommodate the fact that Kendra and Clayton call different things different things, but they actually mean the same thematic thing. It’s such an interest to be in our industry. It really is.
Heather: Yeah, no, it absolutely is, and very exciting.
How do we keep data safe and use it in a responsible and ethical way? What does it mean to be an ethical data custodian?
Kendra: Oh, very happy to. I was being super polite. That’s an awesome topic, and it’s a topic I could literally talk about for hours, but I promised that I won’t. Look, there’s a technically focused practical steps conversation, like, “Do this, do this. Use your MFA,” whatever, that we could have. But let’s maybe take it another way and maybe the way I thought about it, maybe a bit more of a principles-based approach. See where we go. Look, the responsible and savvy use of data is really core to Xero, and it’s a key to our identity, I guess. For those of you who know Xero well, you know that a value we hold really dear is human, and being responsible and savvy and using your data really well is a real part of that identity that we have of ourselves as good humans.
Kendra: It’s also there in our vision. Be the most insightful and trusted small business platform. There’s just no way you can be trusted if you don’t use data responsibly. It’s such a big topic that actually at Xero we’ve kind of crystallised our thinking into, “What does it mean to use data responsibly?” Into eight commitments. Those commitments cover things as broad as security, privacy, consent, what do we and don’t we charge fees for. But they also cover more intangible things that I think people don’t think of immediately, and how do you keep data safe around a commitment to use data for the benefit of small business, and a commitment to continue to invest in using that data to enable accountants and small business owners.
Kendra: One reason we found this principle based approach really, really critical is it’s such a broad topic about how do you use data safely? We found that as a really big, rapidly growing company, super excited to do all those cool things we could do with technology, to help us move safely at speed, rather than try to be absolutely comprehensive of every possible outcome and responsible data use, we want to use that principles based approach, because they help all the smart humans in Xero with our behaviour every day. So, data use, technology investments, product development, partners and acquisitions, using data in a savvy and responsible way is important in all different aspects of our business. It’s been awesome for us.
Kendra: Why am I such an advocate for it? Because I think it can be used well in other companies. It’s been fantastic for us. It’s elevated awareness and understanding across all the other folk. So, I’d really encouraged other people to think, “Savvy, safe and responsible data use. How do I make that part of my company’s DNA?” Maybe think about starting with commitments. Ours are on our website if you want to have somewhere to start with, but maybe think about starting with commitments, because it helps make a really amorphous thing something that you can have a conversation about, and it helps pull people into using the same vocabulary and making sure that we are all on the same page with what can I tangibly do to use data safely and responsibly?
Kendra: It’s going to be different for everybody’s roles, but if you start with, well, morally, ethically, what is a principle based approach to it that can guide the really, really broad thinking that you might need to have as a company? That’s a totally sort of non-technical based conversation. We can have the technical based one, but that’s how I think about it. I just hope that will be useful to share.
Clayton: Oh, that’s tremendous. I mean, the non-technical, the ethics and the integrity and the ethos and the congruency with your brand and all of that, and I suppose that’s why I love this ethical data custodian sort of phrase, really, is that we’re entering this era where the accounting professional and the bookkeeping professional and the clients who we’ve largely shielded from this conversation, in a way, but we need to get them involved and we need to be a pure conduit, that we are not holding back on something or not freely talking to them about this. I think this awareness, because what I’m seeing globally is that there’s various players in this space, and there’s two opposite ends of the spectrum.
Clayton: Certainly, what you are describing there is what probably for an accounting professional’s point of view, that ethical, solid base, and let’s step through this quite carefully, because it’s a marvellous opportunity, but let’s not the opportunistic about it. Then at the other end of the spectrum, I’ve seen vendors actually just be that total opportunist, that essentially they’ve… and there’s vendors around the world that have put their stamp down and said, “You know what? We’re no longer a software company. We are a data company,” on the back of data is the new oil. It’s actually the client’s data. I think of big data, well, big data is an accumulation of a lot of little data. I know we get the network effect of other insights beyond just that micro data. But when we think about it, these are our individual clients’ businesses. It’s the most sacred data to them, totally. It’s their finances.
