3 Ways Accounting Firms Can Survive the Threat of Automationby
Job automation is only going to increase, according to a recent report from McKinsey & Company. The report finds that up to 45 percent of activities individuals are paid to do can now be automated, just by adapting technology that already exists. Those activities represent about $2 trillion in annual wages.
What Does This Mean for Accounting Firms?
The rise of artificial intelligence (AI) means that algorithms are now able to automate some existing business processes, helping to both solve problems and uncover value through measurable, direct ROI. Take tax compliance work, for instance. It currently requires the “crunching and collating of numbers” by a human to inform a business decision.
This means that the accountant needs to first understand complex sets of data and then produce an accurate and timely report. AI readily possesses the ability to process this same data and almost immediately deduce an unbiased, strategic business decision – relieving the company of this human-driven and otherwise labor-intensive, costly, and subjective decision function.
However, accounting firms are able to overcome this threat by finding new ways to differentiate their services. Here are the three ways that the industry is beginning to tackle the threat of automation.
1. Mobilize knowledge from across your business. Knowledge is a key factor in facing the threat of automation. Industry insight, experience, and understanding of clients are all things that can’t be easily replicated by the competition – even machines.
That said, knowledge could easily become “siloed” if the right communication and collaboration resources are limited. And with an increasingly global economy, even small companies need to operate across multiple locations further isolating valuable knowledge. Being able to access and share knowledge across an entire organization (regardless of location or team) is a huge asset, one that is extremely valuable when under a growing threat from AI.
2. Dissolve the wall between your clients and the firm. Given the service-based nature of accounting firms, they must also learn to dissolve the walls between themselves and their clients. A successful client experience ultimately boils down to two things – communication and trust. And it is only through these actions that a valued relationship can be formed, setting a company apart from its human or artificial competition.
According to Robert Eccles, author of The Value Reporting Revolution, the more information firms disclose, the more likely they are to win confidence and investment (within reason, of course). There is a good reason for this: Companies are being held to increasingly high transparency standards, and they expect their accounting consultants to adhere to the same level of disclosure. Client companies have a lot at stake, and they’re entrusting part of their business to the care of an outside entity. The less accounting firms are seen as “outsiders,” the easier it becomes to win a client’s long-term confidence and retain the business.
To overcome this, some accounting firms are adopting software that allows information to be shared, and collaborated on, securely with both external clients and internal teams
3. Leverage creativity. Lastly, accounting firms must embrace strategic creativity within its consultancy services, as this is something algorithms struggle to replace. Creative contributions can’t be outsourced, automated, or devalued. Being able to highlight the areas where an accounting firm displays that creativity can be a beneficial point of differentiation for existing and potential clients. Creativity is one of the few assets that is almost impossible to replace with machines and, therefore, is priceless.
With AI technology standing prominently on the horizon, the accounting sector is faced with two options – prove value or die trying. Those that will survive will learn to evolve, incorporating technology where needed, but all the while making the most of core assets – knowledge, relationship, and creativity.
An accounting firm holds indispensable value to its clients, and the clearer it demonstrates this, the more likely it is to thrive, even in the face of replacement by automation.