Sage’s Practice of Now Report 2019 surveyed over 3,000 accountants globally. Results show a distinct cultural shift in the industry.
Things are changing at a rate not experienced since technological breakthroughs like the desktop PC and the deregulation of the financial markets.
There are various reasons this cultural shift is happening, but our research found that it is mainly in response to changes that will come to light over the next 10 years or so, as the 21st century gets underway.
Will your practice look the same in 2030 as it does now? Take into consideration the technological and societal changes happening today. How will you prepare your business?
A changing profession
According to 90% of accountants, there is a cultural shift taking place in the industry. What’s causing this? The data suggests that it has been prompted by clients and the marketplace, who require more than the typical compliance work and number-crunching they have needed until now.
The data says:
What does this mean for your practice?
Give in to market demands
A market demand is anything a client could request of a practice, like doing the year-end taxes. Market demands are, however, becoming increasingly focused on consultative and partner-oriented advisory services. Increasing client demands has even become prevalent enough to have its own response and segment in the graph.
Practices are typically founded to cater to market and client demands. They wouldn’t be very successful otherwise. But how are they to cater to modern market demands?
Comparing your practice to a newly established firm in your region is the easiest way to see how to cater to modern demands. You could look up their services and marketing material online, and establish what they focus on, and what specialities they bring to the market.
Look into the culture of their business as well. Are they operating mostly via social media channels? Do they staff work remotely, or are they based at offices? While these practices might seem odd to some, they are completely acceptable and normal to others. It allows a practice to save money, which in turn allows them to pass cost savings to clients. Clients often appreciate this kind of forward thinking because they could find themselves in the same position.
You could think about what a practice would look like if it was a start-up today. Technology would logically be at the centre of it. In the era of tax and payroll digitisation, you’d be unlikely to set up paper-based processes with clients who still use boxes to store receipts. Would you want a 100% digital client list?
Trying to retrofit this radical approach to an existing practice is neither sensible nor desirable. What nuggets of wisdom can you gather from this and turn into practical changes in your firm? You might not be able to do much at first but start discussions with your staff about where you’d like to go.
How to respond to regulatory changes
Accountants know the drill: Governments implement new legislation, which places strain on businesses. These businesses then ask their accountants to help them make sense of the new laws, and often, to then take care of it.
Has regulation gotten worse? There have been numerous recent financial scandals that have forced the worldwide legislature to respond. Ironically, the legislatures in Western economies have simultaneously been trying to reduce “red tape”. This has resulted more in a reshaping of the regulatory landscape, more so than an increase or reduction in it.
Changing regulations remain a core business driver for accountants. It also spurs innovation because constantly changing regulations force accountants to stay on top of their game. According to The Practice of Now Report, accountants worldwide believe this is part of the cultural shift.
While your practice might specialise in regulatory requirements, you also need to maintain the pace your clients need. Can you do training to find out what you need to know? The Practice of Now findings suggest that you should ask these questions frequently. If changes are required, implement them immediately.
Practice of Now 2019
The latest research reveals evidence of a cultural shift within the industry as it prepares for the coming decade. Recruitment, skills and training, business practices, service offerings and technology are all evolving.
Making the most of digitisation
Accounting and technology have been linked for over 50 years – the electronic calculator being the first to bring the profession into the modern era. Now, AI, cloud computing, and bots have pulled the industry deeper into the future by changing the way accountants work.
The Practice of Now Report indicates that accountants feel that technological adoption is not happening at the necessary pace. In fact, 85% believe that their local industry needs to increase the rate of adoption to remain internationally competitive. Respondents, when asked why they think practices are so far behind, claimed lack of time (13%), money (38%), and expertise (25%) were limiting their digital transformation.
Accountants can be confident that technology is a game changer. Changes throughout generations have shown this time and again. Not adopting new technology would be a step back.
The solution is to simply keep digitisation top of mind. Because technology is evolving at such a rapid rate, adoption cannot happen only once. New and useful products are coming to market on a regular basis, and they’re worth your attention.
For example, how good is your knowledge of blockchain and the switch to decentralised ledgers? How is machine learning fundamentally changing the low-level admin jobs within accountancy? If all this sounds like Greek to you, you could have a major problem – and one that will only get worse with time.
Research some technologies and think about how they would affect your current processes and tools. Look at how these technologies are being implemented within businesses. You could even make some small investments in training and technologies but be sure to take your clients on the journey with you because, in the end, they will benefit most.
Adapting to generational changes
There has been much said about Millennials. The US Census Bureau reports that those born between 1983 and 2000 comprise the largest living generation by age. What’s more, 2018 marked the first year that people born in the 21stcentury came of age.
Millennials were born into a world of technology and will incorporate it into all activities without giving it a second thought. According to the Walking the Walk report by Sage, Millennials have a unique set of values that sets them apart from other generations. In fact, 62% of Millennial entrepreneurs say they have given up profits to stay true to their personal values, and 66% said they prioritise life over work. More than half believe that they will start more than one business in their lifetime.
The reason there is a cultural shift happening is because Millennials are out there creating businesses and impacting the profession. They might need accounting services, but they can also take care of the day-to-day processes themselves. What they require most are service-oriented business partners who can guide them through the peaks and troughs of business life. Does your practice provide that? If not, how can you make changes to ensure you stay relevant?
The Millennial generation is not only affecting the client base – they are also entering the profession. There is much to gain by having Millennials on your staff. What better way to draw in Millennial-run businesses to your client base than to have your own staff who they can relate to, and who have the same value set? Be sure to look after your Millennial workforce – research shows that they have little tolerance for low-level work, and high expectations for career advancement.
Times are changing
There are many challenges facing the profession at present. In fact, it might be an unprecedented time of change.
The pressure is on for practices to evolve and adapt. For some, this could mean radical changes. It will most definitely require a root-and-branch evaluation of your processes, at least. Research shows that there is simply no other option if you want to prepare your practice for the next decade.