Scale matters

WHK Group in Brief

• Combines six accounting firms from Auckland to Invercargill with 750 staff
• WHK Group in New Zealand has $80 million annual revenue. Australasian revenue is approx. $400m
• Southland and Central Otago's WHK Cook Adam Ward Wilson was first to join
• Invercargill firm initiated IT strategy review
• Review introduces best-practice IT systems and processes, including a single accounting platform

"In firms like ours, all we sell is time, and most of our time now has some sort of IT input. So if your IT isn't working, your firm isn't working."

WHK Cook Adam Ward Wilson chief executive Phil Mulvey

As someone in the business of helping firms run well, Phil Mulvey has a clear idea of how to get the most from his own company. Mulvey is chief executive of accountants WHK Cook Adam Ward Wilson, the biggest practice in Southland and Central Otago and one of the largest in the country.

It hasn’t always had such a mouthful of a name, but the firm’s moniker tells the story of Mulvey’s strategy for dominating the local accounting market, while also making a significant mark nationally. Six years ago the company was the (relatively) plain Cook Adam and Co.  The firm had been in existence for more than four decades. In 2002 it became part of Australia’s WHK Group.

Then last year, WHK Cook Adam, already Southland and Central Otago’s biggest accounting firm  with 11 principals and 110 staff, merged with the second biggest, Ward Wilson, which had eight principals and 90 staff.

Ward Wilson had always been “the team to beat”, says Mulvey, although off the field the two had friendly contact. When Mulvey put a merger proposal to his Ward Wilson counterparts, he didn’t have to work hard to sell its merits. “The more we looked into it the more we thought that by pooling our resources we had the opportunity to create the firm of the future,” Mulvey says.

The combination of the two firms makes it about three times the size of the city’s next biggest. Perhaps more importantly, the company has achieved critical mass in specialist tax and audit work. Scale also gives the firm a big advantage in a profession that is desperately short of skills, Mulvey says. “We had a small tax team, they had a small tax team and we now have a combined one that has really got some grunt.”

So if it works for Southland and Central Otago, how about extending that scale across the nation? A major IT strategy review initiated by Mulvey last year, is achieving just that. Since Cook Adam joined the WHK Group, five other accounting practices, based in Auckland, Hawkes Bay, Wellington, Nelson and Dunedin, have done likewise.

WHK Gosling Chapman, in Auckland, with about 200 staff, is similar in size to the Invercargill firm, while the rest range from 70 to 100 employees, giving the WHK Group in New Zealand a total headcount of about 750.

The aim of the IT review, facilitated by the IBM®, was to get the six firms working together more effectively. About three years ago, the Invercargill firm was having system problems.

“The speed and functionality was poor. It would often crash. People would spend half a day doing some work and bang, it’s gone. So we had huge problems with it — extremely costly and frustrating problems.”

That issue is now behind them and since then Mulvey led an IT strategy review aiming to develop a common accounting platform that is allowing the WHK group to work together more closely.

The group can now take advantage of its size for everything from making IT purchases, to sharing expertise, to providing seamless access for accountants at any of its offices to clients’ records.

“We’ve merged a lot of firms into this group in a short time and there are huge issues around merging technology systems. Now our IT people don’t have to be operating in isolation trying to pull these systems together.”

 “The deficiency was that we weren’t working cohesively,” says Mulvey. “We were missing out on our operating advantage — that we do have scale. There were a lot of things that we knew we could gain by working together that we weren’t getting. We are still improving in this area and there is more to do.”

IBM interviewed the chief executives and IT managers of each of the firms, before bringing everyone together for a series of meetings to develop a plan.

“The goal was to work out best-practice strategies in all sorts of areas — whether purchasing power, or technology — and then create a strategy to keep the firms developing at the leading edge technology.

“We wanted to avoid reinventing the wheel — to not have the Auckland guys, for example, sitting up there working through a procedure while we’re doing exactly the same thing in Invercargill. The idea was to co-ordinate strategies so if we do something, we do it once; if you wind up buying in outside expertise, buy it in once.”

One of the biggest steps was adoption of a single client accounting and practice management package, APS, by the six firms. The Invercargill firm was already using APS, but has radically changed its reporting processes in line with what the group has determined is best practice.

With an IBM BladeCenter server at its core, Mulvey is confident all the Invercargill firm’s systems are as good as they can be. “We have a system that I can say is completely functional. It does everything we want and expect it to do, it’s cost-effective and it works and we have 100 per cent uptime.

“Firms like ours, all we sell is time, and most of our time now has some sort of IT input. So if your IT isn’t working, your firm isn’t working. If you look at the New Zealand group turning over something like $80 million a year, and divide that into hours, it really matters.”

The group has succeeded in bringing its systems up to the same high level in the space of a year. “I think it will be a facilitator in future to pulling our firms even closer together,” Mulvey says.

Key Business Insights

Size does matter in business, but it takes strategic thinking to get the benefits of it. As a result of a merger, Southland and Central Otago’s WHK Cook Adam Ward Wilson has  achieved critical mass in specialist areas of accounting in which there are skills shortages.

Being the biggest firm in town attracts both big customers and accounting talent, but those advantages don’t count for much if there isn’t a solid IT infrastructure to rely on. Its 200 staff in offices throughout Southland and the Queenstown Lakes District are bound into the business by state-of-the-art IT systems.

IT is also the glue that binds WHK Cook Adam Ward Wilson into a nationwide accounting group. After a strategic IT review, and standardisation on a single accounting platform, the group is applying best practice throughout its operations.

IT can help any business extract the benefits of scale. Standardising systems simplifies support, means staff can be deployed in different parts of the organisation without having to be retrained and opens the way to competitive pricing on hardware, software and IT services.

Additionally, a unified IT system (process and applications) makes it easier for your business to deliver consistent products and services to customers, improving your prospects of commercial success.

Integration of organisations through merger or, less tightly, through sharing systems, can bring about the benefits of scale. As the below diagram from a UK case study of the impact of integrating the country’s tax and customs departments shows, cost savings and operational improvements are among the expected gains.

Additional Resources

A 2008 IBM study interviewing over 1100 CEOs worldwide found that integration at a global level is a key characteristic of the “enterprise of the future”. Business models should be strategically designed to access the best capabilities, knowledge and assets from wherever they reside, and deliver them to customers wherever they are needed.

Research from the 2008 IBM Global CEO Survey is available (US)

Integration of organisations through merger or, less tightly, through sharing systems, can bring about the benefits of scale.

Here's an example from the UK

WHK Group, a publicly listed Australian company, operates in both Australia and New Zealand. In all, it has 20 accounting firms and one specialist financial planner. They operate from more than 100 offices in the two countries. The New Zealand members of the group are WHK Cook Adam Ward Wilson (Invercargill), WHK Gosling Chapman (Auckland), WHK Coffey Davidson (Hawkes Bay), WHK Sherwin Chan & Walshe (Wellington), WHK West Yates (Nelson) and WHK Taylors (Dunedin).

www.whkgroup.com.au/

WHK Cook Adam Ward Wilson has more than 200 staff in six offices in Southland and the Queenstown Lakes District. Its business comes from a wide range of sectors, with clients involved in agriculture accounting for about 25 per cent of its turnover.

www.whkgroup.co.nz/