Review of Canopy Tax – The Accounting Technology Lab Podcast – July 2024

Hosts Randy Johnston and Brian Tankersley, CPA, take a look at Canopy, a firm-wide operating system that let’s you do the same amount of work you have today, with the talent you have, but in less time, with less stress, and while creating better client experiences.

Use the video player below to watch, or the podcast player below to listen to the podcast.

Or use the below podcast player to listen:

Transcript (Note: There may be typos due to automated transcription errors.)

Brian F. Tankersley, CPA.CITP, CGMA  00:00

Welcome to the accounting Technology Lab sponsored by CPA practice advisor. With your hosts, Randy Johnston, and Brian Tankersley.

Randy Johnston  00:10

Welcome to the accounting Technology Lab. I’m Randy Johnston with my co host, Brian Tankersley. We’d like to talk to you about canopy. Now Brian and I have a long history with canopy a point of disclosure, we’ve done a lot of design work for this company. But you know how it is with all clients, some listen, and some don’t. And there’s things that we talked about that were implemented things we talked about that weren’t. But the product has made pretty good progress, and is a very popular practice management platform today. It was started in 2017. So it’s about seven years old. And over time, they’ve raised about 70 million in capital right now run in about 150 employees with 70 employees in r&d. They’re out of the silicon slopes. And so down towards Lehigh, as it turns out, most people just think of it as Salt Lake. But the company has been very focused around practice management, document management, workflow. Plus, they also have a really great tax resolution platform. But that’s almost a topic for another day. But the bottom line here friends, is we want you to understand at the low end of the market, there’s a collection of competitors that have come to this conclusion that putting everything together in one platform is a winner. Further. I have never seen in my career as much desired replace practice management, as I have this year. It is stunning. The week that we’re recording this particular session, the day we’re recording, I believe I’ve averaged five phone calls per day, this week from firms wanting to replace practice management and a similar number the prior week. Now, I’m just one person, I’m getting calls left and right. I’ve got open engagements to select practice management. It’s a big deal. All right. That’s a long rant for me usually have a short one. And I asked Brian to tell you about the platform and system. So Brian, what do our listeners need to know about canopy? Well,

Brian F. Tankersley, CPA.CITP, CGMA  02:17

let me let me back up here and talk for a second about about practice management. Because I think one of the one of the big things that that is going on with practice management that is that is not done well with the legacy applications. And by the way, just about all of your legacy applications from the big boys. were written with a couple of exceptions, but just about all of them were written prior to y2k. Okay, so so they are getting a little long in the tooth, the way we manage projects, when we did things on paper is quite different from what the way we do it in paperless world. The world has changed and implemented stuff that is similar to CRM, we’ve implemented electronic signature, okay. So it’s, it makes sense that you would need to change out the plumbing behind your behind your workflows, okay. And so that’s the, that’s the piece here. But again, they’ve got the idea behind practice management is that this is going to end up being a kind of a firm, wide operating system. And so what canopy actually offers is going to be a tools to do proposals and engagements, document management, workflow, time and billing and payments. Okay. They’ve also got insights and analytics on that, as well as client management tools. Okay, the client management in here is somewhat simplistic, okay. And but it is, it’s something that works. That works well for, for tax firms in particular, you know, it is, you know, the the name of the name of the product actually was for many years canopy tax. And so they are honed in very tightly on tax practitioners. And so this would fit well as well. It fits particularly well for Enrolled Agents, again, or, or folks that may have some kind of tax resolution services. The workflow and document management actually had was originally designed to address some of those issues, and they’ve extended it significantly since then. But that’s your you know that that’s kind of what I would say about it here. Brian, before you love this strategy, the uncloaked. Your accounting firm, by the way, I think that’s a that’s a great name.