Clayton: That story about them as people is something we need to hold totally sacred. So, to see this and hear this, I mean, it’s incredibly refreshing, and it’s prob it’s the first time I’ve really probably heard of a tech vendor talk like this. In some respects, the profession has felt like we’re just along for the ride, and the software is this Trojan horse to enter, to lay the pipe, which is the oil pipe. I think that reeks of commoditisation, it reeks of opportunism, and it builds distrust. So, to see Xero approach this and have actually thought about it re-enthuses me about, okay, we have a future here together, because I was seeing fragments start to happen across the industry around the world.
Clayton: I think what it’s going to provide is the accounting professional is going to be able to discern this and actually now hopefully this session will help them gain some awareness that this is in place. That’s a lens that they can look through, because the trust is the key to all of this. If we don’t have that, and I think the data piece has also moved from privacy or storage and access and those sorts of things, which we do need, we need cyber security and data security, of course, but this is bigger than that in terms of it’s foundational, and if we have alignment there with the accounting professionals, then actually, we’re creating this foundation that actually has a future instead of just we’re part of the pawn in the game that actually is about getting data from over here to there, and once that’s done, do they really need us anymore?
Clayton: That’s a cynical sort of approach, but it’s real. We are seeing that with some vendors around the world that have adopted that approach. So, more power to Xero on their thought pattern around this. I think you’re going to resonate with the accounting professional incredibly. I just feel as though, and I totally believe you, but action speaks so loudly I cannot hear your words sometimes. It’s the action that actually is what’s going to be important around this. Yeah, I commend you on that.
Heather: I think to Clayton’s point, I was very excited just to discover there was a data scientist at Xero. I was like, “Wow, what is this?” To that point, I discovered that through the recent announcement, that Xero has a data council.
Why was the data council formed, what is its vision, what has driven its development, and what are some of the outcomes you are hoping for?
Kendra: Awesome. No, and I will say there’s more than one data scientist at Xero, even, so even better. I actually have a team with me now of about 80, which is really awesome. We have 80 data professionals. I’m not going to claim they’re all data scientists, because it takes a village of really different skilled people to do really useful and savvy and responsible things with data. So, 80 wonderful data professionals from around the world, which I do think speaks to Xero’s commitment to this. But to answer your question, because I’d love to, about our data council. What I was talking about with our principles based approach just made sense for us, right? We said, “This is a broad, really multifaceted conversation. It touches every space of our business. We’ve got 200 conversations going on about this. We need to bring those 200 conversations down to 20, and then down to two or three, so we’re all talking together with the same vocabulary. How will we do that as a company of several thousand? Well, we’ll come up with a principles based approach.”
Kendra: Something that we’ve been working in and talking with and kicking the tyres and getting better at over, I’d say, the last 18 months, two years. Then there was a bit of a turning point for us that became quite crystallised for us. We were like, “This is really useful to bring people with lots of different backgrounds together, have a coherent conversation.” Hey, if it’s useful for us, it’s probably quite useful for other folk as well. So, that made us go, “Okay, maybe we can and should, and really have a sort of a responsibility and can bring value by talking about that more externally.” So, we thought, “Okay, let’s test our thinking on that.” We don’t want to be pushing something on the world they don’t need.
Kendra: We thought, “Let’s go and do a bit of research,” and we did. Lo and behold, that’s not probably going to surprise to the two of you, but we did want to validate it for ourselves, as, yeah, there’s a knowledge gap here. Right? I think it’s what we were touching on at the beginning, and we might talk it about a little more, the two things. There’s a knowledge gap and there’s a bit of a culture of fear. There have been a lot of things, very big high profile things in data that have gone wrong. Right? We’ve had some companies do some things that aren’t great. It’s been all over the headlines. It’s talked about a lot. I think that breeds to create a culture of fear when people are like, “Maybe I should just lock up everything, or even keep it in paper and pen, because I don’t want to be the person who loses my customer data. I don’t want to be the accountant that does something wrong.”
