Having started his career in technology in the early-mid-1990s, Reed has seen the big changes in the industry including the advent of the dot-com boom and its subsequent bust. Back then, concepts such as the palm pilot and document storage have now morphed into initiatives that have had the significant impact on the way people conduct their business and their lives.
He acknowledges that the ability to have an online calendar sync with a hand-held device took years to eventuate, but it was the palm pilot that was catalyst behind that change while the idea behind document storage launched by Yahoo back in 1997 - although clunky and clumsy with the application of bandwidth – has culminated into a business like Dropbox with a market cap of $10 billion.
“Although there were challenges back then, these businesses provided the functionality for today’s ideas. Yahoo’s initiative made it easy to have today’s documents in the cloud,” he said. It also serves as a reminder that today’s initiatives may not always deliver but are critical to support innovation in the future.
One of the most notable recent trends has been the emergence of the fintech sector. Reed sees obvious benefits from these businesses in helping SMEs particularly around better access to capital. “In the 15 years that I have worked with SMEs, there is one consistent theme. SMEs find it challenging to get funding to grow. It has been an ongoing conversation.”
MYOB has already forged a deal with OnDeck. “We are delighted with the progress that OnDeck are making with our customers, but we don’t want to be just passive participants. By making our data available and working with businesses like OnDeck we are not closing ourselves from other relationships,” he said.
The business currently has agreements with National Australia Bank’s small business financing service QuickBiz. By giving NAB permission to access MYOB’s data, SMEs can get a lending decision in 10 minutes. MYOB also has relationships with the other big three banks to provide direct bank account and credit card feeds to MYOB software, along with about 13 other financial institutions. On the topic of data, he sees a lot of positives from Australia’s move to an open data framework, but regulation will be key.
“I personally believe that open data rules will be very positive for Australia and positive for SMEs, adding that data sharing will give businesses the ability to deliver a broad offering of tailored products. Decisions can be made with less friction and at a lower cost – all positive benefits for SMEs. However, confidence in data sharing is key and here the regulator should play a crucial role. One of the easy things for us to do is criticize regulators but they play an important role in providing confidence and certainty in the market,” he said.
“I am hoping to have regulation that makes it clear on who owns the data, what the obligations are and who is responsible for data breaches. I am hoping the regulators will be able to answer these questions, so we can move forward with greater certainty.”
He also believes that fintechs will be well-positioned in the new data sharing world. “When I look at what fintechs can do and all data that is available that can be pulled together to enable more information for lending decisions, I do think fintechs will live up to the hype. There is a huge opportunity for the sector to grow.”
Reed also sees many opportunities around the payments sector and hopes that one-day payment innovation will eventually lead to a cashless society. For Reed, the New Payments Platform (NPP) is “a huge strategic platform for the nation that could lead us to towards this future.”
"A huge strategic platform for the nation that could lead us to towards this future."
Kicked off on Australia Day, the platform with the support of 13 financial institutions including the big four will allow Australians access to real-time payments. In particular, he sees an opportunity in such a framework for businesses like MYOB to provide real-time payment services in a “frictionless environment”.
“All 1,500 of us at MYOB understand that our company is about helping small businesses. It can be about simplifying payments or making it easy execute on superannuation payments,” he said. MYOB aims to make it easier for SMEs to manage their invoices and importantly receive quick payment on those invoices. He believes that the NPP will also be an enabler in driving a platform that merges accounting systems with banking systems - an environment, MYOB is well-positioned to grow in.
The business is in the process of building a platform that enables SMES, accountants and bookkeepers to “seamlessly collaborate with each other”. The platform will also develop with the mobile device in mind.
“We are building the capability for a lot more work to be done on a mobile device. What we are really trying to do is remove all the friction from tasks such as recording and reporting financial activity to the ability of business owners to raise and get paid on invoices."
A coordinated approach to information gathering and reporting will also allow SMEs to use that central information for tasks such as reporting to the ATO or applying for a bank loan. “Rather than building individual parts, we are looking to build one platform that provides seamless processing for our SMEs. It is critical that we continue to provide differentiated services,” he said.
This year will mark Reed’s 10 years as head of the firm, fifteen in total spent at the company. Since then, the business has grown from a market cap in the millions to around $2 billion. During that time, he has eyed a few competitors in the market and the rise new entrants like Xero.
“Over the last 15 years, customers, journalists and friends at barbeques would ask me about competitors like QuickBooks or Reckon. Now people are talking about Xero, it’s always been a competitive industry,” he said. He adds that competition is key as it “forces companies and individuals to really dig deep and think more creatively and focus on solving the problem”.
"Over the last 15 years, customers, journalists and friends at barbeques would ask me about competitors like QuickBooks or Reckon. Now people are talking about Xero, it’s always been a competitive industry"
“Xero has done very well. In the time Xero has existed, our enterprise value has lifted $500 million to $2 billion. So, they have not done well at our expense. We have been able to build a good business during that period. We have become a better company because of competitors like Xero and dare I say, they have become a better company because of the competition we provide,” he said.
The father of three children, Reed also has a passion for developing STEM (science technology, engineering, and mathematics) skills in Australia. Although he believes that STEM skills are going to be crucial in professions that are growing and booming such as technology, he adds that it’s not just about supporting software development.
“These skills will also help in the future of customer service. There is a human element in that thinking and STEM skills underpin that. As soon as we can get a program that supports such skills imbedded in schools and the workforce then I think companies and industries will be better able to adapt.”
However, while the government does have a role play in supporting the development of these skills, Reed is passionate that businesses and parents also lead on the issue. He is also equally fervent on the issue of women in technology.
Reed is a member of the STEM Male Champions of Change, a group of high profile men that includes business leaders. Its aim is to lead to gender diversity. In particular, he is hoping to encourage more women to participate in the technology sector. Reed will walk the walk with this message and has already put in a strategy to boost the number of females in its software engineering team.
The firm’s 40 percent target of female participation – double the rate of women coming out of computer science degrees – has already exceeded its goal, with the business now employing 50 percent of women in those roles.
They have achieved this target by providing internships in their design and product manufacturing team, what Reed calls the Future Makers team. The program also includes career development for mature women who don’t have a coding background but an aptitude for a scientific thought process.
The program includes six months of paid training, helping them achieve an undergraduate level in computer sciences.
For Reed, issues such as gender diversity and support for the sciences and technology will also underpin society’s ability to adapt to change. He highlights geopolitical themes such as Brexit and the election of Donald Trump as symptoms of change but remains confident in both democracy and society’s ability to embrace disruption.
“We are living in a period of massive change, but this change is not new. We have had the agricultural revolution, big gains in labour productivity and now a decline in manufacturing and rise in professional services, health and education. As a society, however, we have proven to be resilient and to adapt to change quite well."