Changing of the guard the key to cloud.
It’s been about a year since my introduction to the wonderful world of accounting, a journey full of surprises. I still remember the shock of going to my first accounting software conference last November.
The first accountants I met at drinks the night before Xerocon 2011 were a young guy in a t-shirt emblazoned with the silhouette of a wailing guitarist and the legend “your accounting rockstar”, and a tall blonde with a superhero business card who knew more about cloud software than I did. In fact, lots of accountants there were young, casually dressed and just wanted to talk technology.
This was an unsettling experience for a technology journalist parachuting into unfamiliar territory for the first time. Had I landed in the wrong country? Stereotypes were dashed.
Since that weekend I’ve been trying to answer the question; are accountants expanding their role as business advisers to include technology? After dozens of conversations with accountants (who knew there were so many types?) the best answer is a qualified yes.
My father-in-law’s accountant will never recommend cloud software to anyone, accounting or otherwise. He doesn’t need to – he has great experience in running a business that will always be in strong demand and highly valuable to his clients.
But the mid-20s junior who has been tasked with learning about cloud accounting is almost certainly going to share his opinions.
(Caveat: I’ve met many tech savvy boomer accountants who are riding this cloud software wave just as adeptly as the younger generation. Some are driving the change. There are always exceptions.)
Intuit CEO Brad Smith confirmed to me that the phenomenon was global (it operates in 170 countries so it should know).
“In the developed economies the babyboomer generation are now entering their 50s and 60s and are handing over their firms and their practices to the next generation. And this next generation grew up with PlayStations and iPhones and they don’t want to be tethered to a desk during a tax season,” Smith says.
I put the question to the Modern Practice LinkedIn group and received a range of insightful responses. The implications of this transition are fascinating. I can see five.
1. Ready for change
Chris Eccles from Team Accountants, says he has swapped pumping out tax returns for recommending and implementing cloud software. “It is only early days but clients seem to love talking to us now rather than avoiding us. So is this the way of the future? If you are a next generation accountant the answer is yes,” he says.
2. Retention tied to technology
“I left two firms where I had good prospects purely because of the negative attitude towards change and an inability to embrace Cloud/Social Media but also other issues like workplace diversity,” Michael Cooper at Optima Partners says. He went out on his own and then joined a small firm.
3. New wave of firms
The cost of setting up an accounting firm used to be at least $25,000 for servers and software. With the cloud it is literally zero – an accountant can sit down in a cafe and start processing clients’ tax returns and accounts immediately. Tim Whitehouse of UK-based Caprica Online Accountants left a Big Four firm a little more than a year ago to start his own firm. “It seemed there was a great opportunity for IT focused accountants that are able to take advantage of the cloud and modern ways of working. So far it’s going great and hope it is a real lasting trend,” he says.
4. Two-speed firms
Older partners who aren’t interested in changing their habits but admit the need to keep up will let younger partners or juniors create in effect a second firm within the first that runs more efficiently using the cloud. Older partners may choose to retire and let the phoenix rise from the ashes of the old firm. “I have seen the shift with conservative accounting firms who move to the cloud, delegate the task of sourcing, learning and recommending cloud solutions to their younger team members,” says Gillian Roussow of Jill of all Trades, a Xero Gold bookkeeper.
5. Falling valuations
Sunk investments in servers and server-based software will be worth nothing to younger accountants switching to cloud-accounting platforms. Their clients may not be interested in being sold to a younger partner who promotes the cloud approach, so the value of client base may also be in reality smaller. With a record number of businesses for sale, boomers may be disappointed at the size of bids.
What do you think a modern accountant will look like in 10 years’ time?