Despite current statistics, innovation and common perceptions, rest assured technology will NOT replace accountants, but rather it will give them an upgrade.
Bureau of Labor Statistics figures show that the accounting profession will see the largest decline in the absolute number of jobs. After all, automations, integrations and artificial intelligence that is so aggressively finding its way into accounting software are reducing the need to manually enter bookkeeping transactions and perform audit of large volume of transactions. It is easy to come to a conclusion that technology will replace about one in 12 accounting professionals. But, that is a wrong conclusion to draw.
The American Institute of CPAs defines accounting as: “the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least of financial character, and interpreting the results thereof.” Let’s assume for a moment that this is THE definition of accounting.
Technology is now increasingly recording, classifying and summarizing transactions and events of financial character (i.e. what accountants traditionally did). But it is the last part of the above definition that was and is of the most significance (i.e. interpreting the results thereof). Technology is shifting accountants more towards that “work.”
You have no doubt heard of “driverless” cars by now. Driverless cars can, in theory, reduce the number of jobs such as taxi drivers, food delivery drivers, Uber drivers, truck drivers, etc. But these drivers whose jobs are “threatened” now will need to effectively “upgrade” themselves.
With appropriate new training, they will transform into “customer delight representatives.” They will become the on-site brand ambassadors of products and services. It will all happen due to more human interactions with customers. These “drivers” of today could become “mechanics” of tomorrow - thereby increasing their earning potential.
If technology can shift “brawn” work to “brawn+brain work,” what will happen in the accounting profession – which was always more of “brain work?”
Let’s analyze a bit more:
It is now easier for small businesses to manage their books without much support from bookkeepers and accountants. Comparatively, you’ll agree, that in the past, it was not so easy. Technology made it easier.
And the same technological trends that are sounding threatening to accountants will make it even easier for small businesses, so much so that at some point in time, they will hardly need to manually create accounting data. What happens then?
The small business owners will NOT see much of an incentive to do bookkeeping or accounting themselves, if they don’t already. When that stage comes, they will seek out accountants to help make sense of all that data that is automatically getting created.
Survey after survey findings show that accountants find it challenging to get new clients, find talented staff, have work-life balance issues and overcome fee pressures. The cumulative impact is that accountants are usually overwhelmed and overworked.
Without adequate time on hand, many accountants are not able to cater to the higher value advisory needs of their clients. Technological advances will actually help accountants in this aspect.
A bulk of the time that is currently wasted on mundane, data producing work will get shifted to client interactions and analytical work that relates to the context of current situations of each business client.
When technology transforms expectations of clients, invariably the clients find it difficult to justify cost of traditional work done by bookkeepers and accountants. In other words, the perceived value of the same work goes down as technology does that work.
However, reduction in cost by saving time taken for data producing work can help accountants boost profit margins. The combined effect of the points mentioned above is that accountants will move onto higher value services that can fetch better prices and higher profitability.
These are just a few thoughts starters. Based on your specific clients, services and technology mix – and the intensity of your entrepreneurial thinking, you can see the specific future path for your firm.
But Don’t The Numbers Show A Threatening Decline?
The numbers cited by Bureau of Labor Statistics are computed by the somewhat predictive, trends extrapolation based and assumptive methodology used for such projections (which also takes into consideration the factors affecting demand for occupations). These are not absolute predictions, of course, and many other factors can impact the actual figures.
For instance, the shift towards higher need for services and the trends of “contingent workers”, “1099 economy” or “freelance workers” – all of whom can be construed to be “micro-entrepreneurs” - should increase the need for accounting services. Is it factored in already? Hard to tell!
Recognize the Upgrade and the New Opportunities
For the purpose of our analysis, I am not as focused on the actual number of reduction in jobs in the accounting profession. Instead, I think it is of paramount importance to recognize that the shifts happening in the accounting profession are actually UPGRADING the overall life-experiences of accountants from their “work”.
Think of it. Collecting documents, organizing them, data entering information from documents into increasingly sophisticated software – was the essential “work” that was required to be done. It was to help you arrive at “analyzable information” for you to interpret for your clients.
You needed all your education, experience and expertise to be able to interpret that information. But bulk of your time got consumed in creating and organizing data – which do NOT require your level of education and experience. It reduced your opportunities to help more people with interpretations; and hence reduced your earning opportunities. But now technology is delivering back those opportunities to you, thereby upgrading your earning opportunities.
Accountants will find their lives enriched with such experiences – enriched in many aspects. The satisfaction and delight they will feel by being able to truly impact the lives of their clients, of being more measurably helpful for their clients’ decision-making and truly performing the role of the most trusted advisor. And at the same time, it is even more important to understand and prepare to acquire the “new skills” that will be required for accountants to transcend successfully into the future of accounting.
As an accounting professional, what are your thoughts about the changing dynamics of the profession? Please share your comments below.