Accountancy’s digital revolution means that your firm’s toughest competition might no longer be across the road, it could be a switched-on firm on the other side of the continent.
Predicting the future is a risky exercise – even the future of your own profession. In 2007 CPA Australia took the bold step of launching the Firm of the Future report, which examined and extrapolated factors that would produce future opportunities and challenges for public practices.
The 2007 report rightly identified technology as a key driver of change, and more specifically it highlighted the growing importance of the internet, knowledge management and the automation of financial data handling. It discussed how these tools would reduce the cost of low-margin work, and how mobility would enable the creation of a more flexible workforce.
These findings were proven correct, but missing from the report was any reference to the biggest impact on practices: cloud computing.
“The impact of the cloud is the big game-changer going on right now,” says practice adviser and technology specialist David Smith FCPA from Smithink. The cloud may have been the greatest driver of change since 2007, but Smith says its transformative powers are far from exhausted.
He says the cloud is enabling practitioners to engage with clients on an ongoing basis by providing a window into their real-time status.
“The cloud accounting technologies have the potential to fundamentally change the relationship between the accountant and their client, and truly enable the accountant to become the external CFO of the client,” Smith explains.
Brisbane-based practice Consolid8 is already doing it. Managing director and founder Tanya Titman FCPA says the practice now runs 100 per cent in the cloud.
“We are now working real-time with our clients via the cloud,” Titman says.
“It gives them a greater level of control over their information, and we can be working on their file and they can be logging in at any time and seeing the status of their work.”
The cloud has allowed Titman to take on clients across the country – a development made easier by another technological innovation – online video calling.
“We are doing more and more Skyping with our clients,” Titman says.
“Where possible we like to go out and visit them, but that ability to Skype puts us almost there.”
Indeed, as the National Broadband Network (NBN) rolls out across Australia, the possibilities for report communication are likely to bloom, says Smith.
“Imagine we’ve got the NBN, where everyone is running on 100Mbps or better, and we are all sitting there with high-definition television cameras, and high-fidelity sound, using video-conferencing technologies,” Smith says.
“You’ll be able to sit across a table from a client anywhere in the country, as well as you can in the next suburb. There is a huge opportunity to provide a high- quality service to a customer anywhere.”
It is understandable that the impact of the cloud would not have been obvious in 2007 – the cloud-based company Xero only got going a year earlier, and the NBN was just a concept. But the cloud’s impact is demonstrated by a survey of 300 practices by CCH last year which showed 69 per cent were using online software.
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The cloud is driving some other notable changes. Titman says that she has made the paperless office a reality, as different cloud tools route information electronically. Coupled with electronic signatures and new display technologies such as smartphones and tablets (something else not foreseen in 2007), her need to print has diminished dramatically.
"Cloud accounting technologies have the potential to enable the accountant to become the external CFO of the client." David Smith, Smithink
Not everyone is convinced the cloud is the only future, however. Tim Millar, the chief executive officer of Cashflow Manager, refuses to get caught up in the hype whirling about the cloud.
“The cloud is simply a method of distribution, and we have given it a whole different status in talking about it as technology,” Millar says.
“This is accounting – accounting is thousands of years old, and nothing in it is new. How you get it to the client, and how the client accesses that and pays for that is all that is new.”
The cloud is also only one part of a broader technology trend that will have a lasting impact on accountancy practices into the future. Automation was identified in the CPA Australia report as a way to complete low-margin work more profitably. This is now demonstrated in tools such as automated bank feeds and the use of application program interfaces (APIs) to move data between applications.
The managing director at Intuit in Australia, Nicolette Maury, describes this development as an ecosystem to eliminate data entry.
"Data flows into the system, through the system, and out again without individuals needing to key in that data,” she says.
Brent Szalay CPA, the managing director of Melbourne-based practice, SEIVA, believes the long-term ramifications of automation are huge. What automation will give back to practices is that valuable commodity of time, and Szalay says it is then up to managers to determine how they spend it.
“That can really have an impact on a client’s business, if you can sit down and spend the time with them that you should, rather than just an hour or two a year,” Szalay says.
“You can get down to doing some chunky stuff and become a partner to their business.”
Detailed analysis and reporting will be a key part of this future service offering. This capability is generally referred to as data analytics, and is part of a technology trend known as Big Data.
Cloud-based analytics, reporting and dashboarding tools such as Fathom and Spotlight Reporting are becoming increasingly popular, as they let a practice see what is happening within their client’s business and quickly provide advice.
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Smith says EY is one larger accountancy firm that is building up a solid capability in data analytics.
“They are seeing that as the future of their business, to really start to unlock all of the hidden drivers of a business to really help hone business performance,” Smith says.
Data analytics also gives firms the ability to examine other business drivers, beyond just financial data.
“We are going to see data analytics opening up how the non-financial drivers can be used as a good way of honing a business to improve its financial performance,” Smith says.
However, if the thought of building an analytics capability is going a bridge too far, technology might again have the solution.
Artificial intelligence (AI) is the name given to software systems that are self-learning, and AI is becoming increasingly common within business software for analysis and forecasting.
