In 2018, the World Economic Forum’s Future of Jobs Report listed accountants and auditors as one of the jobs mostly likely to decline as a result of automation. This was based on the expectation that tax and accounting professionals would fail to adapt to new technology and therefore render themselves less efficient.
Now, less than two years after that prediction, tax and accounting professionals have become the backbone of a business world in the midst of a global pandemic. Indeed, tax and accounting professionals are now essential to navigating the terms, conditions, and questions that arose from the economic stimulus package and new tax regulations that came of the U.S. government’s response to the COVID-19 pandemic. For many of these professionals, this elevations of status transcended their businesses, allowing them to evolve their relationship with clients beyond being just a tax preparer to a role of trusted advisor.
As clients were forced to rapidly navigate the challenges all businesses faced with having to make quick office and staff adjustments as the pandemic spread, their tax and accounting professionals were able to don their invisible superhero capes to assist, even as they dealt with their own business adjustments during the crisis.
Now, as 2020 nears a close, tax and accounting firms should look ahead at where their business needs to evolve next. Often when this point is raised, the conversation seems to automatically leap to requiring additional or new accounting technology.
Technology (alone) can’t save your business
The conversation about CPA technology and innovation isn’t new, and in fact, is a central part of the dialogue for the tax and accounting industry. The word technology often accompanied by the word innovation, is presented as if they are interdependent. Indeed, there is underlying belief that only technology drives innovation, which is a somewhat dangerous premise because it leads to the idea that innovation means only having the latest and greatest accounting technology. Yet, business innovation, as described by wework, is the implementation of new processes, ideas, and services all with the goal of increasing the organization’s bottom line.
Kimberly Ellison-Taylor, Global Executive Director at Oracle Corp., describes technology as “a tool not a strategy… innovation isn’t necessarily a need for more technology.” Ellison-Taylor says firms should determine how they can be more innovative and take an honest assessment of what sets their business apart from competitors.
Hear more from Kimberly Ellison-Taylor on ‘Hype vs. Happening’ during the Thomson Reuters SYNERGY event, Confidence for a Dynamic Future, now on-demand.
Included in this assessment should be a look at the quality of service offered. Can it be done better? If so, how? Are there too many services being offered, including some that may be sub-par at best? What about the firm’s clients? Are there too many? (This can be an actual problem, especially if some clients are not revenue-producers and their drain on resources means that high-quality clients cannot be given enough attention. The saying, Less is best can hold true here as well.)
After this in-depth analysis, it is time to create a strategic plan that will allow innovation to really take root and flourish.
Innovation will save your business, technology can help
As we’ve pointed out, innovation is about making things better and faster; and in the case of tax and accounting firms, it’s also about providing exceptional service without comprising the top or bottom line. In order to succeed, firms must innovate.
With a clearer path to understanding how to increase the bottom line, tax and accounting firms can now identify their current accounting technology requirements. And for each technology that is identified, a business case needs to be made for how that technology will improve the firm and service clients. This assessment will determine what technology you have that is useful and what may be less valuable.
In the tax and accounting profession, the word failure is rarely used, especially around the idea that failure could be a pathway to success. Yet, sometimes you don’t always get it right the first time and purchasing technology is no different. “Whenever you innovate, failure is a distinct possibility,” explains Ellison-Taylor, adding that there are three ways to manage, mitigate, and learn from risk-taking, and even from possible failure.
- Establish parameters for success and failure — This seems obvious, but it is often a major miss. Define what success looks like, and what is considered failure. The biggest component of creating parameters is that it takes a team effort to reach an agreement of what success or failure would look like.
- Fail fast — Knowing when things are not working out is often hard to admit. There is a tendency to continue working on something despite it clearly not working, which leads to overspending of time and resources. Failing fast allows a firm to move past what isn’t working and toward finding the next best solution.
- Develop a culture that celebrates intelligent failure — Most individuals are risk-adverse, and in the tax and accounting profession this may be especially true. However, despite extensive research and the promise of perfection made by the product-maker, there is risk in how any product will work within your business. Encouraging team members to make calculated and intelligent risk can allow them to stretch and become more innovative.
Changing successfully is the pillar of innovation
Tax and accounting firms can always plan for innovation and new accounting technology, however, without a shift in culture that includes the buy-in of staff, it remains just a plan. To successfully lead a change transformation, Ellison-Taylor listed five considerations (based on a McKinsey & Co. report):
- Offer open and frequent communication — Over-communicate with staff on the pending plans. And remember, transparency is key.
- Tell a consistent change story — This allows other employees to understand the bigger picture. Use simple direct language to do this.
- Communicate how roles may change — Transformations work when each member understands how their role will be impacted or enhanced by the change. And you are most likely to get stronger buy-in when everyone is clear on how their roles will or could change.
- Give staff the power — Empowering the team to adapt to ongoing marketplace changes and giving teams the opportunity to evolve with the broader shift will make a difference.
- Develop your team — Proper people management allows for employees to recognize and be comfortable with ongoing change. If done well, teams won’t view change as a disruptive external experience.
As a result of the pandemic, the excitement or stress (depending on how it is viewed) has created some fantastic opportunities for tax and accounting firms, including improving new client relationships.
Moving forward, firms will want to look at how they can be more innovative and open to change if needed. And this can be accomplished if firm leaders equip their teams with accounting technology that will enable them to be nimble, focused, and accurate.