e-business - Preparing for the new economy - Size need not matter.
Philip Smith talks to Berg Kaprow Lewis partners Jeff Hartstone and
Philip Smith talks to Berg Kaprow Lewis partners Jeff Hartstone and
How things change. Two years ago, Accountancy Age visited a small accountancy firm in north London who claimed to be making progress in the use of information technology.
The firm was gingerly moving across to Microsoft Windows NT, away from Novell Netware.
And it was getting excited about something called the world wide web.
Finchley-based Berg Kaprow Lewis has now virtually doubled in size, with 100 employees and 13 partners. It has also just opened an office in the West End and will soon be launching its client extranet.
‘It’s about our appearance to clients,’ says BKL partner Jeff Hartstone.
‘Sometimes it is a shock coming from a paper-based industry.’
BKL classes itself as a general practice firm of accountants offering the areas of advice one would normally expect from a firm of its size.
It is being somewhat modest in that assessment, however. It is well known now for its work in the IT sector, an area that has been driven by one of its partners, Jeremy Hyman.
Hyman originally joined BKL as an IT consultant to help the firm develop its own internal IT strategy. His role has now shifted so that he is far more client-facing, the theory being that he can do for the outside world what he has done for the firm .
Now a partner, Hyman is busy selling the intranet software developed for the firm under the brand of SingleView, a company it launched at the beginning of the year.
BKL sees that the firm’s work in the IT area is split into three related areas. First there is the general work that it carries out for a range of IT and internet businesses, ranging from advice to start up companies to a full service for established companies.
Then there is the work undertaken on the firm’s internal systems, particularly its intranet, which as well as proving to be an invaluable knowledge management system for the firm has become a revenue generator in its own right.
Thirdly, there is the firm’s website.
Hartstone admits that currently it is still only a brochure site but the firm has plans. ‘We want to use the technology to make it far more client-facing,’ says Hartstone.
Hyman concurs, believing that they are different aspects of the same principal, and so there should be a homogeneous approach. ‘In effect,’ he says, ‘the clients will become special users of the firm’s intranet.’
Back in January, the firm hived off its intranet/extranet technology arm, SingleView, partly because it felt it needed to raise external finance to develop the product, and partly to give it a separate identity. Ironically, the firm raised the finance from a client who had bought the software, a consortium led by ex-BDO partner Gerard Cohen.
The current product is aimed at the accountancy world, though the next version, due to be released next month, will seek to widen the target market. They have already signed up a biotech company. ‘Not an obvious market,’ acknowledges Hyman.
Where SingleView is used to generate additional revenue for the firm, BKL also uses the internet as an additional tool for bringing existing services to market. The recently launched ‘AdviceOnline’ is a good example.
Hartstone believes there are about 2,000 similar sized accountancy firms in the country that offer some form of independent financial advice. However, there are not many who can offer such advice over the internet.
AdviceOnline, launched in April, does exactly that. In fact, when it launched, BKL claimed that it was the first IFA that used the internet as its only source for procuring new business. Partnered with BT, the site is now linked into another 40 sites.
Hartstone says: ‘The site allows a local firm to broaden its market – advice for anybody anywhere.’
However, the firm does not see the future in e-commerce. ‘The term e-commerce is misleading,’ says Hyman, who chairs the e-business committee of the UK 200 Group, an association of small firms. ‘It will disappear as it becomes merely a necessary way of being able to trade. No-one ever refers to visa-commerce do they?’
BKL has placed a great deal of importance on ensuring its internal systems work before launching them outside. Where resistance was experienced, the firm aimed to make the processes as simple as possible. According to Hyman: ‘People will look for any reason not to put information into the system, and a great deal depends on the culture of the organisation.’
Hyman cites a client who had commissioned a knowledge management IT feasibility study from BKL. ‘Unfortunately, the culture was such that it would not have benefited the client.’ However, the client did then go on to use the study as a catalyst for change in the organisation. ‘It only takes one person to see the value of change,’ says Hyman.
