 Ah, good morning on a Wednesday morning. This is St. Fidel. We're doing business in Hawaii today with Donny Shimamoto. He joins us from the West Coast. He's a CPA, but he's very high tech. Hi, Donny. Hi, Janice, to be here. Yeah, thanks for coming. Well, I wanna talk to you about your practice because your practice is not the ordinary run of the mill CPA practice. It goes beyond that and maybe it's a statement of the future. Can you tell us why your practice differs from the conventional CPA practice? Sure, I like to think of my practice as the next generation practice and it's really representative. I normally call myself a non-traditional CPA because I don't do audit tax or bookkeeping. My background is actually in audit, but I actually do technology advisory services. And what that really means is that we help our clients make better decisions around technology and their use of technology, particularly in their businesses. So there's two things happening here. One is your using technology, which I wanna cover in some detail on this discussion. And the other is your consulting with your clients about their use of technology. Yeah, that's very important because a lot of clients are Luddites. They should have an L for their middle name Luddite. So let's talk about that one first. What do you find out there in the CPA community, the client community? Are people knowledgeable about this or no? I think there's a pretty wide variety. And one of the things that I find interesting is a lot of people go, well, with the millennials coming in that, hey, I just grabbed the millennials, stick them in the workforce, throw some technology at them and they'll fix all of our problems. And I'm one of the ones saying they're going, no, don't do that. Business technology and the way all of the different systems interact really takes some knowledge and it takes an understanding of business processes. And when we bring the accounting context in there, it takes in also an understanding of internal controls or how do I stop someone from committing fraud or how do I ensure that I have data I can rely upon? And that's where the CPA mindset starts to come in. Well, it's really interesting you say that because so many people say, oh, you're a millennial. And by the way, millennials, anybody young, it doesn't really matter if they had a cherubic look around them that they must be a millennial. And if they're millennial, they must know about technology. And if they must know about technology, they're a natural for my business, they can figure it all out. All I have to do is unleash them and it will just be fine, but that's not true. So how do you get a millennial, a cherubic millennial who has been doing social media and games all his life or her life to be a business, a business computer person? How do you get them to make that transition? Well, that's actually part of what my firm does that's also different. So the reason I'm actually on the West Coast right now is my firm is based in Hawaii, we're a Hawaii CPA firm formed in Hawaii. I'm a University of Hawaii grad. And but what I'm having to do is I'm having to actually travel to educate people how to do this. So I spend over half the time of the year traveling around the mainland speaking in different states and within the last couple of years, also internationally to really help people understand this is the business aspects of technology. And these are both the innovations that can help move us forward as well as here are some of the cybersecurity and other types of things we have to worry about as we look at our foundation to ensure everything is secure. Yeah, so here you have millennial, bright-eyed, very familiar with social media, spends 18 hours a day on social media and I know it's how to work that phone really, really fast. But he doesn't know too much about business programming and software. Well, how do you start that conversation? What do you say to him? Look, you got to come to another level. Here are the things you need to know. What are the things he needs to know or see? The first thing I always say is start with the business purpose because a lot of times what you'll see and this is not just in millennials but this is a lot of the vendors, they're coming to you with a solution that's looking for a problem. And a lot of times I come back to it and I'm like, well, wait, what is the business problem that we're trying to solve? We really need to start there and understand also what is the strategy for the organization? What's the business strategy? What are we trying to achieve? So those are normally the first things we really start to come at and say, well, how is this going to either add value in really being able to help us to do something or how is this also potentially going to add risks? And so I need to do something to secure it or I need to make sure that I'm understanding the potential impacts to the business if this technology is not available. But I think about like ransomware, that's one of the ones now where if you've got ransomware, it'll lock down your systems and how do you deal with that? And if you've built your business and being dependent upon the system, have you mitigated the risks associated with that? No, it's so interesting. It's like a dog training class. I'll tell you why I say