Kendra: We did see that, that kind of knowledge gap and that uncomfortableness in the community when we did our research. We said, “Okay, so that tells us, yeah, if we go out and really take some of the expertise that we have in house and talk about our journey and the commitments, and then actually go further than that and say, “Look, there are accountants who think about this hard, there are bookkeepers for whom this is a passion, we have our app partners who really think deeply about this, and hey, there are people whose whole lives are looking into the ethical use of data. What if we could assemble some of those folk? Sure, For Xero, that’s great, because we’re going to get to talk to them and you know, broaden our own ideas. But also if we have some of those conversations more publicly, more externally, we could provide a bit of what is missing here in terms of this knowledge gap.”
Kendra: That’s what the Xero data council, their advisory council is all about. It’s people from that broad spectrum of our community coming together to say, “Right, what do we know about this space, about being savvy and responsible? Then where do we think some of the gaps might be in the broader community, and how do we fill those gaps? Put in place some of the building blocks that people can go, “You know what? I don’t have to be really nervous about this. Xero, and some of these other folks as well, have got a place where I can start. I could educate myself, I could go a bit further.” Back to my point around I do see this as a superpower of accountants and bookkeepers, they’re very, very savvy people. If you give them the way to learn, they will expand their comfort levels and spaces in this.
Kendra: Obviously, as a data person at heart, I think that’s got enormous benefit for the small business economy, because confident, savvy accountants and bookkeepers will create confident, savvy, small business owners who will lean into using some of these tools that can help them expand and run their businesses more and more effectively. So, that is what our council is all about. It is about having open public conversations, talking about the things that are tough, talking about the way that things move so quickly, it can be difficult to stay up to date, and putting some tools in the hands of that community to say, “Well, hey, this might help. This is a beginning. This is how you could learn a bit more.” Yeah, like you guys have sort of said, and it’s really lovely to hear, we have had a really, really positive response. I think a lot of people are saying, “Oh, this is useful. This is helpful. Thank you. I’d like to get involved.” So, it’s been phenomenal, and I’m just really excited to be part of it.
Clayton: Yeah. You just sense that we’re sort of at that inflexion point, and the thing is, the fact that you’ve taken the lead on this, and obviously the composition of that council, I have read, and I know many of the people that are on it, and it’s representing the industry, the profession, the vendors, so all the parties that actually make up the community and ecosystem that represents small business as well. So, yeah, it’s early days still with all of this. I’m curious as to whether, in your circles, obviously you’ve got other people in other organisations around the world, colleagues, if you like, in other industries perhaps even, is this something that there seems to be a broader ground swell around the world with the tech vendor community to say, “Hey, how can we learn off each other around this?” And putting this ethical stamp stake in the ground. Is something that exists?
Kendra: Yeah, I think it very much is. You’ve always got to be turned around, is this true? I’m so fascinated in this that I’ve dug out all the things. But I think there is. I don’t think that’s just my bubble. If you want to go super academic for a moment, there’s been a massive ground swell in the last five years of understanding in the really academic research communities around machine learning and AI, hey, this stuff can be used for a lot of things. Let’s lean in as an academic community and make sure that we are being careful about how it is used. So, there’s been an emergence of an area called FAIR, which is fairness, accountability and transparency in ML. I’m going to get the acronym slightly wrong, but huge upswell in that. I think you do see it a lot now, more being talked about in commercial companies.
Kendra: Sure it’s going to be partly because, hey, guess what? The American government’s waking up and going, “Oh, oil and gas, we might need to start thinking about, hey, do we need to regulate some of this? Do we need to break up some of these massive companies?” There’s a lot of discussion about that in the American political market at the moment. But I think it came before that. I think there are companies, and sure, there’ll always be bad actors, and there’ll always be flash in the pan people who, I think you and I have talked about this before, Clayton, aren’t there to maximise, have a really decades long experience. So, they’re not worried too much about long term, short term thinking.
Kendra: But I think there’s a groundswell of companies who are like, “We want to be here for 50 years. We know that part of that is maintaining trust,” and a big part of that is, “Hey, this data, isn’t ours. It’s data that we use on behalf of people to do things,” and we need to be really savvy and careful about what it means to do that well. So, I’m pretty positive. I do think that’s changed in the last five years.
