The impact of emerging technology on the accounting profession
Jules Carman from Alliott Group Preferred Partner (Accounting Software) Sage provided practical tips to delegates on how their firms can take their next steps on the journey to digital maturity.
Rather than talk about the usual ‘pie in the sky’ technology issues and market statistics related to the cloud and digital transformation, Jules Carman from Alliott Group Preferred Partner (Accounting Software) Sage provided a practice playbook towards the transformation of an accounting firm and client businesses, commenting that a more pragmatic approach is the “driver towards a successful future”.
Speaking at the 2019 North America Leadership Conference, Jules commented that while transformation is not easy, firms need to start to transform: “The longer you have been in business, the more difficult it is to change, whether due to legacy systems or people resisting. It’s not easy, but it is important to start the journey.”
Jules’ presentation, which had been preceded by a benchmarking survey of participant member firms, made the point that we live in the ‘fast economy’ and that time is the biggest competitor of accounting firms when it comes to making change.
Many firms are still using on premise software rather than software in the cloud. In Jules’ view, these firms are much more vulnerable to security threats such as hacks and are therefore a long way from entering into what some are referring to as the Fourth Industrial Revolution.
Why firms are looking to transform
Three key reasons were cited for the shift towards digital transformation:
- Inefficiencies that undermine profits and growth potential: It’s easy to lose focus on growth when the firm is distracted day-in-and-day out on the inefficiencies that linger in the business. From operations to accounting to managing inventory, the little inefficiencies can add up to big missed opportunity
- Lack of insight into operations: Reacting to changes such as growth, stagnation or disruption inside the firm or in the market can be difficult with lack of insight due to the incompatibility of disparate systems trying to keep all your business data organized
- A lack of agility and timely responsiveness within an organization: This challenge arises because of ever-increasing business complexity and the increased time spent by employees on non-productive tasks as a result.
The benefits of digital transformation for accounting firms
Data was described by Jules as “the golden asset”, commenting:
“Accountants have a ton of data about their clients’ business- this privilege places them in a great position to achieve even greater trusted adviser status." She added: “This data means you know more than they do about their business. Transformation will bring you the intelligence you need to respond to your clients’ questions about where everything is going in their business and their sector.”
According to Jules, transformation will enable accountants to get more involved in their clients’ business planning and to pivot their services well beyond compliance.
With cloud based systems having a subscription model, firms also have the opportunity to generate recurring revenues that will get them out of what Jules referred to as “technology debt” – value will be able to be “recouped” by moving to the cloud.
Other benefits to be gained from transformation include the ability to win and handle larger clients and larger projects, improved integration between systems and the ability to monetize the client portfolio more effectively.
On the other hand warned Jules, failure to transform might result in staff leaving the firm with employees feeling that poor processes are preventing them from doing their jobs.
Delegates were also advised that technology can in fact make the situation worse if you don’t take the right path to transformation.
Cultural barriers - teams and firm leadership
In Jules’ view, the longer a firm has been in business, the more difficult it is to change due to legacy systems, people resisting, etc. Transformation is not easy, cautioned Jules, but it is important to start to transform. Firms need to identify who is more adaptable, resilient, and comfortable being a “Change Maker” and which people will need more care, training, coaching and education: “Turn the tables on yourself being leaders of the firm. The ‘resist culture’ needs to be eliminated,” advised Jules.
Bill Payment transformation
Firms need to take steps to identify the issues and inefficiencies. Jules explained that it can be a major exercise just to identify the issues, but also outlined how important it is and how it can shed light on the extent of the inefficiencies and vulnerabilities. In one example, Jules explained that it can cost some firms $38 to pay a bill with as many as eight people involved.
Nail the basics
Jules advised Alliott Group’s accountants to capitalise on their strategic advantage: “You have a ton of data about your clients’ business – you will know more than they do.” To do this, attendees were advised to get in the cloud and “nail the basics of their tech stack”.
To assist with identifying the issue, Jules provided a useful technology wheel [this valuable tool can be found in Jules' presentation deck under Additional Documents on the North American Leadership Conference event page. Click here to view] and advised members to start on the right hand side of the wheel before starting on the left. According to Jules, getting bill payment systems, document management, HR and reporting dashboards set up correctly is a good first step: “Don’t even go to AI before you have the right hand side of the wheel sorted,” cautioned Jules.
Practical steps to digital transformation
Jules advised that firms should take the steps below:
- Prioritize the gaps
- Tackle one or two projects
- Gather success assurance/evidence
- Execute the solution
- Socialise the success internally so that everyone will feel great about it
- Go to the next priority.
What is the ROI or the RONI (the risk of not investing)?
Firms’ inability to decide or move on some of these certainties is starting to cost real money, according to Jules. Quoting research from Clayton Christianson on disruption, Jules commented that what he found was that in times of relative stability, the cost of not innovating (i.e. of doing nothing) is close to zero. She added that inertia won’t make any money, but it won’t cost anything, either.
However, Jules was quick to emphasise that we are not in times of relative stability. Instead we are in times of great change and complexity and doing nothing means firms will fall further behind and risk becoming irrelevant and out of tune with technologies such as AI and blockchain which may be high on the agenda of the firm’s clients.
Rather than considering the ROI, firms need to consider the RONI (the risk of not investing).
How Sage can help
Sage don’t have software that does everything, nor is it advisable according to Jules. However, Sage has a great certified network of partners who work together to provide a total solution.
To give firms a benchmark against a “state of the art firm”, Jules explained that this type of firm will have a cloud based accounting package and an average six apps with which to support their clients and a seamless integration between everything. The perfect scenario, according to Jules, one where everything syncs and is accessible via dashboards.
It was highlighted to delegates that the most progressive technology stacks are to be seen in firms that are focused on advisory as they are so profitable versus firms focused on providing services with a more traditional transactional focus.
Sage, an Alliott Group Preferred Partner (Accounting Software) offers a number of resources including workshops and health checks/audits to help firms to identify the key issues. For more information, contact Giles Brake at the Executive Office.