that. Because when you have dog training class, you're not only training the dog, you're training the master. You're training a whole new paradigm between them, a relationship, where the icons of knowledge, of programming, of expectations are all different, but they both have to get on board. Am I right? You're completely right. And that's when we look at the success factors for whether technology or innovation as a whole is being incorporated in, it takes that buy-in from the very top, that CEO or business owner coming in and saying, okay, I understand that this is technology, this is how it'll help our business. And then them also coming in and allowing the millennial, whoever it is, because a lot of times I'll tell you too, it's not the millennial, it's the Gen X, or maybe that understands the business is in a management position and is in a well-positioned to say, well, this is how we can use that technology to really come in and help. And so it's really about buy-in and adoption. And that actually, interestingly, I gave you my background, I'm actually a CPA by training. I'm an IT specialist within our CPA realm. And then I've also done some graduate work in organizational development around behavioral change and organizational psychology, because it's that adoption of the technology and that change in thinking that's required to really get the benefits. Yeah, all three of those go together, you know, and it's, what do they call it now? It's called network analysis, social network analysis. It preceded Facebook, it preceded social media. And it is the concept that actually the NSA started using after 9-11, where you take the email of a given organization and you analyze it for keywords and then you make another schematic, a whole new schematic of who's really running the place, a social network analysis. And it has been used, it is used today. And you're using it, I guess, in corporations to find out who in fact is in charge. It's very important. Yeah, it is. That's one of the great uses of artificial intelligence as well, is it'll tell you who the real people are. Yeah, well, before we go to that, and I do wanna go to that, I wanna catch on one thing you said, and that's security and ransomware and all the other dangers and risks and threats and pitfalls of nasties that are out there watching you and trying to do either mischief or kidnapping, as the case may be. So you have to help people because their lives and fortunes, their businesses in general are completely dependent on being clear of those threats. But those threats change every day. Therefore, you must change, you must follow it. So my first question in that regard is how do you follow something that is moving so fast that the average Joe has no idea how fast it's moving? How do you follow it? That really I think is a misconception. So I won't say that it's not evolving, it is evolving, it does evolve quite a bit, but most people are not subject or as much at risk to these first day attacks or these late-in attacks that are really coming in. What we can do though is we can prepare and be ready to respond. And so really it's about making sure that you understand where are the threat vectors to your organization? Where are the threats potentially coming? And with that, I'll mention, if you look at Ponemon's research, they do a study every year around the data breaches, only 50% of those incidences are coming because it's this outside hacker trying to come in and get into your network. And everyone thinks, well, that's who it is and I'm never gonna stop them, right? Because exactly what you said, it's like everything's changing so fast, how can I even stay ahead? It's really only 50%. Another 25% of the attacks are really coming from an employee simply making a mistake, clicking on the wrong link, opening the wrong attachment, that ends up giving up their password or launching the ransomware attack. That those threats are combated through user awareness and helping them understand these are how you identify links that you shouldn't be clicking on. This is how you make sure you don't click on something or open up a file that you shouldn't be opening. Those are some of the simple things, that's another 25%. And then the last 25% is really about IT or business processes not being designed correctly. And so that again is making sure that you have competent IT team or you're working with a competent IT provider, as well as making sure that your systems are designed in a way where whether it's social security numbers, bank routing numbers, credit card numbers, that they're not exposed as they're moving through your systems or through your transactional processes. So 50% or half of the incidents is that cause a data breach, you can actually protect your business from. Well, that reminds me of the false missile crisis back two years ago, I'm sure you followed that. And it was a particular employee working for the organization that handled the warnings. And it was a question of training. It was a question of the authority. It was a question of the protocols, the programming. All those things seem to have gone wrong. And in your discussion a minute ago, it sounded like if you follow the steps, you were outlining that would not have happened. And so, but the lesson to me is that you can have a perfectly