Clayton: Yeah. Well, that’s refreshing to hear. You all sense that the investor community will respond or disseminate who’s in that camp and who’s not sort of thing as well. So, it might be ethical investments that’ll be a criteria, I suppose, for those that actually can discern who’s actually on board with this. Yeah. It’s renewed my faith in terms of the tech world. I felt as though we were going down a rabbit hole. There was some serious bad actors around that actually seemed to be getting away with that perhaps we would see that they really shouldn’t be. To hear that others are standing up and stepping up and saying, “You know what? No, we need to actually put this stake in the ground,” it’s for long term forever mindset around that. Of course, in our profession, deep partnering with the accounting profession, who ethics and trust are just critical bedrock.
Clayton: So, yeah, it’ll be great to be able to who’s in that camp and who’s not, and it’ll be up to the individual accounting professional, the firms to at least to ask these questions and dig a little deeper to see how is this data being treated, what’s in place to ensure that this data sovereignty or ethical data custodian aligns with us. People have different views on that, but at least to know that there is a camp that you could down that path, and if others think of it differently, well, there’ll be other options for those people as well. But at least to ask the question and get the straight answers.
Heather: Thank you for that. It’s a fascinating conversation. I’m going to move ahead. In 2006, as you have mentioned, UK mathematician, Clive Humby coined the phrase data is the new oil. Coincidentally 2006 seems to be when Kendra started to become a data scientist as well. You said 15 years ago, so roughly around then. If data is the new oil, accounting software is the pipe that connects the data. Many listening are working in an environment where the data is shared across solutions. How are these doors open and closed, and what transparency is governing that?
Kendra: 2005/06 is when I started leaving the ivory tower of academia, so there you go, my math is good today. It’s interesting, yeah, that phrase has been around for a while. It’s not my favourite phrase. I always like to think of data as water, not oil. Water is beautiful, it is life giving, it’s precious, and it flows around to do good. Right? So, what better analogy could there possibly be for data?
Heather: We will wipe it off now.
Clayton: Love that.
Heather: We’ll go back and restart the episode.
Clayton: It’s not going to stop people that believe it’s the oil. They’re on that path. But I think reframing that, yeah, it’s timely.
Kendra: That’s why I like water, because oil has got its negative connotations too, right? Particularly in Australia today. So, yeah, for me, it’s water, but it’s a real fine personal point. But to go back to your real question, Heather, how are the pipes open and shut, whether it’s water or oil flowing through them, look, let me give you an example that might help, and then maybe Clayton can jump in and illustrate with the way that helps his thinking as well. A Xero example to illustrate it, hopefully everyone listening today will know that Xero has an ecosystem of app providers.
Heather: They all do.
Kendra: Yep, there you go.
Heather: If they’re listening to this show, they will do.
Kendra: If you’re a user of Xero, that’s fantastic, right? Because you can connect your Xero solution to one of literally 1,000 different applications through the app store. It really helps, particularly if you’ve got a niche business, there’ll be someone who does your niche, does it really well. What does an ecosystem mean in terms of those pipes opening and closing? Under the hood, to make that useful for you, each application that you say, “Yep, that’s going to be helpful to me or helpful to my client,” has to exchange data with Xero, and to not get too technical, but it does that via an API, application programming interface, which for the purposes of this conversation, maybe we think about as it’s a spec. It’s a contract between two solution providers, Xero on the one side, and the app provider on the other side, that says, “This is the data, this is the format, this is what the fields mean.”
Kendra: So, this is where I’m hopefully getting to answer your question without too much context setting. To me, that’s where the transparency about where’s the door, is it open, is it closed? That’s where the transparency comes in. To go with that Xero example, if you are choosing to connect an app, Xero will explicitly ask you for your consent. That’s important to us, and that’s important to you. No consent, no sharing. To go back to the conversation we were just having, it’s your data, so the right to share that data with a provider sits with you. That’s where the transparency comes in in that example. So, at a high level, that’s the mechanics. The bit where Xero explicitly says, “Hey, you’re about to share your data with this provider. Is that cool? Is that what you want to do?” That’s the mechanism for transparency, it’s explicit consent.
