Most of us have been trained to think linear and local rather than exponential and global. Today, we are being forced to change our thinking about age-old challenges in the accounting profession (talent, workflow processes, technology and providing relevant real-time wisdom rather than just information).
The microprocessor has been around for over 50 years and when it doubles today, the increased capability is significant. To demonstrate this law in another way (financial), how much money would you have after a month (31 days) if you started with a penny and doubled it every day?
At the end of two weeks you would have $81.92 and at the end of 31 days, $10,737,418.24. Most people can’t comprehend this without actually doing the math.
The important point of exponential growth is that there are three primary digital accelerators currently converging: processing power, bandwidth and storage. Bandwidth and storage are increasing at an even greater rate than processing power.
Full-motion video requires approximated 10 Mbps. Most people have this capacity on their cell phone or in their home.
The first hard drive was developed by IBM in 1956 (5 Mb). It was the size of two refrigerators and leased for approximately $250,000/month.
In 1979, Seagate released a 5 Mb drive for $1,500. Today, we can purchase one-terabyte drives for under $50 (Samsung T3 SSD, the size of a thick credit card, costs less than $370). These examples demonstrate that the curve is going vertical and no longer in a slow growing horizontal slope, meaning we need to think differently about the challenges we have today and into the future.
Every CPA firm leader says talent is their number one challenge. They especially don’t have the talent to take over (buyout) the partners who are at retirement age and rapidly grow the firm. Thus, we see an incredible amount of merger activity. I ask, “is talent the real problem or are there other considerations we should be focusing on?”
Talent has been the problem for decades, but perhaps the real problems are the lack of a shared vision, lack of integrated and standardized systems, poor internal communications and processes and a need to focus toward advisory rather than after-the-fact compliance services which are becoming increasingly commoditized.
Where will you and the profession be in 10 years? According to the Economist in 2013, there was a 94 percent probability that accounting and audit jobs as we know them today will be lost due to disruptive technology over the next 20 years.
The February 2016 edition of 24/7 Wall St., references the Bureau of Labor Statistics’ similar prediction that jobs in bookkeeping, accounting and auditing will decrease by at least 8.4 percent by 2024. We already see the early stages with new technology that eliminates data entry, coding and reconciliations.
Blockchain and other technologies on the horizon have the potential to eliminate many security and privacy issues, as well as eliminate most of the time spent today in reconciliation and data entry. Are we as a profession going to miss this opportunity and lose relevance? Or are we going to embrace the exponential and global movement?
Some will probably choose to allow the gravity of the past to paralyze them while others will become future-ready. I believe accountants and their firms should and can do both. It is not an either/or proposition.
I believe it is an “and” proposition, providing the excitement and needed growth opportunities to attract excellence and leverage technology that allows you to work from anywhere and at any time. Work is what you do, not where you go.
Relevance means CPAs should move up the value chain, focusing on knowledge and wisdom. Clients are looking for “signals,” not “noise” when it comes to managing their business and lives.
I caution you to avoid ignoring the impact of technology and include technology in your vision and strategy. Firms need someone with technology and business savvy at the management table.
Too many firms are moving to a technology outsourced model. In the short term, this strategy may increase the partners’ income, but in the long-term firms need internal technology expertise that can lead and nurture innovation.
Again, I believe it is an “and” proposition. Outsource some of the infrastructure and support, but retain IT visionaries and leaders who understand both the future of the profession and technology.
Technology is a growing component of marketing and sales strategy. Some marketing gurus have predicted that the marketing technology budget will become the largest component of the entire firm’s technology budget.
Whether this happens or not, it points out the need for a comprehensive technology strategy. To do this, firms must think differently. By thinking differently, they will see the need for a technology capability model/assessment.
Much of the IT focus in the past has been on production in tax and audit-related services. Firm management has also been part of the equation, yet the applications generally have not been integrated or shared data easily.
As we move to the cloud, integration is easier, there is less friction among applications and the focus should go beyond just the front office. The strategy should consider the client and employee experiences as well as support and the use of business partners/sourcing.
In a future article, I will share a Capability Model that will improve your IT vision as well as document the nine areas of importance. The model is relevant to firms and clients of all sizes.
You simply adjust the model to your vision and strategic plan. Without an integrated strategy, it will be difficult for firms to remain successful and future-ready.
Here are eight mindsets that will help your firm transform and remain successful and future-ready:
- A bigger future – you must focus on the future and believe that it will be greater than the past.
- Team player – the day of the rugged individual is over. Clients’ wants and needs require a team approach. The team can be composed of external as well as internal resources.
- Willing to change – your ability to embrace change and learn faster than your competition is vital.
- Improve processes – eliminate steps that don’t add value. (The Lean Six Sigma approach.)
- Life-long learning – training and learning are a two-way street. You must be willing to learn as well as teach others.
- Growth – the only alternative is growth if you wish to attract and retain the brightest talent.
- Connected – trust is what holds the internet-connected economy together. You create digital trust the same way as any other kind of trust.
- Accountable – you must be willing to hold yourself accountable if you wish to hold others accountable. Accountability is the fastest way to change results.
The original article appeared as part of the Boomer Bulletin blog.