innocent situation where somebody just isn't up to snuff, where the programming isn't up to snuff, where it hasn't been thought through. And because of the leverage you get in computer programming and software now, going to mission critical operations by the company, you can have a huge result for a tiny, tiny slip of the wrist mistake. So this is very important, what you say. You could bring the whole enchilada could come down one little tiny mistake. I was gonna say that's one of the things too though, that whole fear of that little thing coming through, that's what you see a lot of IT professionals using as leverage. And they'll come in with these dark web reports and these other things saying, hey, you need to be careful, here's all the things that are floating on the dark web. But in the end, it's not about absolutely minimizing that risk. It's really about managing that risk. And that's that perspective that we come at as CPAs. What are the risks out there? How do we manage and mitigate those risks to something that's manageable and acceptable by the business? Right, but we don't panic. And we don't, we don't go too far too hard, too fast and worry about it all night long. That's a yes, I totally agree. And that takes me to the next question I have for you, which I think you knew I was gonna ask you. And that is coronavirus. You know, we are sitting in a world that is changing around us. Some people say by the hour, other people say by the minute. Angela Merkel, you know, this morning predicted that two thirds of the German population would be infected soon enough. There are other scientists, you know, based on, you know, a scientific analysis believed that we'll have millions of cases over the next few months in this country. So the question I put to you is you have clientele out there. They have important businesses. They have employees who are at risk. They have management who's at risk. And they have an ongoing, you know, threat of threat that might get, it is getting more deadly every day. They must ask you what to do. What do you tell them now? Today, Wednesday, what do you tell them? So luckily a lot of our clients are coming to us because they've already anticipated these types of incidences. And this actually falls into the area of business continuity planning. And some people will call it disaster recovery. Cause really it's, I mean, it is a disaster. We can't leave our homes, right? We're isolating ourselves. Then it is a disaster. So what we're really looking at here is how do we enable business processes to either be conducted remotely or that they can be automated, right? And so they can be conducted without a human intervention. So depending upon the industry and of course depending upon the type of systems that a company is using, that's where these business continuity plans are gonna vary and they're gonna be different. Yeah, so you come into a situation and you, you know, I'm sure you have this experience and I'm sure you've been through it. Coming to a firm, a new firm, new client, new client. But a client that's been around for a while, a client that has some legs and you walk through the place and you see they got computers that are 20 years old. They got software that isn't supported and they're dealing with a mindset that doesn't have any significant expectation for moving ahead. And so now you're meeting with the executive committee and you know, what's on your mind is these guys are way behind the curve and they're gonna have to spend some real money to get even to a reasonable place, much less an advanced place. What do you say to them? Now that'll call on psychology. I mean, maybe you need a degree in psychology too, you know, a psychological CPA person. Anyway, what do you say to them? That, you know what? That is exactly where it comes to. A lot of it is about, I actually think of it as hope, right? And so there's all these things happening. I don't know what's going on. And so it's actually one of the way we describe what we do is we provide vision and clarity. So our typical client when we're coming in, it's my question is, tell me where you wanna be three to five years from now? And we create that vision over on that side that says, okay, this is where you wanna be. If this is where you wanna be three to five years from now, let's look at all these steps that we can take you to go along the way to reach that vision. And that's how we take this big massive, we have to update all these things and break it down and say, okay, now let's figure out what can fit in your budget. What's gonna make sense? Let's step you along and create this roadmap. And it may be a mix of different products. It may be a changing in systems. Sometimes it's just changing in the way that you operate business processes and procedures. And but that's kind of the core of our approach. Dan, we're gonna take a short break. When we come back, I would like to discuss with you, you know, what the ideal arrangement would be. I know that's a very broad question and what you would like to see them ask you for, but you would like to see them ask you for. I also wanna ask you about the distinction between, you know, profit businesses, ordinary corporations, LLCs and the like, and nonprofits when it comes to your special kind of practice. We'll be right