The accounting profession is well-placed to take advantage of the emerging data analytics revolution but it will require a redesign for many firms, as well as a major change of mindset.
Data analytics can seem like an intimidating field but with a considered, strategic approach the benefits offered are far greater than the possible problems, says adviser and futurist Dr Emily Verstege.
“The problem is not an absence of information,” says Verstege. “After all, 21 million Australians own smartphones and usually a number of other connected devices. There is an avalanche of raw data available to all businesses.
"The issue is an absence of insight. Many Australian businesses are so busy doing what their customers pay them to do that there is simply no time to create meaning from the available data.”
How to capture relevant data
A connected problem for many small- and medium-sized Australian businesses is dealing with legacy systems that fail to capture data that is relevant and useful. Often, data exists in isolation, with clients’ case records separated from business development or marketing databases. When systems are compartmentalised, it is impossible to get a complete picture of the most important part of a business: the clients.
“In my experience, accountants are pretty good at analytics,” says Verstege. “But often the strength of insight they bring to their clients’ accounts is not brought to their own business, because of these disconnected databases and the busyness of business.
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“Crucially, many firms do not regularly reach out to their clients to get insights that will help deliver greater value. Getting a nuanced understanding of your clients’ experience of your firm is the one thing almost every business should do more of, starting now.”
She points to 2015 research from Watermark Consulting showing that firms that deliver distinctive client experiences outperform the market, generating a total return 35 points higher than the S&P Index. In contrast, firms not prioritising client experience lag more than 45 points behind the broader market.
Accounting and AI
Verstege believes that professional services broadly, and the accounting profession in particular, have been wary of analytics and artificial intelligence (AI). In the past few years, however, she has sensed a real shift in attitudes.
“Conversations have moved from a language of fear to ones that are cautiously optimistic and excited,” she says.
“There is a feeling that this is an opportunity for accounting as a profession to lift: to get rid of procedural, transactional, repetitive work and to really drive home value with the insight, strategy and empathy only a human can offer.”
Despite this progress, she cautions against diving into the analytics field without proper planning. Buying an analytics platform or package just to be part of a trend can be counter-productive, not to mention expensive.
“There needs to be a clear strategic benefit for the firm to make the pain of migrating to a new technology viable. And of course, if the decision brings no benefit to clients – or worse, makes their lives more difficult – then forget it. That is what everything comes back to – the connection with the client.”
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Accountants as trusted advisers
“Almost 20 years ago, David Maister wrote The Trusted Advisor, an extremely important book. He talks about the most successful client relationships as being an accumulation of quality experiences. There is nothing new about client experience.”
Verstege says what is new is that clients “expect to be treated like human beings”. Leading firms will step away from delivering low-value, commoditised services and towards transformative partnerships with clients that leave a lasting impact, she says.
Working in true partnership with clients will deliver value for both firm and client.
Building a client picture
Verstege has seen many cases where one of the pieces that is missing is a comprehensive client dataset. This dataset should give a complete, nuanced picture of past, present and possible clients.
Ideally, it is systematically captured and regularly updated, and is shared across the business. Used and developed effectively, it enables performance enhancement and product improvement, and it drives client partnerships.
It should include quantitative measures but should also capture stories or information that shows the light and shade of who clients are and the problems they are experiencing.
“Gaining and retaining a competitive edge comes only with a deliberate focus on client experience,” she emphasises.
“What problems do we solve – really solve – for our clients? How can we create value for them through those solutions?
“The real value is in the insight and strategy that spins off analysis of data, and in true empathy. Professional services clients expect a distinctive experience. And, when they get it, it is the basis for an effective and enduring partnership.”
6 key tips for data analytics
- Understand what information is of most use to your company
- Ensure that information can be shared across company systems
- Reach out to clients to get insights that will help deliver greater value
- Consider how an analytics package will integrate with your strategic direction
- Develop mechanisms for capturing client information, going beyond quantitative measures
- Remember that the focus is not on information itself but on the insight it can provide.
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