With changes of all sorts bearing down on them at an accelerating pace, CPAs and accountants face a serious choice, according to Illinois CPA Society president and CEO Todd Shapiro: adapt and advance, or get left ever farther behind.
“We have two choices -- we can get waylaid on an exit and get disrupted, or we can be disruptors,” Shapiro told attendees in a keynote at this week’s ICPAS Summit in Chicago. “Honestly, I don’t think we really have a choice.”
There are three major trends driving the change that calls for disruption, he said: first and foremost, technological innovation, followed by changes in hiring practices, and new client demands.
Technology: Citing a study from Big Four firm Deloitte and consultancy Accenture that predicts that as much as 40 percent of accounting work will be automated by 2020, he noted that the profession is already feeling the impact of technology: “Think how natural language processing, OCR and robotic process automation are already changing how tax returns are prepared and accounting work is being done.”
“You didn’t use to think about IT all the time -- but now you do; it touches everything,” he continued, and for those who wonder if they need to adapt to technologies like blockchain, artificial intelligence and bots if their small-business clients aren’t using them, he offered two reasons: “First, not only are we aging, but your clients are aging. When they sell or merge, a new business is going to come in and evaluate their accounting providers: ‘How up to date are they ...?’ And second, every business is part of a supply chain, and all the biggest players are starting to work with blockchain -- which means that it’s going to flow downhill to everyone in the supply chain,” including small-business clients.
Hiring practices: Shapiro noted that hiring of accounting graduates by the Big Four firms and other major employers has declined somewhat recently, as they focus on new skill sets in data science, technology and related areas.
Going forward, both in industry and at public firms, “The team of the future has fewer CPAs -- they’ll have a data scientist, a data analyst and so on,” he said. “The team that used to have three CPAs will now only have one.”
“As students see businesses and firms hiring fewer accountants and CPAs, they’ll move to other paths,” Shapiro explained, leaving the accounting profession with fewer members and, potentially, less relevance.
New client demands: Clients are finding less and less value in compliance-based services, and more and more in useful advice for their businesses or their personal lives.
“Do we want to be just ‘compliance assemblers’ or more of an ‘impactful advisor’?” asked Shapiro. “Where do you want to live?”
Getting disruptive
“If you don’t move forward, others will,” Shapiro warned.
To start, accountants need to disrupt their own skill sets. “Five years from now, more than a third of skills considered important today will be considered unimportant,” he said, citing a World Economic Forum.
To start, they’ll want to look at the data analytics and technology-savvy that graduates are bringing to the table: “You’re going to have CPAs with data analytics skills,” he explained, naming two universities in Illinois that already require data analytics classes for accounting majors.
More important, though, accountants need to be prepared to learn throughout their careers. “As a profession, we’re lifelong learners,” he acknowledged, “but it’s been additive -- you build on what you’ve already learned. You need to learn, unlearn, and then learn something new -- whole different skill sets.”
Older accountants need to step up, too: “I think technology isn’t owned by young people -- it may be dominated by them, but it’s not owned by them,” he said in a later interview with Accounting Today. “You’ll see some older CPAs embrace technology.”
Firms will also need to change, starting with adjusting their cultures to truly prioritize work-life balance.
“Are AI and the use of bots going to enable us to bring work-life balance, because it doesn’t take as much time to do compliance assembly, or are we going to just add more clients, as we did with earlier productivity tools?” he asked. “The culture has to match -- you can’t say you have work-life balance just because you have a ping-pong table: ‘We have a nice room for people to be in when they’re here at 8 o’clock at night.’”
Relationships with clients will also need disrupting, particularly around how they are charged.
“We’re going to have to change the way we do billing,” he said. “How much talk is there about value billing? But how many firms are doing value billing? AI and bots are going to have to change that equation. It’s going to take a fraction of the time to do the job -- are you going to charge your clients by the minute? In five or six years, you’re going to be charging clients by the value received, not by the time.”
However, by far the most important step toward disruption that Shapiro recommended was being innovative -- with an important distinction between “little I” innovations like Excel, which automate and streamline current processes, and “big I” innovations like blockchain that completely revolutionize businesses.
“We need both,” he said, “lots of little I’s, but if we don’t have some big I’s, we won’t be disruptors.”
Now is the time -- and it’s a good thing
“I don’t mean to scare you,” Shapiro told Summit attendees. “The future is going to be brighter than bright.”
“We can own the world,” he told Accounting Today in a later interview. “Accounting can be a dominant player.”
For accountants who are willing to be disrupters, he sees major opportunities in areas like client accounting services, cybersecurity, wealth management, and strategic business advisory services.
They will need to move quickly, however. “The reality is that change doesn’t progress at a steady pace -- it started slow, and now the pace of change is incredibly fast,” he said. “The future is now -- we can no longer say the future is out there -- it’s now.”
And as proof that Shapiro is walking the walk, he noted that membership organizations, including state CPA societies like his own, will also need to choose between being disrupters or being disrupted, as demographics and workforce shifts change their potential membership pools.
“Business models for associations are going to have to change,” he told Accounting Today. “We are having to think about how we can reinvent ourselves to support our members as they move toward their goals, and to help them be successful.”
In the end, disruption will affect everyone, and it’s best to initiate change yourself, before you’re forced to. “The best reason to change is because you haven’t,” Shapiro said, before adding a final warning joke for accountants: “What do you call a firm that doesn’t want to change?” he asked. “Merged.”
