There has been much talk for many years about how accounting is changing. All these factors were discussed at this week’s International Accountancy Forum in London.
Changes in working practices; client expectations and therefore the services they need. Changes in business model. Changes in expectation from employees of the work they are to do within your firms. And of course changes in how technology is used to support you in your wider business transformation.
What’s driving change?
We’ve seen from our customers and research that success in digital transformation hangs on five key elements:
Like most things in accounting it all starts with real-time data.
Access to client data that’s consolidated into one data store means your team (and clients) are all working and collaborating with the same set of live data.
Workflow automation. Now you have the data you need, technology can then help you standardise (and then automate), compliance and other accounting workflows. Then everyone works the same way and is observing your identified best practice. This will make this core work faster, easier and more profitable.
Communication and collaboration tools make working together easy too.
But context is everything. Email is one thing but being able to communicate alongside the report or data point you have a question about in the same platform as your client, makes it much easier to get questions answered quickly and accurately – with no risk of misunderstanding. It also means you keep the conversation trail with the client file for future reference.
Data and analytics. Armed with consolidated real-time data (and the analytics tool to interrogate it) you can benchmark performance across your client portfolio and look for trends that clients can learn from as they plan for the future – a core pillar of advisory services.
Cloud computing. Finally the cloud is key. You experience the general benefits of cloud based technology that we see in other parts of our businesses and personal lives like ease of management, subscription-based pricing; continuous development and upgrades, access and mobility of course.
But using a cloud accounting platform also means you can put your data, workflows, and collaboration onto a cloud service that makes them available to everyone. And if the pandemic has taught us anything it is that enabling our teams to work anywhere and at any time is now business critical.
Using technology to enable these five key factors improves existing compliance services and opens up new revenue streams from advisory. It can underpin your transformation in terms of improving the services you provide and make your firm more successful.
We have looked at the customers we’ve helped with our technology over the years so we could learn from their experience and build a common roadmap for a successful digital transformation that others could follow.
We call this the four sights of connected accounting.
You will be a connected accountant when your firm has successfully passed through these four key stages of digital maturity.
As you pass through each stage your firm, team and clients become more connected. That means you’ll unlock new opportunities for greater productivity, develop new services and revenue lines from advisory, improve your competitiveness and be more successful.
The first stage is all about data – we call it Fullsight. Here you want access to real time and historic data from all sources. It needs to be standardised as this is key to the next stage.
Hindsight. And this is all about automation of your workflows plus real time reporting and effective collaboration. All enabled by technology to free up precious people resources to spend more time with clients and less time crunching numbers and compliance reporting
The next two stages of maturity relate to advancing your advisory agenda.
First – Insight. Here you interrogate that full data set at your fingertips to unearth critical insights from benchmarking of industries or clusters of clients to deeper performance analysis. Then use these discoveries to unearth advisory opportunities or provide insight to your clients.
Finally, Foresight – using data, analytics, even AI and machine learning, to forecast or look into the future and use what you find there to advise clients. Even turn this insight into advisory services you deliver digitally so they can scale and be automated too.
Keeping the lights on has hindered progress
So how well is the accounting profession doing in its digital transformation and maturity?
We have surveyed 250+ professionals each year to give us a flavour of what progress is being made in relation to this Digital Transformation Maturity Curve – we call it the Tech Trends in Accounting Survey.
The report shows how a combination of evolving customer expectations and new technology are changing accounting.
Quick spoiler alert: it may not come as a massive surprise but the pandemic has accelerated the adoption of cloud and collaboration technologies but slowed progress in other key, and perhaps more strategic, transformational areas that help change the way we work and the development of advisory services.
In fact 88% of firms have increased their tech usage in 2020/21 during the pandemic.
This indicates that the vast majority of firms were poorly prepared for the demands of remote working and were forced to invest quickly to maintain operational continuity.
A closer look at where technology was applied gives us more insights. Remote working (87%) and communication (84%) were the two main areas of focus, followed by collaboration (64%). Firms wanted to make sure that their staff could still work from wherever they were now based, and keep in touch with colleagues and clients.
Data analysis was only a focus for 5% of those increasing their tech usage.
Automation and reporting only did slightly better, as both were cited by 22% of firms as an area where their use of technology had risen.
While any increase in capabilities here is positive this just isn’t enough for a truly transformative strategy.
