What will be the most significant technological changes to impact the accounting profession in the next 5 – 10 years?
I think there are three big trends accountants need to consider.
The first is around mobile technology. When you look at where the world is heading with mobile devices and wearable devices and everything including your fridge being connected to the net, there is going to be all sorts of different ways that professional advisers and professional service firms will start to engage and connect and provide information to their clients. One of the interesting things will be around what applications start to emerge to provide what I call 'information snippets' to clients, helping them find out what’s happening in their business. I think there is a whole interesting trend around mobile.
The second interesting trend I think will be around big data.
One of the things about cloud computing – and if you look at Xero, MYOB, Class and BGL and all these companies, they’re essentially building enormous databases with lots of businesses’ data in the one database, and all these SMSFs and all their data in the one database. That will allow those organisations to, at some point, benchmark themselves against the other businesses or super funds. That's a whole concept of saying: we've got all this data, can we take this data and get more intelligence out of it to work out what I and my clients can do in business to be able to run a better business?
Because you're building these big databases it will enable accountants to provide that type of information to small business clients which has historically been the domain of very big business.
The third trend is all about how accountants and their clients are going to connect. You look at the convergence between National Broadband Network and high definition television and think to yourself: when we have broadband connections that can stream high definition TV everywhere at very high quality, why can’t an accountant sit and have a conversation with their client in very high resolution interactive modes? In other words, Skype on steroids. I think in the end, people say they’d much rather sit across the desk from somebody but when the clarity and quality of that communication is so good perhaps people will be more comfortable with it and particularly when you get to the next generation, Gen Y etc. they're going to be even more comfortable again. So will we have a circumstance where I’m an accounting firm in the back of nowhere and I’m servicing clients right around the world? I think so.
They’re three macro trends going out in the future, none of which are all that possible today in SME-land, but when you take those trends into one’s mind it seems pretty obvious that there is going to be stuff happening around those spaces.
Which accounting service line is most susceptible to the digital disruption?
I think compliance services, for the first time, are really threatened. People have been saying compliance services have been threatened since I joined this industry in the 1970s but because of the fact we've now got this technology, which is automating the processing of transactions like never before, and when you combine that and again, looking out 10–15 years, with things like machine learning and artificial intelligence there is a real argument that a lot of compliance work, not all of it, but a lot of compliance work is going to be automated. Even some advice, it will be not completely automated, but the machines may well deliver to the accountant the key information they need to provide the advice so the accountants don’t need to go away and do the crunching of the data. I think that's going to be where the real disruption is, around all of that compliance type activity which is going to force the accountants to really work out how they can add value to the clients' businesses which brings us back to that argument around big data and other things.
An accountant will be able to look at that, and hopefully the big data systems will be intelligent enough to be able to say: here are the key things happening in this business which are different to other businesses in that category. This business is not performing in these areas, so go out and have a discussion with your client about those things.
Knowing this digital disruption is on the cards, what can accountants do to prepare their businesses?
I think one of the biggest challenges for accountants is thinking about this technology and changing what they do. One of the core things that I do is that I go out into firms and do technology and process reviews where I assist firms, encourage them, coerce them, and get them moving down this road. I give them ideas about how they can change their business and change their processes. A lot of what I’m talking about comes out of doing those types of process reviews.
If you take the cloud accounting at the moment from MYOB and Xero and others, what I very often find is that many accountants might have got their clients moving on the cloud accounting thing but the accountants themselves haven’t really changed their own processes to capitalise on the opportunities yet. So the biggest challenge I think is for accounting firms to rethink their own business based on all these developments and be willing to experiment and try different ways of doing things; different ways of engaging with their clients and different services that they can provide. I think many of them are still doing what they’ve always done even though this new technology is there, they’re not leveraging it.
The whole nature of innovation is that you have to be willing to fail. You have to be willing to dip your toe in the water, and run a couple of experiments. If it was me I’d be going to a couple of clients and saying I want to try this with you, it may not work but are you willing to give it a go? I think there would be quite a number of clients who would say that’s interesting, let’s try that. I think firms need to do a bit more of that, experimenting about what could be a different service, what could be a different way of delivering information, what could be a different way of communicating with clients? I think firms need to experiment and yet we have a relatively conservative industry where there’s only a few firms which are willing to take those types of risks.