Accountants must “ride the wave of digital disruption and come out the other end as high-value, agile service providers who’ve moved beyond compliance”, Tim Gullifer, president of the Institute of Chartered Accountants of Australia, told attendees at Xero’s national customer and partner conference earlier this month.
Gullifer, also a partner of Deloitte’s private practice division, said he wanted to create a “burning platform” for accountants to help them transition faster to digital-centric work.
“I am now full bottle on digital innovation and how it’s impacting professional services and the accounting profession, as well as the opportunities it presents for all of us,” said Gullifer. “Digital disruption has rocked our world.”
Below is an edited extract of Gullifer’s speech at Xerocon in which he outlined the threats and opportunities facing accountants. BoxFreeIT will publish a second extract containing Gullifer’s advice to accountants on new, digital-aware business models and how they reduce operational costs.
Tim Gullifer, ICAA
The changes to the accounting landscape by the arrival of cloud technology cannot be underestimated.
Cloud accounting, championed by a wide range of technology providers like our hosts today Xero, does away with the old business model where businesses would purchase accounting software as a ‘product’ and install this onto their computer systems.
With cloud accounting, the business is purchasing the use of accounting software via an online service provider.
There is no initial capital expenditure and it’s all paid by monthly fee. With data held in the cloud, storage is not constrained to the storage memory of the internal network, and importantly, it can be accessed from anywhere across the globe.
For those of us serving clients this is a huge change, as now the data can be accessed by us and by our clients in real time and allows us to do what we have been trying to say we will do – work less on compliance and more on the value add through accessing current data and not historical client data.
One of my peers who is with us today, James Solomon, says in a recent ICAA technology report that the uptake of practices moving to the cloud is somewhat dependent on the rollout of comprehensive cloud management solutions.
James says it’s also being driven by a new breed of younger practitioners coming through that understand technology and see the benefits, as well as client demand. At Deloitte the Xero solution team are all managers and under 40.
The Institute’s member experts in this space say reduced costs, increased collaboration and client access to data are some of the most significant benefits of cloud accounting.
In response to the pressure of delivering more for less, being able to create centres of excellence offshore and push work into low cost jurisdictions has been a win for the profession.
But it’s a win also for clients in that the cloud also enables greater collaboration with their accountants who can offer more value add services – in real time, from any location.
Finance, accounting and professional services are facing significant and imminent disruption. In other words we’re staring down the barrel of a big bang on a short fuse.
Inaction is a dangerous strategy. So on the basis of Deloitte’s research, expert opinion, in-depth experience and market knowledge – my advice is that today is the day to start reconsidering your response, for you and your clients.
Research has shown that around two thirds of SMEs said that they would consider replacing some of the services that their accountant currently performs with cloud-based software and that around half would change accountants if they didn’t embrace a cloud solution to their offerings.
This is a real concern as I know from my own experiences at Deloitte Private that 70 percent of our work is compliance work based on transactional and administrative services and only 30 percent is coming from strategic business advice.
This is of major concern to our profession when you consider that it is low-level transactional services – manual data entry, book-keeping, year-end financial reporting, BAS lodgements, payroll and financial analysis – that are most easily automated and replaced by a cloud-based solution.
The immediate threat to my business and the profession is obvious. If we don’t adopt cloud based solutions with our SME clients then we run the risk of becoming less important to them and being replaced as their most trusted adviser or worse lose them as clients completely.
So my advice to all of us is that the transition to cloud based computing presents immediate threats but many more long term opportunities.
As we allow the cloud and those enablers like Xero automate the lower level administrative tasks that we have been completing on clients behalf for decades, we can move into the real time, access-anywhere offerings that our clients are expecting of us to maintain and retain our position in the business life cycle of our clients.
What the cloud is proving to our relationship with our clients is that we are more connected and transparent by giving us visibility of the client’s business, now and in the future.
But more importantly it allows us to continually interact and engage within the strategic direction of their business and in doing so reset our professional relationship.
It’s enabling our evolution as value-adding service providers who can give clients more bang for their buck.
Read Gullifer’s advice on new business models for accounting firms on BoxFreeIT tomorrow.
Image credit: Tim Gullifer, ICAA