By Brannon Poe, CPA
A lot of thought leaders in the profession are predicting the rate of change in the accounting industry to rapidly accelerate in the next 10 years. There are some disruptive technologies, such as artificial intelligence (AI) and blockchain that do have the potential to drive change. What are the possible changes and when are they likely to occur? Is this something to fear or something to be excited about?
“You can’t connect the dots looking forward; you can only connect them looking backwards. So, you have to trust that the dots will somehow connect in your future.”
– Steve Jobs
WHAT DOES THE FUTURE HOLD FOR THE ACCOUNTING PROFESSION?
1. We’re NOT going extinct any time soon.
Things are changing but it will be more like a rising tide than a tsunami. Think back on some of the major technologies of the past 40 years. Most of these massively disruptive inventions have taken about 20 years to mature. I’ll date myself a bit with this one, but I remember the Commodore 64. There was a lot of hype about how the personal computer was going to change everything right away. The Commodore 64 was a useless device. Fast forward 20 years, and those early predictions had become a reality. In short, we have time!
2. Cloudy days ahead.
The Cloud-based applications are here to stay. Embrace it. This is actually great news for smaller firms. For one, Cloud systems facilitate remote working arrangements which can be a huge help to any staffing problems that firms have. Perhaps more importantly though, I predict that AI will be available to all via the cloud, and that there will be tools widely available that can help CPAs analyze financial statements and identify actionable insights for their clients. This will help keep the CPA relevant! These applications may be a little “clunky” at first, but they will improve rapidly. Machine learning pioneers like Uber, Netflix, and Google are shaping corporate strategy with the help of AI right now. It will be only a matter of time before the accounting software industry is able to replicate this practice in a meaningful way. Accountants have a huge opportunity here. The early adopters will reap major rewards. For a deeper dive into this topic, check out “Strategy For and With AI”1 that was recently published by MIT Sloan Management Review. If you want to learn about some of the more futuristic predictions about what AI could do to the professions, check out The Future of the Professions: How Technology Will Transform the Work of Human Experts by Daniel and Richard Susskind.
3. Blockchain will be a game changer.
As mentioned, the computer took a long time to perfect. Similarly, the internet took about 20 years to evolve to meet the early predictions for it. I predict blockchain will be similar. Blockchain is about 10 years into its life cycle. In another 10 years, we may indeed see accounting and finance transformed by it. Again, I think it will take some time, but it would be really smart to understand where these technologies could be taking us. They are likely to show up first in large engagements (public company audits for example) and begin to trickle down to smaller and smaller client applications over time. For a nice overview of blockchain technology and its potential impact on the accounting industry, check out Deloitte’s recent report.2
4. Your work will get easier.
Technology will ease the routine burdens. This is already happening. This is actually something we should all be focusing on right now. So much of our work can be automated. This will create immediate pressure on CPA firms’ efficiency, pricing, and struggle to attract and retain the best talent. There are an endless number of opportunities to automate and streamline the work that CPAs are currently doing. The modern firm is an automated, paperless firm.
5. Your work will also become more challenging.
Learn to create value for your clients or suffer and face a declining practice. Clients will come to expect forward-looking insights. With the “easy” tasks completed by machines, the modern CPA firm owners and staff will be able to put more of their attention on improving the client experience and providing more advisory and consulting that no machine will ever be able to
HOW TO QUICK-START THE MODERNIZATION OF YOUR FIRM
1. Old school basics: Create capacity first. What can you and should you stop doing? This could be one of the most widespread problems and biggest opportunities in the CPA profession. We don’t take advantage of the tremendous power of focus. Instead, many of us focus on the wrong practice areas, the wrong clients, and the wrong tasks every day. The result is CPA firms become too overworked and under-profitable. Finding where your time and energy are being underutilized requires stepping back from the details and looking at the big picture. The process of creating capacity could be quite extensive which goes beyond the scope of this column. However, in order to implement change in any business, there must be capacity to plan and implement changes. Without the necessary capacity, any change-initiatives are likely to fall flat. You must find the time.
2. Identify the pain points in your processes and explore automation solutions to relieve them. We did a recent podcast with Ryan Lazanis titled “Building a Cloud-Based Accounting Firm.”3 Ryan used pain points as one of the primary foundations for creating a high-growth modern firm.
3. Involve your team. They may be more tech savvy than you realize. Brainstorm ideas with your whole team and not only will you likely get great ideas, you’ll engage your best and brightest.
Technology is something to fear only if you are unwilling to change. The early adopters will use technology to improve client relationships and deliver higher value to clients. Also, it’s incredibly important to remember what will not change! Clients want insights and they want them presented in a simple way so that they can take action to improve their organizations. Personal relationships are the key to this. Technology is just an increasingly powerful set of tools to that end.