Randy Johnston  04:23

So Brian, before you leave that concept, I believe you were the one that came up with the idea of all of the modules inside practice management. And you developed a lot of Venn diagrams, and we don’t have Venn diagrams to show our viewers and describe to our listeners in today’s session. But the idea here is that you have Time and Billing and workflow and document management is your three primary system systems but You also have other features like due date, monetary, and portals. And a lot of the systems are now adding payments. And they’re adding proposals engagements. When you first came up with those diagrams of Brian, I think it was approximately five years ago. It was like a brilliant bit of work. And you and I went back and forth on lots of ways to show those diagrams. And you know, we wound up with a simple Venn, saying that it was the best we could do, because we wound up with too many petals on a flower is almost way wound up. And

Brian F. Tankersley, CPA.CITP, CGMA  05:31

we actually use the flower petal design, because it was the only thing that could do four simultaneous intersecting things with differing numbers in there. And you know, the problem. The problem again, with practice management is is what is it? And and, you know, again, if I’m as I’m because I take demos on all these products, just like Randy does, we actually take demos together. So we we can both be up to speed on what’s going on. But I will tell you that one of the first questions I always ask is, okay, what does practice management mean to you? Okay, because there’s, you know, there’s practice management centered around selling practice management centered around scheduling, there’s practice management centered around billing, there’s practice management centered around time tracking, you know, or document management or portal or, you know, there’s just so many it or PBC lists. I mean, there’s so many workflows surrounding practice management. And I think it’s important for you to figure out what what it is that the as you look at the products, you know, I would say almost, if I had a, I might actually take about 10 dimensions of products, and I would rank the products on a one to 10 basis for your needs. If I was doing a selection engagement, just because I think that I think that there is there’s not a perfect solution for everything. Okay, so everything is going to have compromises you have to make. But the when Randy talks about this Venn diagram, the Venn diagram is pretty complete for canopy, they’ve got a pretty good set of pretty good set of tools for most of the major needs that people have in Okay, so So Brian,

Randy Johnston  07:16

kind of coming down the path a little further on your comment, because I’m actually doing practice management selections. Right now, I know you’re involved in some too. I’m using a grid of over 100 features when I score these products. And usually what I try to do for most firms is filtered down to 3456, that we’re going to look out how did the 53 in the marketplace as of today, now? Yeah, how could you possibly take all those apart? It’s hard, we live, eat and breathe this stuff. But as a practitioner trying to run a firm, it’s hard to get through that. So that’s number one. Number two, you are absolutely right, because you were naming all sorts of feature sets in the workflows and so forth. But what’s most important to you is, is the biggest question, because all of these products do some of everything. Few of them do any one thing super well. And, you know, the whole idea of having a single operating system for the firm is really what many of these all in one practice management products are trying to do? Will they get there? I don’t know, we can go back to some of the earliest ones. And we’re not going to talk about those today. But when I think about what’s important, you got to figure out what’s important to you. And that’s how I’m trying to filter most of these right now.

Brian F. Tankersley, CPA.CITP, CGMA  08:38

And I have to say that I think picking practice management, accounting platform tax software, this is very much like getting married. Okay, Randy, I know you and Pam have been married for over 40 years. My wife Jeanette, and I’ve been married for over 30 years. And I just have to tell you folks that that, you know, I think practice management is analogous to a mate in that it’s something you’re going to do your practice with, you’re going to do life with this thing, okay? And so you need to make sure that it has what you want, and it doesn’t have too much of what you don’t want. And that that you can live with it for the rest of your life. Okay, because things are going to change in your firm, is it going to meet what you need? Is it going to is it going to, you know, is it something that’s okay, now, that’s not going to work for you in 10 years when things change? You know, again, I think you’ve got to a pick the right solution, and B be committed to it once you pick it. Unless it just absolutely can’t work. Okay. Because this you know, I think you’ve got to commit your workflows to it. You’ve got to commit the way you work you’ve got to commit to the to the processes and the things your staff people do and the things you do and the way you deal with clients. And I think it’s it is very much like that picking that mate you’re going to do life with because there’s a whole lot of joy and a whole lot misery that can happen if you make the right or wrong decision. So,

Randy Johnston  10:03

you know, with that in mind, I am going to take two downsides here on canopy and call them out with intent. But one of the things that was never good in this system was the way the Time and Billing worked. But you know, the reporting, based on that it was also tough, although they have an add on module client insights, or something I think it’s called but the product was revised mid year of 2024. In July of 2024, the system was restructured. So if you’ve looked at the product in the past, and Time and Billing didn’t work, well, you were right, it didn’t really work. In the past, a lot of people have made it work. But there’s a lot of niggles as they would say, in the UK, to work around this stuff. I think most of those are worked out, not all but most are worked out. That’s number one. Number two, like other venture backed organizations, they have sales metrics that they have to hit, and their sales teams are very aggressive. And we see that at NetSuite. We see it, I will name a whole bunch more, but I can name the companies that are very aggressive at sales. So you need to make sure that you’re ready to make a decision. Because you will figure out right away a lot of these practice management products are currently backed by venture. And because of that, they have very aggressive sales teams. And as soon as you come up on the radar, they want to win the deal. So you won’t buy something else. And

