Technological transformation: Be mindful, purposeful, and flexible

Thirty-nine percent — that's how much more revenue per employee firms that are "early adopters" of technology make. 

That number, from a recent RightWorks survey, surprised even me. But it makes sense. The accountant shortage is taking a toll on the millions of small businesses in the United States. Anything that makes firms more efficient in providing service will automatically increase revenue potential, especially if that practice is also optimizing its billing structure. 

The information age, beginning all the way back in the 1980s, created opportunities for businesses of all kinds, including accounting firms, to be more efficient and streamline their processes. But firms didn't modernize in one fell swoop. In fact, "going paperless" is a discussion some firms are still having. Technological transformation is an ongoing process, and firms need to adapt at a pace that makes sense for them and their clients.

For instance, cloud technology is a given today. Having all your information in one, secure, accessible place is beneficial to staff and clients. Firms report that security is a top concern and reason for hesitation on full cloud adoption, but firms that have completed migrations into a completely integrated cloud system typically report that security (and accessibility) are the top benefits.

When creating a strategy for technological transformation at your firm, remember that advancements in technology are so rapid and fast-moving that concerns from a decade ago may not be relevant today. Of course, security should always be top of mind, and cyber insurance is something to consider. The AICPA offers the AICPA Professional Liability Policy, and there are many other third-party organizations that provide this type of coverage. But also important to remember is that what used to be true, often is not anymore.

For example, firms used to consider the best-of-breed pieces of technology for each need: the best portal technology to speak to clients; the best tax software; the best data analytics tool. Then, as software companies began to offer suites of technology that provided everything a firm would need, where all the pieces talked to each other, that became the norm. Now things are shifting back a bit — it's possible now to find the best of breed in technology and use third-party APIs to connect those pieces seamlessly. The bottom line is, when creating your technology strategy, think flexibly. Technology changes so quickly that you want to be able to adapt with it — but not so impulsively that you're changing your stack every year. 

I do see a shift away from platform-based shops — i.e., firms that use primarily one technology provider for their technology stack. It's an exciting time. Much more is possible these days with API connectors and the right staff to manage the technology (more firms are hiring non-CPA IT staff for this or outsourcing the job during adoption). But at the same time, as always, firms should be careful and deliberate in their technology stack planning.

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Artificial intelligence is on the rise. While AI is just automatically embedded in more and more software, some firms also adopt simple tools, such as AI-driven chatbots to perform preliminary conversations with prospective clients through their websites. But clients don't love them. A recent Harvard Business Review study found that 66% of customers using chatbots (in the telecommunications industry) rated the experience a 1 out of 5. Clients don't like feeling like they're speaking with a robot, and AI chatbots aren't developed enough as yet to give nuanced information or answer complex questions. This is fine if all you require from your chatbot is simple, entry-level conversation, but keep in mind that technology isn't serving you if the client isn't happy.

AI is embedded in all kinds of software today, non-client facing and otherwise. But the point is, it's important to be careful and not rush into adopting technology simply because it's new and attractive. Yes, early adopters of technology broadly see a lot of benefit — but it behooves small and midsized firms to make a comprehensive plan, consult with experts, and be mindful and purposeful when building their technology stack. Especially because technology is a significant investment.

Think about what drives your firm. Is it primarily tax services? Great — you need a tax platform, and a compliance platform that makes sense. Then think about what supplemental services support what drives your firm. Maybe you'd like to add a piece of technology to provide tax strategy help to clients. Then you want to ask, "How do I layer this into my tech stack?" Decide as a firm what services you are in, what you are offering, and how to deliver these in the best way. And then to tie it all together — what is your internal process of communications to make sure you're not missing anything?

Finally, remember that you don't have to do it all on your own. Firms can hire temporary staff to help them through their technology transformation process, or outsource their IT and technological needs to companies that provide such services such as TechGuru or ImagineIT. As you go through this process, do it mindfully, purposefully, and with the ability to be flexible as technological advancement continues to progress.