Kendra: Yeah, unfortunately there is a bit that sits on the shoulders of the humans who are listening to us. I do need to suggest that you do do what many of us don’t in our personal lives. You need to read the terms and conditions when you make that agreement. Xero will do its absolute best to make sure that they’re working with good content, good actors, but you should read the terms and conditions. Here’s a tip for you. Good providers will have good, clear terms and conditions. At Xero, my legal colleagues have done a fantastic job, I believe, to work hard to put it all into clear language. If you are struggling to read Ts and Cs, maybe point out to that company, “Hey, do a bit of a better job in using clear language in your legal stuff, not legalese,” because that is where you need to take on some responsibility to dig into it, to go, “Am I comfortable with this provider?”
Kendra: So, the mechanism is the API, and the data exchange, the bit where Xero and that app provider can help you is the bit where we say explicitly, “Do we you have your consent?” Then the human bit is you do need to put a bit of thought into what am I consenting to? “Yes, yes, I’m good with that. Tick.” So, I hope that helps, and then maybe, Clayton, you take it another way.
Clayton: Yeah, totally. I think reading those Ts and Cs that, although when you read them, if you’re reading most of them, many of them you’ll just have that many questions that you don’t even know whether you should sign up. So, the fact that you guys have simplified that and put it in plain English or plain language, if you like, because I’ve read all the other others, and there’s sneaky gotchas in amongst there. Sometimes even some larger, you might have been thinking accounting circles that your big firms in fact actually may even rewrite those to some extent, so the small firm isn’t getting the same contract that the big firm’s getting too.
Clayton: It can be very difficult and challenging, but totally, totally recommend reading the Ts and Cs. If nothing, just to highlight questions that you may have, so you can follow up on, “What does this actually mean? Can you walk me through that before I actually commit to that?” I think that’s a great suggestion. There’s also then what’s data stored and can you get back out? You know? I think the opt-in is actually really salient point that you mentioned there. Again, there’s other vendors around the world that actually don’t have that opt in. It’s basically you’ve got to try and opt out, and trying to do that is virtually impossible. Even the right to be forgotten if you want to actually remove your data at some later stage, I mean, it’s maybe a whole nother topic, but the fact to make it simpler, having the customer, the client at the centre of this, then none of that should be sneaky gotchas.
Clayton: None of it should be jumping through 1,000 hoops to try and get out, because then otherwise it’s not in the spirit of the actual what we’re trying to achieve in the first place. I think that that’s really important. Then you did mention it, yeah, as you say it, it is the client’s data, and that’s not universal. That is not universal the way all vendors in this space actually treat it. They treat it as once I’ve got it from your system, it’s now actually mine. It’s my data, it’s not yours anymore. Well, I can say that most small business clients would be horrified with that approach, and obviously we’re not hearing that from Xero, so you do have a commitment that it is the client data, they are the centre of this, and your actions then are commensurate with that approach.
Clayton: So, again, it’s just a great differentiator, and this will be the differentiator for people to come on board with. People will actually change software because of this. This will be something that’s so critically important to them, because we need to have this trust. It’s sort of just implied trust at the moment in many places, but you’ve made it just specific and explicit that this is what it is. So, I think that’s going to be really important, and we will be reading more of these terms and conditions, because my goodness, there’s some of them you just wouldn’t sign when you do read them.
Kendra: Yeah. Yeah, I mean, just looking at my own personal life, you go, “Wow, if your terms and conditions are that long, ugh.” But I think it does come down to this personal responsibility thing. Companies who do take this seriously are moving towards being explicit, because people might have different opinions about what is fair use and what isn’t, right? And that’s fair. Humans are different. But at least if the company is explicit, you can say, “Yep. That seems like a reasonable deal. I’m okay with that.” Or, “I don’t, but at least I know, and so I can make a real choice.” I think the other thing is, to your point, Clayton, about retention, storage, that those questions should be answerable, right? You may or may not like the answer, but at least you should be able to find a good answer to the question.
Kendra: There’ll always be interesting things like companies that work in FSI or particularly in tax may well have legal reasons that they have to hang onto your data for seven years or whatever, because they do have to work with the regulators, but the acid test should be, is it clear? Is it easy for me to figure out what the company will do? I think we are seeing companies realise that that is becoming a differentiator, and they are moving towards it, which is really good, but it doesn’t take away from our responsibility as humans to unfortunately have to read it and go, “Do I like it? Do I not?” And vote with my feet. Yeah.
Heather: Yeah. That sounds so time-consuming reading all those terms and conditions. We’re going to have to try to find a robot to scan through them all and tell us what we should do.