Brian F. Tankersley, CPA.CITP, CGMA  11:35

and the thing about that is that there is there are too many practice management solutions right now in the market. You know, 5053, or whatever it is retracting Randy is too many 15 or 20, I think is probably about the right size for the market for the different segments, you know, maybe maybe a little more than that. But But I think there’s going to have to be some consolidation in the long term. So

Randy Johnston  12:01

in your earlier comment, Brian, many of the products that are sold were designed before the year 2000. They’re 25 Bloody years old. And they’re still being sold and pushed in, you know, one of the better or first all in one designs was designed in 2006, and seven, even it’s 20 years old. So these modern systems like canopy that are only about seven years in, it usually takes about four or five, six years for a product to get enough depth to be usable competitor at the high end carbon is kind of in that ballpark, for example, they’ve been added eight years if I recall correctly. So understand we’re not trying to kick anybody hear in these comments. We think canopy as a system is a good practice management system. But by repeating the point, not every feature is the best. This is you know, kind of it’s got a lot of good things in it. And it’s got some bad things in it. And there is no magic bullet, no single solution that does everything, or Brian and I would recommend to you. So there’s too many competitors. But this is one of the better ones.

Brian F. Tankersley, CPA.CITP, CGMA  13:13

And I’m going to say that it’s somewhat analogous to the size vehicle to the kind of vehicle you have, okay. I like my four rounder because I go up to the mountain and I go to the middle of nowhere. Randy drives a lot on flatland between Wichita and Hutchinson airport at the airport in Wichita and Hutchinson, he’s got a Mustang and he can set land speed record. So you may have heard some of the sonic booms he makes on the highway to Wichita. Okay, and there’s nothing wrong with that. Okay, my wife drives a Fiat 500 convertible. And the reason she does is because she can make a parking place anywhere because it’s a little golf cart. Okay. You know, on the other hand, I have friends that have six kids. And guess what, they drive a big massive SUV that’s half the size of Utah. And so I want you to understand here that just like there are different cars for different needs and the different stages of life. There are different firms, there are different products that meet the different stages of practice that firms are in different kinds of practice there. Yep. So if you’re into value pricing, you know, the Time and Billing problems that some folks have had with with the past version for canopy may not matter if you’re going to do value pricing, you know, if you’re a no timesheets person, you party on Okay. On the other hand, if you’re a law firm and you live and die six minutes at a time, this isn’t your solution. Okay? And that’s okay. All right, because there’s just like spouses in cars, there’s the right one for everybody. Okay. And so we encourage you to go out and figure out what the right one is.

Randy Johnston  14:49

So thanks for the interrupt on that Brian, because I thought those discussion points are important for our listeners, whether originally did canopy or any other practice management so their pricing and packaging He is actually interesting to use on the website. But for most of you, you’re almost certainly going to wind up in the pro edition. And the pro edition slider has some limits, because in effect, they’re going to force you to call for pricing once you get above about 10 users, but you price document management, workflow, time, and billing all separately, the number of contacts that you have is kind of sliders. So they’ve got this kind of sliding scale to get to your quote. But I know you can go to the website and do your own levers do be a little cautious because you’ll be tracked when you’re on the website,

Brian F. Tankersley, CPA.CITP, CGMA  15:38

you know, when the only device to use your Gmail account, it

Randy Johnston  15:42

is a great place to use your alternate account. I agree. So in the old days, we used to talk about canopy as being about $50 per user per month, that is not the way it prices out today. By the time you put all of the pieces together, it’s a lot more likely to be in the $70 per user per month range. But I am not here to quote pricing on this particular product, because it varies by your mileage, your number of clients, your documents, and so forth. And