back. Don Ishimamoto. All right, we're back with Don Ishimamoto here on Business in Hawaii on a given Wednesday on Think Tech. I'm Jay Fidel. And my next question, which Donny already knows what it is, he's sitting there in the room with a bunch of management guys who have a 20 year old system and he's trying to bring them current and get them to see into the future even, maybe use that future examination, the ghost of Christmas future, if you will, as a way to get them off the dime. But they may be Luddites, Donny. If they're Luddites, you have to offer them options. You have to give them the vision. So what kind of vision do you give them? What do you tell them they should be asking you for? Yeah, it's interesting that you frame it that way because we actually would not work with a client. If they're at that point where they're like, we don't know, we don't believe in it, then we're like, thank you. This is great talking to you. You're not the client for us. We're really here to help those that are buying into the technology and that value in it move forward and accelerate their own success. Okay, well, let me go to this then. What kind of two to five-year plans do you usually get? What do they usually say to you? Where do they say they think they want to go? It's really figuring out how do you better leverage technology? And so whether it's onto, quote, the cloud, right? And how do I actually move my processes to the cloud? Or how do I increase the interactions, the digital interactions with my customers? So whether it's online shopping, online customer support or email-based support, or how do I, the other one more internally focused is how do I actually make everything work together? How do I get information that's in this system going into that system so I don't have someone manually re-keying things? So that's where we'll bring all whatever technologies are potentially available and talk them through and say, well, this is what's possible. And then we actually from there help them find all of the vendors that might make sense. So a lot of times you can almost think of us like a general contractor, where we have this ground plan for what you want your business to look like and we'll bring in all the different specialists that then we'll do the cabinets and the flooring and be everything else to make everything work. But we make sure everything works. I like designing a bicycle. First, you need to frame. Yeah, yeah. You know, you make me think of the experience we had in Hawaii maybe five years ago where the state government decided that, yes, it was way behind and the state government wanted to catch up and it took certain steps. It hired a consultant who had had a lot of experience in organizational computer networking, so forth, from Washington. He was from GSA, as a matter of fact. Sonny Bukwalia was his name. Anyway, he found after, you know, it was like a lot of money was spent by the government and by what do you call it, private industry partners in the project. He found that, yes, indeed, the state was way behind and we only knew that so that was not really helpful. Then the question is what to do and that means a lot of money. And so, you know, I asked you before, what happens if you're in a room of Luddites? What happens if you're in a room of state government where they, you know, they have a bureaucracy that'll choke a horse and you can't get them to do anything or spend anything? Do you take that client? So it depends, you know, it's funny you mentioned that project. When I first heard that project, I was like, whoa, good luck. And then I saw the vision that Sonny came up with and I went, wow, that's pretty amazing. You know, it would be great. It would be great to see all improvements in government and but it comes down again to the people and it's about change and it's about helping people understand and buy in even more so in government, right? Because we've got the unions that are coming in and we've got people who, stereotypically, I'm gonna say that not all state workers, but stereotypically, people think of state workers as, you know, I'm not gonna change, I'm not gonna do anything. And again, that was why I ended up doing some of the graduate work in the psychology area because it's about how do we introduce incentives for change or how do we help it buy into change? And it's an adoption that is probably the most difficult. The other thing that I think is from the state perspective, when we look at that is there's a lot of complexity and there's the need for allowing particular departments to really be able to operate on their own. And it's not only true in state government, it's also true in business, where maybe there's multiple departments or there's multiple divisions and they're having to work a little differently and that's the type of flexibility that it's our jobs to bring in to understand how can I introduce flexibility and ability in a business while still maintaining internal controls and maintaining all of the information and data flows and integration? Yeah, well, and I wanna take you to one other kind of client, which I think is one of your favorite clients and that is a non-profit. Non-profits are special animals. They have special management, they have a whole different way of thinking because there's no real