Clayton: Well, I think it’s an opportunity for someone to actually do some heavy lifting in that area that’s got some domain expertise. You know? To pull them out and actually highlight them. Maybe there is a service of someone that’s in this legal space that actually can say, “Well, this is what means.”
Kendra: Imagine how much effort you’re going to have to put in reading the terms and conditions for the terms and conditions box.
Clayton: I mean, it’s the open-ended ones that you got to watch out for. You know? I’ve read one, for example, that says we can do anything we feel as though will benefit the customer, and lo and behold, that actually led to actually the tech vendor reading the client’s balance sheet and then trying to sell them a loan off the back of the fact that they saw that the client might be in some financial issues in the future, and suddenly they got marketing sent to them. It looked random, but it was actually specific of actually looking at the client’s balance sheet, and the client and the accounting professional and ourselves, we had no idea that that was even possible, and it wasn’t explicit that it could be possible.
Clayton: Now, if it was upfront and clear in advance, “Hey, do you allow us to look at this for this purpose? We do have loans that we could actually service you with that could benefit you in the future.” Clear question, yes or no? Probably many would say, “Oh, yeah, that’s okay.” or someone says, “No, I don’t want that.” But when it’s just open ended and it’s a sneaky gotcha, that whole just because something can be done, doesn’t mean it should be done. Maybe the pillar of the legal piece will stand up and there’s no recourse, but doesn’t mean it should have been done in the first place. So, this is what it’s come back to, ethics and integrity and values that align to all of us as partners and providers.
Heather: To be clear, that example that you were referencing was absolutely not Xero.
Clayton: No, it was certainly not Xero.
Heather: No. Just thought I’d throw that in.
Clayton: Read the terms and conditions, guys. That’s exactly what I’m saying. Read them.
Heather: Yeah, absolutely. Thank you for that, Clayton. As we come towards the end of this very interesting conversation, which I hope we can organise another one, we’ve been talking about data, and I would like to do a shout out to a website and a Twitter handle called COVIDBaseAU. So, for those of you who are listening at home, please go and have a look at the Twitter handle COVIDBaseAU. What they have done is they wanted to create a place to simplify data and present it in an easy to understand format. What they did was create a website tracking COVID-19 data. This website has been cited in many, many medias, on the news, in publications.
Heather: What just recently has come out is this website, this concept has been completely developed, completely run by three teenage boys, a 14 year old and two 15 year olds called Jack, Darcy and Wesley. They were doing their schoolwork at home and they had some extra time, so they pulled this together. They’ve been running this through almost this whole horrid pandemic. They’re such amazing guys, so I just wanted to do a shout out to them in that they used the data, they’ve got emojis happening all over the place. It’s easy to understand. I just think that they epitomise data in a useful format for the community. So, I just did want to do a shout out to those boys if anyone isn’t watching them.
Have you seen that, COVIDBaseAU?
Kendra: Absolutely. It’s one of the three that I’ve been following. The thing I love about those guys is their rigour. They are not shy in coming forward and saying, “Oi, ABC, you just said a stat that is technically correct, but actually confusing.” Or, “Oi, Vic gov, I know what you meant to say, but it’s not actually what you said.” The devil’s in the detail. I love off how detail oriented they’ve been, because they’re teaching people data literacy, and data literacy is the other superpower of our generation, right? Folk who are comfortable with statistics and comfortable with data have an edge. So, I love the fact that those boys are out there teaching everyone how to be data literate. It’s awesome.
Clayton: Wow. That’s tremendous. I had not heard of it, so there’s my weekend gone, for sure. Thanks, Heather.
Heather: They’re just amazing. 14 and two 15 year olds. Just amazing. Thank you so much to Jack, Darcy and Wesley for providing us some sanity and providing us with data through this terrible time. With that, it’s almost time to wrap up the conversation, so I’d like to ask each of you, if you could suggest to those who are listening, what would you suggest to those who are listening who would like to learn more about data and would like to learn more about how they can use data to help their clients, what would you suggest to them?
