There are three types of accounting firms, according to Thomson Reuters’ Jon Baron, and roughly a third of them are dooming themselves to extinction by not embracing change and technological transformation.
In a keynote address to the 1,700 attendees of the company’s annual user conference, Synergy 2017, the managing director of the professional segment for Thomson Reuters’ Tax & Accounting business broke the profession down into three segments: “Roughly 30 to 35 percent of firms don’t want to change, and they’ll probably disappear. Then there’s the 60 to 65 percent that use technology to enhance existing practices, but not much more. And the rest—less than 10 percent—are aggressively transforming their firms and diving into technology, and they will thrive.”
Citing a host of statistics to demonstrate the enormous growth in Internet usage and the penetration of the technology into every minute of everyday life, Baron said, “We have all changed because of these technology changes. We have to understand how it affects us in our firms.”
One key is how technological change will affect firms' ongoing viability as businesses: “Growth in progressive firms continues to strengthen,” Baron said. “The technology laggards aren’t growing at all, or are simply disappearing.”
“Some firms are sitting on the sidelines—I think that’s a mistake,” he continued, sharing the results of a survey of users of Thomson Reuters’ UltraTax tax prep software that found that 37 percent of them don’t have a website, 34 percent don’t use document management software, 61 percent don’t use portals, and 86 percent said that they don’t use the cloud applications.
“We’re transforming as a profession just to stay in the game,” he said. “We need to plan that transformation.”
Opportunity in chaos
While many accountants are worried about studies like one done by McKinsey that found 86 percent of accounting tasks can be automated with current technology, Baron pointed out that study also noted that “knowledge work” of the sort accountants are particularly apt at has a low potential for automation.
“Even when machines do take over an activity, that doesn’t mean that jobs don’t remain in those areas. In fact, sometimes they grow,” Baron said. “And new methods of doing traditional accounting work can bring us explosive growth.”
As an example, he noted the vast amounts of data being thrown off by emerging technologies: “The size of the data universe will double every two years, with fifty-fold growth from 2010-2020,” he said. “We’re going to get into unstructured data in the accounting profession—we’re going to see ‘fast data’ that is immediately available and actionable that accountants can supply clients. We’re a data-driven world, and the profession is in a great position for that. We understand data and analysis.”
Similarly, he highlighted the enormous potential for change represented by blockchain, a technology that Thomson Reuters is deeply engaged with. “Don’t think of blockchain as bitcoin—it’s much, much more than that,” he said
For instance, creating pools of instantly verifiable data can transform assurance functions. “We may not need audits if we can access automatically validated information,” Baron said. “The Big Four firms are hiring fewer accounting grads—we won’t need these armies of auditors.”
They will, however, need data analysts, technologists and others who can leverage these technologies to provide valuable advisory services to clients.
Two big reasons
Clients are another important reason accountants need to lean in to technology, according to Baron, as they have already embraced the cloud, mobile and social media—the types of technologies firms are all too often behind on.
“Clients are consumers,” he warned. “They don’t like paper. They want interaction on their terms, not yours. And they may not want to visit with you in person.”
If that isn’t reason enough to start planning a firm’s technology transformation, Baron pointed out that being up to date can be a recruiting and retention tool—no small bonus at a time when large firms report turnover of 23 or 24 percent, and even smaller firms are seeing rates of 10 percent and higher.
“What are we doing to keep people?” he asked. “What are we doing that excites them? Are we offering them the latest technologies? What are we doing about training and development, and not doing things the same way? If they see a firm that’s stagnating, that turns them off.”
Coming soon
As part of his keynote, Baron also discussed some of Thomson Reuters’ upcoming plans and introduced a new product.
To start, he highlighted the success of the company’s online platform for accountants and tax pros, Onvio, which now includes Onvio Trial Balance and Onvio Project Manager, along with Onvio Documents, Onvio Client Center and Onvio Time & Billing. And he announced that the company plans to release Onvio Tax and Onvio Fixed Assets next.
Next he introduced OnBalance, a cloud-based app built on the Onvio platform that is aimed at helping business owners better manage their businesses, while also working more closely with their accountants.
OnBalance integrates with both Onvio and the Thomson Reuters CS Professional Suite. “There are a lot of overlapping functions between accountants and business owners,” and OnBalance is designed to work in that area, Baron explained. He noted that it includes collaboration tools to help accountants reinforce and expand their role as their clients’ most trusted advisor in the face of massive changes.
“Reliable, accurate after-the-fact services are no longer enough. This transformation is happening,” he warned. “Will we be relevant down the road?”
