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Are you readying your accountancy practise for the next decade?

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The accountancy practice of the future looks radically different to the ones of today. The Sage Practice of Now 2019 report found that 90% of the 3,000 accountants surveyed believe that there are key cultural or evolutionary changes happening within their profession.

Drawing from the findings of the report, this article will focus on three things to prepare you and your practice for what lies ahead.

Firstly, we’ll look at what’s happening in the businesses of tomorrow and the impact this is having on the business landscape.

Next, we’ll cover information about the changing workforce and how the rate of change is affecting the profession overall.

Lastly, we’ll look at what this all means for you, the accounting professional.

The speed of change

Many accountants across the globe believe that things are moving too fast.

But is this accurate? As AICPA President and CEO Barry Melancon said, “This is the slowest pace of change that we will see for the rest of our lives.”

If the pace of change right now is the slowest that it’s likely to be, what are we to make of all the new technologies coming about? Artificial intelligence. Cloud computing. Are these technologies truly ‘emerging’, if they’ve been around since the 1950s?

In the past, only large corporations had access to these technologies, but now even the smallest start-up can access them with ease. However, to the accounting profession, these technologies still seem as if they are emerging because of the lagging rate of adoption.

According to the Practice of Now Report, 85% of accountants stated that, in order to be competitive in the international landscape, “we need to pick up the pace of technology adoption”.

Ninety percent of accountants surveyed believed that technology is one of the reasons the profession is undergoing a cultural change. Other reasons included client demands, generational changes, market demands, and changing regulations.

It’s interesting to note that all these forces are external.

Anticipating the business of tomorrow

It’s critical to plan for what our clients will look like, not only in the immediate future, but also in the longer term.

Clients retiring or going out of business are not the only perils your client list may face. There exists a very real possibility that you can lose clients by not anticipating their changing needs.

A study by Salesforce found that 64% of businesses are willing to leave the brands they work with if their needs are not anticipated. The same study reports that 70% of consumers say that technology has made it easier to take their business elsewhere.

Do accounting professionals know where their client needs are heading over the next year? Five years? Ten years? Are they adapting accordingly?

While technological innovation will likely spearhead the needs of business in the future, it is by no means the only driver. Founder of Intel, Andy Grove, said, “Disruptive threats came inherently not from new technology but from new business models.”

A good example is Flippy, the burger-flipping robot that was used to automate the burger creation process at a California-based burger chain.

The machine had to be turned off after only one day of service because it caused problems with the workflow for the staff. They would require training to work with Flippy, but the high staff turnover at burger joints made this untenable.

It was assumed that a simple task could be automated, but what Flippy brought to light were the flaws in the fundamental assumptions the burger joint was making. This resulted in a change of business model.

Accountants, like the burger joint, need to watch and anticipate the changes in business models, rather than just technological changes.

Who is the workforce of tomorrow?

Millennials – those born after 1981, but particularly those in the 21st century (Gen-Z) – now dominate the age demographic in Western countries. This means that the workforce of tomorrow will increasingly consist of millennials and Gen-Zers. By 2020, more than half the entire workforce population will be made up of them.

Knowing, and strategizing for, what millennials / Gen-Zers anticipate when working at an accounting practice, is critically important to the success of your firm. They don’t feel like they have a voice. Senior accountants who have the “I started in the mail room” attitude don’t sit well with the millennial generation.

While they don’t need to start at the top, they do need to feel that they are being heard by those who are at the top. Diversity can lead to a much richer and dynamic business model and business plan, which means that hearing them out can be advantageous to your business.

These stories illustrate the nature of this challenge:

Ken is 88 years old and wants to get online. He got himself an iPad. Ken’s son acted as a makeshift tech support line for his father, and one of the first calls Ken made was asking how to email pictures to his daughter.

His daughter had emailed him before, so her contact details were already there. Ken didn’t know this. He has no basis on which to make that assumption. This is how modern technology presents fundamental barriers to the older generation.

Molly is three years old. One day, while her mother was out, Molly found her father convulsing on the floor.

She grabbed her father’s tablet and video-called her mother and shows her what is happening. Her mom calls an ambulance to assist Molly’s dad, who was having a stroke.

Molly had never made a video call before, and was never taught how to. She learned by watching others, or worked it out for herself.

This is the nature of the technical divide. Basic things are difficult for older generations, but are second nature for the youth.

Molly is your customer – and your employee – of tomorrow.

Millennials/Gen-Zers expect the latest technology when they join the workforce. It’s not an option; it’s part and parcel of how they exist.

In a survey on Millennials, IBM’s Institute for Business Value found that they want to:

  • Have a positive impact on their organisation
  • Work within a diverse group
  • Work on things they’re passionate about
  • Become experts in their field

Millennials will not won’t settle for anything less.

What does this all mean going forward?

Many accountants complain that they can’t keep up with the influx of apps hitting the market every day. Accountants are going to need additional skills in future.

To increase your chances of keeping up with technology, it’s advisable to focus on a specific industry or vertical. Trying to be all things to all business types will only result in failure.

Business advisory services – anticipating the needs of your customers and talking to them about where they are heading – will remain a key service.

Business don’t want simple financial review work alone, they want advisory services that are forward-looking.

The Practice of Now report makes some predictions about what a practice will look like around 2030. These are:

  1. No manual data entry: Data will flow automatically between clients’ accounts and their accountants’ systems. Manual data input will become a rarity, with legislation forcing businesses to change.
  2. Real-time relationships: The accountant will have a real-time view of their client’s business and will be able to interact with that client instantly. The accountant will be a trusted partner, or even a constantly present companion.
  3. Proactive alerts and notifications: Accountants will be instantly alerted when things change for a client. For example, the accountant will be alerted when their client suddenly incurs a lot of bad debt resulting from a big order placed by the client’s customer whose credit rating is low.
  4. Pre-emptive problem solving: Accountants will be proactively looking at business problems and spotting errors before they become apparent in year-end error corrections.
  5. Higher fees – but better value: Due to the increased value from their advisory services, accountants will charge more than they do today. While fees might not grow by much, accountants will be able to monetise better.

When will you be putting these into practice?