Kendra: I’ll get on my soapbox for a sec. I love opportunities to do that. I would say, and it follows beautifully actually from that conversation about COVIDBase, if you are nervous about using online services, if you’re nervous about technology providers, if you have become worried oversharing your data, I would just say to you, take another look. I think there are bad actors. We’ve kind of been talking about it. There are bad actors. They’re not in the majority. You can take simple steps to protect yourself and to protect your data. One place you can find out more about that as, we touched on, is the use Xero responsible data use hub, where we are going to be sharing our thoughts on how you can take those steps to protect yourself, sharing some user stories about stuff and how to do that.
Kendra: Why do I think it’s worth your time? Why am I using the soapbox to talk about it? Because obviously, being who I am and what I do, I really do deeply believe that insightful, data rich, modern products can make an incredible difference to your quality of work life, to your productivity, and therefore, to your humanness, and I’m so disconcerted that there are folk who have become closed off to it. Take that time. It’s worth the investment of your time to learn more because of what you can unlock for yourself and your customers. There you go. That’s my soapbox moment. I’ll hand to Clayton.
Clayton: Yeah, that’s great. I mean, I suppose I was probably in a way in the last few years, because I’ve had insights to things that have been happening, and have been very concerned about where the futures… I’m probably a sceptical optimist, in a way. I don’t know if that’s a term, but my accounting training, but I am an optimist. I do believe in the future and collaborating together. It’s so refreshing, actually, as I think I’ve said it a couple of times, that we’re having this conversation. It was something that our industries and professions needed to have and to see a tech vendor actually step up into this base and actually put a stake in the ground and start talking about it.
Clayton: I think that resource that you’ve just mentioned would be a perfect place to start for people, because it brings them up to speed on, it’d be terminology, there’d be, “Hey, this is one approach.” You can then run that lens through when you’re looking at others, and you’ll start to discern who’s who in the zoo, and also what’s their different approaches. Ourselves as professional advisors, we’re sort of this middle person sitting between the client and the vendor, and we’re the connector, so we’ve got a huge responsibility to ensure that that’s a safe and ethical connection, and align to us in our values as well, because we are part of this. You know? We can’t contract our way out of it. We can’t plead ignorance. It’s none of that. We are complicit in the good and all the bad here. So, we need to actually really be able to discern.
Clayton: Don’t be afraid to call it. If you discover that you’ve got a vendor that you’re actually working with that just doesn’t fit and align, if you don’t do something about it, or at least broach the subject with them and talk to them about it and why this is important, then we are just going to accept it. All that does is really just creates probably almost internal rage that’s not actually expressed, which equals pain in the future. So, I think that’s just something that… and don’t feel as though you’re an island or alone on this. You might have just felt that this is just something that I’m concerned about, or maybe a few friends, you’re talking about it, and you’ve felt as though, “Look, this is just happening anyway. We’ve got no chance of redirecting the future,” Well, we do. We totally do.
Clayton: I believe we’re not past that point of no return, I think with something that we can materially actually impact and also help shape the future direction. So, yeah, each and every one of us, and obviously collectively, we are the part of the future. We are creating the future. So, be empowered, feel empowered, and actually take some action. So, yeah, feel totally empowered to ask the key questions, get clarification, and drill in on this, because it’s such an important thing. Once you’ve done that, it’s like, “Great, I’ve done that. Now I know that that bedrock foundation is actually right. It’s aligned.” You probably never have to revisit it. But if you haven’t done it in the first place, you could be building a business on very shaky foundations.
Heather: Thank you so much, Clayton and Kendra. I wish we were at a conference and I wish we could go to the bar afterwards and continue this conversation. It has been sensational. I deeply appreciate your time today. I know the community will be very excited by this conversation. I’m going to call it the greatest starter conversation ever. Kendra’s probably been in some better conversations, but we’re going to label this one the greatest one ever. Thank you so much for your time. I hope I can get you back on the show maybe next year to continue this conversation, because there does seem to be a lot that we should be talking about and making community aware of. Meanwhile, I’m being attacked by a fly as I’m talking to you. Thank you so much, and wishing you all the very best.
Clayton: Well, thanks so much, Heather.
Kendra: Always a pleasure. Really, really enjoyed it.
Clayton: Thanks, Kendra.
Kendra: Let’s look forward to round two. You guys have a lovely weekend.