Accountants becoming data-based technology businesses
Accountants are poised to transform themselves by becoming strategic advisors to the businesses they work with. They will achieve this through greater use of technology, partnerships with technology businesses such as Microsoft, extending their reach into other service areas such as law, building on the already strong relationships they have with CFO’s, and moving towards a greater productisation of their service offerings. This was the conclusion for me, having attending the excellent Alternative Accounting Strategic IT Summit.
“How long before accountancy businesses become technology businesses? ... we have a huge technology partner community that can make the numbers sing and dance but they can’t tell anyone what to do with them.”
This was one of the fascinating thoughts from Robert Pope of Microsoft in one of the closing keynote presentations. Microsoft have a compelling set of tools to help the accountants in transforming their clients' businesses and Robert shared details of their approach to AI and how firms can leverage this. Microsoft is offering to act as the hub and help connect up their technology implementation partners with their accounting partners to jointly help their shared clients achieve new insights. This makes so much sense given the key challenge to leveraging some of the transformative technology is access to quality sources of data. Who better has real quality data sets than the accountants. Microsoft also feels that the move to the cloud, through Azure, has enabled a lot of this now to become a reality in a cost effective way.
Microsoft also discussed the shifts towards more productised subscription based services that then become a reality of what accountants will provide. In their view AI is not a technology play but rather a transformation play and this shift in delivery model is what the transformation delivers. As Robert put it,
“AI eats data, and accountants hold more data than any other trusted advisor.”
However, although they believe that over 85% of organisations will use AI by 2020, only 25% have started planning on how this will be used. An interesting model was shared around the digital feedback loop of engaging customers, optimising operations, empowering employees and then transforming “products”. At the centre of all this was data combined with the intelligence that AI delivers.
This shift in the way technology and data usage can transform accounting services was also highlighted by innovative firms such as Ecovis Wingrate Yeats. As Reuben Barry outlined in a very thought-provoking session, they are using mixed teams of accountants and data scientists to deliver higher value service offerings. Reuben covered many areas including some very tangible examples of where they have used machine learning to run across financial data sets to help drive the clients' business direction. In a practical client example they shared how they had applied statistical analysis approaches around areas of spending on marketing data to reduce costs but retain the same level of ROI. They achieved this combining accountancy skills, data science and clever use of software. Bringing the rich financial data held by accountants to life in this way through effective graphical interfaces for the clients in a more productised approach has allowed them to offer higher value services. Being able to proactively help clients take better business decisions will place accountants right at the centre of advising clients on how to more effectively run their businesses.
Other progressive firms such as Cooper Parry effectively described their shifts towards more productised services and showed impressive-looking apps which help clients at the point of onboarding with things like predictive analytics around whether new customers are likely to pay on time based on past performance. The practical examples showed how accountants are shifting beyond the pretty much commoditised audit space and moving the advice more upstream before the event happens. Cooper Parry have also partnered with Microsoft in directly delivering combined solutions to clients. It was also fascinating to hear from the CEO Ade Cheatham around the way in which they have driven the fundamental shift in the culture of the firm, and I have to say the office space looked more like a startup than an accounting firm. Any firm that is trialing sleep pods, has a drive-in movie theatre, a running track, and things like email curfews (between 7pm and 7am) and limitless holidays is going to attract a younger, more tech focused workforce!
There were also some really interesting breakout sessions around topics like AI, analytics, use of RPA (Robotic Process Automation), and how to give clients better access to systems and data. I was struck by some firms being pretty advanced on use of RPA and how to use this as a practical and relatively cost-effective way to get around the fact that many legacy accounting systems are pretty clunky and don't talk to each other very well. In fact this was a key theme of a vendor discussion around product strategy which highlighted the need for an open access mechanism for more effective data sharing. A lot of the challenge seems to be the varying stages that providers are at in embracing the cloud. The Big Four weren’t in the room but if they had been I think KPMG might have had something to say on this given some of the work they are doing here around data standards.
A key theme across many of the sessions was the real need to transform the way in which services are delivered to clients. A great comment from Edward O’Rourke of Ashtons Legal who was there to provide the legal perspective, was that,
“We really need to redesign the way we deliver services. Not just automation, transformation. Clients don’t want lawyers, they want the solutions they can provide.”
So again this message around a shift towards outcomes, and away from the process. Edward also talked about the blurring of the lines between accountancy and law and the fact that clients really care about who can deliver an outcome, not whether an aspect is accounting- related or law-related.
Accountants really are poised to drive some significant transformation in the professional advisor space. They have the pressure of the commoditisation of the audit, they are naturally analytical, they really understand their clients' businesses, they have the key relationship with the CFO, they hold valuable sets of data, and there is a logical fit with technology businesses like Microsoft whose technology runs on this data. I believe that the successful accounting businesses will indeed become technology businesses and that they will offer more productised solutions to clients and then layer on top of this higher value services based around the unique insight they hold, which will help their clients take more effective decisions. This transition will place them more centrally as overall business advisors and drive greater competition between accountants and lawyers in this space.
Services firms are undergoing a shift in moving towards a greater degree of technology enabled productisation, and they need a clear product strategy to ensure success.