owners there and the managers are incentivized in a different way and their missions are different and arguably it's altruism that drives them, it's a different way of proceeding. So how do you, how does it differ when you meet a room full of managers for a non-profit instead of a government room or ordinary business company? Actually, I actually find it's a lot easier with non-profits because of this focus on the endpoint customer, the outcome that they're trying to achieve. So that's where when we look at a non-profit, it's really the motivation to help people and I'd like to also think that that's the motivation that we're seeing in government, right? In the end, how do I serve the average citizen? How do I make a difference in people's lives? And so the psychology around that again comes into play. It's the motivation of, well, if we work together and we make this change, that's how we can achieve this lofty goal that we set as a vision that we're trying to achieve. Versus a lot of times in business, the problem we're gonna see there is they'll become this question of, well, what's the impact on my profitability and is it gonna affect my profit sharing or is it gonna affect my bonus? But if we don't make that, versus in the non-profit world and in the government world, we see that as well. In the end, if I have the funding and if I'm able to better serve my constituents or the people that I'm trying to help, but then we should do it, because then it makes sense. Yeah, absolutely. And it seems to me that that's one of your favorite things and it also seems to me that people in the non-profit are, they're trying to make the world a better place and they're not asking you, how soon are we gonna recover our costs? Which is a deadly question, because it's very hard to answer that if it's a prediction thing. So I guess we're a non-profit and we want to hear a think tank. We want to have every new technology that we can possibly imagine. I don't think that's your average client, but suppose you're run into a client like that who says, Donny, we want it all. You do AI, we wanna find out how AI is gonna leverage every single thing we do. We want database, we wanna keep a record of everything and have it immediately available and so forth. What do you say to that client? Because he has the risk of spending too much money on dream-like things and aspirations that are largely theoretical. How do you stop him from doing that? Or do you stop him from doing that? It's actually the same question that I started with in the beginning. So what is the business outcome or what are you trying to achieve? And can we actually align the technology or the thing that you saw at the last conference that you went through, right? How do we align that with achieving that vision? So we'll go through a little bit of validation there to make sure that we're managing expectations and that it really is contributing towards the objectives. And that's, again, the decision-making process. And I'm here as a CPA to help my clients make better decisions around technology. So it's really taking you through that, going through the visualization because there's diagramming techniques that we can use to say, this is what it really needs to look like when we get there and then figuring out, what are the steps? How do we ensure? And if they want to move fast, how do we get people behind it? Because the faster you move or the bigger the project is, the more risks there is. And so we need to make sure that those things are managed appropriately. Well, last one, one last category. We only have a minute left. And that is the guy that says, I don't care what it costs, Danny. I do not care. I want to be at the front of the wave. I want to have the greatest leverage possible. I want to automate everything. It sounds like Jeff Bezos, doesn't it? I want to automate everything possible because I know that in the future, this will be a big return for me. Not now, but later. And nobody cares how much later, but soon enough we want to leverage. We want to have the benefit of this leverage. What do you say to that client? Can you do that? How do you do that? Is that a special effort for you? I'll tell you, in all my years of practice, I've been in practice for over 20 years now. I've never heard that. I wish I could say there was a scenario for it. We don't see it very often or at this point at all because we were primarily with small and mid-sized organizations, very much our Hawaii business environment. And so we don't see that a ton. I will tell you though that when a client comes to me that has that type of mentality, because we've tried to work with them, like start off in as a recipe for failure, because what you're gonna find is that they're gonna say, well, I want all this today. And then they go into the next thing and they go, well, then I want that tomorrow. And can you deliver it by the end of the week or tomorrow or yesterday? And those are asking red flags for us. You can't chase the rainbow every single day. Donny Shimamoto has an extraordinary CPA who's into so many things, including technology for everything in your business, or your nonprofit, or even your government organization. Thank you so much for joining us, Donny. Thank you, Jake. I appreciate you cutting me on the show. Hello, hi.