MYOB boss: Tech sector’s future bright, on balance
Departing CEO says services will have vital role in GDP creation as population ages
‘Idon’t think there’s a negative sentiment in the business community but there is a sense of apprehension,” says MYOB chief executive Tim Reed, who steps down this month.
Reed, has led the Australasian accounting software firm through 12 years of dramatic economic and technological change.
He says business worries about uncertainty are understandable.
“But you don’t want that apprehension to become self-fulfilling. And I am nervous about that.”
Despite the trade war and slowing global growth, both the Australian and New Zealand economies are fundamentally sound, he says.
Both have experienced a “long period of economic growth. Both have low employment and no prospect of recession coming on,” he says.
“The governments both have plenty of fire power, they’ve both got reserve banks that are quite proactive. All of those things bode really well.”
Reed has been with MYOB for 16 years.
That time has seen an historic shift in the business world — encompassing the Global Financial Crisis and rise of digital disruption.
Looking back, the biggest difference is the way businesses now embrace change, he says.
“We used to have challenges getting clients to take on new products, to change the way they worked, even if we knew it was good for them and that it would save them time.”
One of the few positives to emerge from the GFC was that businesses realised how vulnerable they could be to big shocks.
“It made them a little more open to innovating, changing and challenging the way in which they work.
“Small and medium shareholders now don’t believe the world will be the same place in five to 10 years. They are very open to the idea that they have to continue to adapt.”
New Zealand business owners probably picked up on it before many around the world, Reed says.
“There’s natural entrepreneurial flair and spirit that exists in New Zealand business owners and I think that is what has put them in good stead and allowed them to come back and prosper.”
Melbourne-based Reed stops short of mentioning Wellington-based rival Xero by name, but he acknowledges that intense competition has been good for the industry in Australasia.
“MYOB is a much better company than it was 12 years ago, in part because we’ve got strong competitors,” he says.
“It really drives you to be customer centric. Small business in New Zealand and Australia is very well served by our category.”
“There’s been challenging
moments,” Reed says. “We have had to re-examine who we are and what we do. If I think back 12 years the products we had in market are now completely different. The economic model is completely different, the skills inside the business have changed materially and the culture has therefore had to change.”
He reels off some impressive growth stats for the period.
MYOB has grown the online business from 100,000 subscribers to more than 800,000.
“We’ve trebled the revenue, the enterprise value has gone up five fold, we’ve more than doubled the employees,” he says.
“We used to give people an empty vessel and they had to fill it. They had to enter all the data, they had to gather all the documents.”
These days the service included connecting customers’ online accounting to their banks, to the IRD and any other data sources “including photos of receipts on their mobile phone, where the information automatically gets uploaded from there”.
Reed recalls how the company used to make an annual software release and had to work hard not to have too much change “because we knew if we changed things people would get really upset”.
Now there is a process of continuous incremental change as online software automatically updated — sometimes three times a day.
The combination of data, connectivity and algorithms will continue to move at pace in the next few years, he says.
“Those three components — whether you call them AI or artificial intelligence or whatever — will continue to make up a component of most of our services — whether that’s mining services or professional services.
“People are going to want holistic solutions rather than piecemeal components.”
Professions that involve high degrees of knowledge, where people needed to make judgments, will continue to grow, he says.
With an ageing population on both sides of the Tasman the coming technological advances to the service sector will be crucial to maintaining GDP growth and boosting productivity, he says.
“That adds up to an optimistic scenario,” he says.
Reed says he hasn’t decided what he’ll do next but expects it will be in the tech sector.
He is replaced at MYOB by Greg Ellis, who was most recently chief executive at German tech company Scout 24.
There’s natural entrepreneurial flair and spirit that exists in New Zealand business owners and I think that is what . . . allowed them to come back and prosper.