Internally the firm decided to pilot its own knowledge management schemes with a single department before rolling it out to the rest of the firm.
The reasoning behind this was simple: ‘When they boast about the improvements, the news spreads,’ he adds.
BKL has never tried to achieve the utopian ideal of a paperless office.
Instead, the aim has been to move towards a ‘less paper’ environment where over time paper drops out of the equation. Essentially, BKL was looking for a mechanism for handling paper so that documents could be called up on screen, saving time looking for files and impressing the client at the same time.
By simply scanning documents such as client letters into the system, access is immediate – not exactly rocket science, but still very effective.
In effect the firm has a virtual filing system, but still recognises that it could never do away with paper altogether.
The next step is to give clients access to this database. To counter security issues, clients will only be allowed access to a shadow copy and will not have live access.
‘Clients will only see an extract of the database,’ says Hartstone. ‘But it will mean we will have nowhere to hide – the client will be able to see everything we do for them.’
As for the future, Hartstone is determined to consolidate the pilot programmes that have been running in the firm. ‘We have to get the internals right before we take it externally.
‘I want less paper to be more pervasive and I want to see wider knowledge sharing.’ Hyman wants to build on the success of SingleView, broadening its market place. Recently he was able to sell the product to a marketing consultancy that was pitching for his business.
And the extranet will be key to the firm’s progress. ‘Clients want efficient access to the service with which they are being provided. The extranet will supplement that relationship, it shouldn’t replace it.’
Both Hyman and Hartstone believe they can take the lessons they have learnt and pass them on to their clients.
‘We might not be a perfect example,’ Hyman acknowledges, ‘but we are a very realistic example.’
WHAT SHOULD A FIRM’S INTRANET PROVIDE?
– The key features of any intranet should offer:
– The ability to connect to various data sources and publish the most useful information
– Automated document creation and management
– Fast, easy to use search facility for finding information and knowledge
– Simple scanning facility to automate incoming post or archiving
– Comprehensive implementation, training and support
GOING GLOBAL – HOW BKL HELPED THE ONLINE DERIVATIVES TRADE
Patsystems founder and chairman Thomas Theys had worked in the futures and trading business since 1972, having worked in Chicago, London and Singapore. ‘I foresaw the fact that all markets trading on an exchange floor would eventually go electronic,’ he said. ‘I knew my future as a trader on a trading floor would soon become redundant.’
Rather than sit back and wait for the inevitable to happen, Theys decided to seize the initiative. He set about pulling together a team of experienced futures traders and financial IT professionals to create a product that would enable pit traders to deal on hand held devices from the floors of open outcry exchanges.
‘As we were all traders, we thought that we were ideally placed to develop a system that would be perfect to trade on an electronic platform.’
Six years later patsystems is one of the global leaders in providing internet access to derivatives exchanges and a leading vendor of pre-trade risk management software. It provides real time trading access directly to the world’s exchanges, both electronic and open outcry, in a risk controlled environment.
Theys brought Berg Kaprow Lewis on board at an early stage as he saw the firm had a good understanding of the needs of fast-moving IT firms.
In order to attract new investors who recognised the venture’s potential, BKL identified a number of areas such as accounting, payroll and management reporting systems which would enhance the overall professionalism of the project.
As Theys admits: ‘BKL kept me on the straight and narrow, acting more as advisers than auditors and accountants.’
A particular area that came under scrutiny was the structure of share options and remuneration packages, always a tricky area for young IT companies.
BKL ensured a tax efficient deal was struck which allowed for further investment by individuals as the project progressed.
The company aimed to raise #50m on the London Stock Exchange’s techMark, and when it came to market in March this year, the issue was six times over-subscribed. The company saw a growth rate of over 300% during the first half of 2000, and now has offices in London, Chicago, Frankfurt, Singapore, Sydney and Warsaw.
‘BKL was my partner and not just a supplier of a service,’ says Theys.
‘They were always looking out for my financial position and I never had trouble raising money.’