Brian F. Tankersley, CPA.CITP, CGMA  16:10

I’ll say that, it it also solves more than just the practice management role. It solves the document management role, the workflow role, the, you know, some of the some of the portal role. And so that’s one of the things I think you’ve got to watch out for here is because you may look at that and go, you know, I hear this is a quote, that’s 500 contacts and 10 users, and this is their slide, it’s 1085 a month. So that’s $100 per user 108 50 a month per user. But remember that it’s also your DMS, it’s also your portal, it’s also your workflow, and, and Time and Billing tool. Okay, so so so the point here, I guess, is that that Venn diagram becomes more important when you’re pricing these things out figuring it out. Now, I’ve always said that the most expensive thing you ever bought was software that you bought exclusively based on price, okay, because this fit is important. But as you’re thinking about as you’re thinking about this fit, I don’t want you to, again, that’s one of the reasons why I’d like you to rank it on a one to 10 basis for different dimensions of the things that are important to you. Because I think you’ve got to decide, are you ready to make this kind of commitment change out this many systems? Or are you going to use this as a standalone piece? Where use something else for document management workflow? Maybe? If that’s the case, maybe it makes sense? Maybe it does. Okay, so So I think this, this evaluation of the different components in what you’re going to use, and what you’re not going to use is one of the most critical things and so many people don’t do it.

Randy Johnston  17:44

Yeah. So friends and listeners, we have philosophy, Brian and I have been talking about it over the last two years. I know it started in 23, possibly in 2022. Less is more, you know, when we talk about other products, like they’ll quit core or canopy or taxdome, or firm 360? Or how many do you want me to name normally, what we’re trying to get you to do is buy fewer products, it’s one of the reasons that I’ve been an admirer of Zoho one for so many years. It’s it’s one purchase, and you get everything that you could need, literally in the platform. And so less is more has been a mantra that I’ve been on for a while we think firms and small businesses, maybe businesses of all sizes, have bought too many products trying to solve problem problems by putting band aids on them, instead of getting a pair of gloves and getting the right solution. So when we talk about these, these products, you will want to get a good feature fit, you will want to think about pricing.

Brian F. Tankersley, CPA.CITP, CGMA  18:47

Now one thing they’re doing that is interesting is they have some they have some AI generated AI generated content. So you can you can actually use this, this is actually something that, that that actually picked up at the at the mashup that we had with the 40 under 40 With the thought leaders, the CPA practice advisor did in June, one of the practitioners said, you know, AI is the best for writing emails to people that you’re mad at. Because it will just do it where you will just make your life shorter and more and less pleasant by doing it. And so they’ve actually got a functionality in here, where they’re actually doing that to integrate AI into the different tools.

Randy Johnston  19:33

Yep. Yeah, very interesting conclusion on that. So Brian, any other closing key thoughts on canopy

Brian F. Tankersley, CPA.CITP, CGMA  19:42

you know, I think this is a this is a product again, that is it’s one of 50 in the space. Okay. But it’s, it’s, it’s old enough to have to have the depth of features that that a lot of other products don’t have, but it’s not so Old that it’s a legacy tool. Okay. One of the reasons by the way, one of the reasons we always say you want to get something that’s been around at least five years, is that all these startups and especially VCs run things, according to a book called The Lean Startup. And the concept behind the lean startup is the minimum viable product, okay. And that is a product with the least number of features that can be sold to anybody, so that they can then get in and get customer feedback to drive the development going forward. Okay, now canopy did this, okay, seven years ago, but they’ve had enough feedback and enough iteration now that it’s a it’s a fairly mature solution. And for the right firm for the firm that wants to practice this way and have workflow run this way and everything. It could be, it could be the right solution. It might be your firm, it might not. But I encourage you to check it out.

Randy Johnston  20:48

Okay, what an interesting comment, Brian, because you also have learned in this year, one of my least favorite phrases has become minimal, viable product. I’ve known about it for years, but I’m an old core hardcore programmer, and I want the bloody things to work. I want him to do everything that I need, just not a portion of what I need. And that’s a great comment on the maturity in this particular platform. Now, Brian, and I spent a fair bit of time trying to pick the right content for our episodes with you. Sometimes we break things up, like we’ve done with Microsoft copilot, and Chad GPT as an example, canopy could have easily had 2345 sessions on the different features. So we want you understand it’s a broad product that we tried to cover in this session. It is a good company and a good product. One of the options we think for good all in one, practice management. We appreciate you listening in. We’ll talk to you again soon.

Brian F. Tankersley, CPA.CITP, CGMA  21:49

Thank you for sharing your time with us. We’ll be back next Saturday with a new episode of the technology lab, from CPA practice advisor. Have a great week.

== END ==