Marc Lehmann, the chief executive officer of cloud accounting software maker Saasu, says AI will have a home within his company’s software.
“This year we built a forecasting tool that uses a bit of artificial intelligence and a whole lot of different data sets to work out what the cash position for the business owner will be in the future,” Lehmann says.
“You can also use AI software to learn from customers’ behaviours and improve the quality of notifications. We call it ‘notification accounting’. Rather than just looking at the past, the system has some intelligence and recognises patterns and KPIs and notifies you about those events.”
The use of AI has huge ramifications across the board for white-collar jobs. The Committee for Economic Development of Australia predicts that more than five million jobs (almost 40 per cent of jobs that exist today) have a moderate to high likelihood of disappearing in the next 10 to 15 years due to technological advancements, particularly automation and AI.
While the Firm of the Future report may have preceded the cloud revolution, also missing from its pages is any mention of the social media phenomenon that has changed the way people communicate – and do business.
This oversight is perhaps more understandable, given the relatively slow uptake of social media as a business tool generally within Australia. A recent study by CPA Australia indicated that only 46 per cent of local small businesses are using social media today, compared to 96 per cent of small businesses in China.
"Rather than just looking at the past, the system has some intelligence and recognises patterns and KPIs and notifies you about those events. We call it notification accounting." Marc Lehmann, CEO, Saasu
Only a small number of practices appear to have so far embraced social media in a meaningful way. One of them is Titman’s Consolid8, and she believes it will play a more prominent role.
“We tend to find that the accountants who are fairly technology-based are in that social media space,” Titman says.
“When you get into social media it is not only beneficial from the point of view of connecting with clients. It can be really helpful when you can start collaborating with your peers and find out what tools they are recommending and what things they are coming across,” she explains.
Related: How to implement a social media policy at work
Not surprisingly, one of the areas where social tools are manifesting in public practices is in business collaboration tools. Indeed, collaboration is the core technology in MYOB’s recently released Accountants Office Portal, which allows accountants and their clients to collaborate around documents online.
“It’s a whole new way, a new tool for accountants to engage with their clients, and has one of the fastest uptakes of any piece of software we have rolled out in the accounting space,” says MYOB’s chief technology officer Simon Raik-Allen.
“For an accountant and their clients, the portal is the key point and that is, we envision, where all that will meet. We see that model really exploding with many other products making use of the portal.”
New tech wrap-up
The battle between the major accounting software providers is good news for practice leaders keen to get their hands on new technology.
US giant Intuit has overhauled the user interface for QuickBooks, and launched QuickBooks Online for Accountants, which helps accountants collaborate more closely with their clients regardless of whose software they use. It also allows them to take a broader view of the business that they are advising to spot trends in cash flow and alert clients before problems emerge.
At MYOB much of the focus has been on its Accountants Office Portal collaboration tool, which allows real-time document collaboration between clients and practitioners. The company has also cloud-enabled its practice management suite, helping accountants to actively manage multiple clients via a dashboard.
Xero has deployed more than 1000 new features in the past year, including tools for inventory and quoting, as well as tax lodgement. The company is improving its mobile experience and enhancing tools for collaboration between accountants and clients, as well as relentlessly driving the automation of basic processes, and has signed partnerships with industry heavyweights such as Dropbox, Adobe and Google to increase its functionality.
Reckon meanwhile has launched a slew of new apps and features, and signed a deal with ANZ bank for online data processing. It has launched a tool that lets accountants and bookkeepers automate data collection in their practices, regardless of the accounting software their clients choose to use, overhauled its Reckon One small business suite, and launched a free mobile invoicing app.
Saasu has focused on getting cosier with financial services such as banks. It is using AI to provide better insights into the status of clients, and also to provide advice and warnings when things might be going wrong, such as alerting a customer to increase their overdraft before they run out of cash.
Quiet achiever Cashflow Manager has also joined the cloud, launching a cloud suite to its accounting partners in November and then to the retail market in June this year.
Back in 2007 …
Cloud computing, which had its conceptual origins in the late 1960s, didn’t really hit its stride until 2009 when Web 2.0 really came into play, with the change from static pages to dynamic user-created content. This, combined with the availability of high-speed bandwidth, prompted tech giants such as Google and Microsoft to start offering so-called “killer apps”
Smartphones and tablets
In January 2007, Apple’s Steve Jobs launched the iPhone, which he proclaimed a “magical and revolutionary product”. Within 18 months Google had launched the Android, and by 2011 it had 43 per cent of the mobile market. In 2010, the fourth screen had arrived, with Apple launching the iPad and Samsung followed hot on its heels with the Galaxy tablet that same year.
While the fortunes of social media sites such as Friendster and MySpace waxed and waned, Facebook’s play for social media dominance came about when it launched its open API (application programming interface) platform in 2007. This move allowed developers to build their own apps that worked on Facebook, and thousands flourished, prompting the site to open its own app store.
As of 2012 there were nine million supported apps. Twitter followed suit. Now you can “tweet” or “like” or “share” something you are reading at another website, without actually being on Twitter or Facebook.
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