Our respondents seem to have taken (or been forced into) a very short-term view on their use of technology during the extended pandemic. Naturally firms wanted to make sure that their staff could still work from wherever they were now based, and keep in touch with colleagues and clients. This has indirectly led to a rise in digital maturity across related areas such as cloud availability, data storage, and workflow standardisation.
Keeping the lights on is driving enhanced collaboration, consistent operations, and readily available data, making it easier for accountants to work from anywhere and on any device – and helping managers keep track of work across the firm.
These are positive signs. However, looking beyond operational continuity, to what extent have firms used new technology as an opportunity to also invest in solutions to facilitate a strategic shift to advisory?
Still a way to go
There is work to do. The ambition for success in advisory is still there but important capabilities are missing if progress is to be made.
Firms are improving their digital maturity in some areas but they are not yet using technology fully for forecasting, financial modelling and for delivering value added services to clients.
55% of last year’s respondents expect advisory to dominate their business within just five years.
But bookkeeping and compliance remains very much in charge, and we’ve seen little change in our two reports – still only 14% of people say advisory leads today (no movement at all).
They’ve chosen to focus on operational improvements over innovation in the development and delivery of technology or data-enabled advisory services.
The goal to see advisory as the most significant contributor to fee income must feel a way off.
Digital transformation is still a work in progress but the clock is ticking faster. Firms have restated their commitment to switching to advisory services, but like many other areas, the pandemic put plans on hold.
Firms are still largely using technology ‘just’ to improve how their existing work is done, and not to change the nature of the work from compliance to an advisory focus.
Many seem locked in the early stages of our digital maturity curve – battling with data, perhaps improving their automation but definitely concentrating on working practices and collaboration.
This is just the tip of the transformational iceberg.
And this is despite what we hear in terms of firms providing a lifeline for their clients during the pandemic. They provided, and continue to provide, critical advice on an ever growing range of subjects. It seems though that this advice is not always being paid for or not being offered in a programmatic way or turned into a ‘product’ per se.
So while advisory might be growing as a part of the service it is not growing in terms of its revenue contribution. And this is not helped by the tools and data available. Core to advisory is access to the data that drives insights and advice. More bad news here.
Only 13% strongly agree that they have access to the data and insights required to deliver value-add advisory services to their clients. Delivering advisory services isn’t just about uncovering the insights in the data; it’s about being alerted to an opportunity or problem in the first place and then sharing it with a client in time for action to be taken to improve their performance. The quicker an insight can be identified, shared and acted on, the more valuable it is.
Despite this, only 10% said their IT systems automatically notify them when a client passes a performance threshold needing attention.
After a year of limited progress in digital transformation, firms will need to redouble their efforts to make up lost ground in their use of technology to advance their advisory ambitions.
So what is hindering progress? Here too we have seen a shift.
It’s all about people
Access to technology is not the biggest concern now – it is talent and skills. Talent is in short supply.
A recent report by the European Union referenced accountants as one of the occupations with a shortage across the EU, with at least nine countries reporting a lack of skills in the profession.
And the best talent is getting very picky about the work they do and the firms they work for.
Access to technology and new talent with technical and advisory skills are the frontline issues to address as accounting transforms and are now the major inhibitors of growth.
So given these opportunities and challenges – what role do we as technologists play in supporting you to make progress in your digital transformation?
As we look forward to the work we must do to support you and other firms like yours – we focus our energy on four calls to action where we feel we have the most to offer.
Create great technology – we will continue to invest in understanding your needs and innovating on our platform to meet these. Creating technology that is easy to use and easy to learn. And gives you quick ROI that plays a positive role in your business transformation. Standard ways of working and more efficient processes can also help with resource management – not only can people achieve more in the same time but work can be shared across teams more easily. But that’s not all, innovative technology helps you attract or retain staff who are passionate about new ways of working and using new technology.
Support you in change management – successful digital and business transformation is more about people and less about technology. We work closely with customers to help them plan and execute change successfully. We share with them our experience of supporting 100s of similar firms with their own change.
Support your team with the new skills they need for future success – we train teams to use our technology and make it work in their firms.
Give you the tools (and time) to advance your advisory agenda – automation of your compliance work is the first step to liberate time but then you need the data, analytics and reporting tools to create these new services. We do both these things.
There is little doubt that accounting is radically changing – and this started long before Covid.
Now the question is how fast can we pick up where we left off and get back on track. Like many other sectors, we’re on the road to recovery. It’s time to kick start your business and client service transformation.