Newsflash:
IFAC Practice transformation action plan
Welcome to the Fast-Future
We will not recognise the accountancy profession in the next 10 years. Actually, the fact of the matter is that it will probably be in the next five years. —Barry Melancon, President & CEO, American Institute of CPAs and CEO, Association of International Certified Professional Accountants
We live in a dynamic, fast-paced world. Accenture predicted that advances in robotics would automate, or eliminate 40% of basic accounting roles by 2020. Within 10 years, robots might be able to answer all technical questions regarding accounting and auditing. It is critical to dedicate time to your firm’s future and embracing new opportunities.
As the preferred advisors to small and medium-sized entities, accountants and SMPs must leverage established trust to provide required services while upholding ethical standards.
What is the road map to the future?
Adapt, adapt, adapt, and adapt some more. The primary challenge is to be willing to adapt. Transformation involves strong leadership; embracing technology; recruiting and retaining the next generation of accountants; an innovative approach to training, continued learning and development; and identifying and meeting the needs of an evolving marketplace.
The four focus areas of practice transformation are:
1. Embrace change
2. Leverage technology
3. Focus on talent management
4. Evolve the firm operating model and build advisory services.
1. Embrace change
Change almost never fails because it is too early, it almost always fails because it is too late. — Seth Godin, author and entrepreneur
The future requires an open and agile mind set embracing rapid change and an innovative drive towards continuous improvement. Anticipating trends and advising clients on their implications will be key. Be future- ready: skills development and improved technological expertise are crucial.
Taking even small steps forward while facing risks and challenges is better than inaction.
2. Leverage technology
Leveraging technology developments will improve practice efficiency, and enhance and expand the range of services provided. Artificial intelligence should be regarded in terms of the elimination or evolution of tasks and the new opportunities. Professional judgment will, however, remain essential to advising clients and adding value.
Five key initiatives to successfully adopt and embed technology include:
A. Conduct an environmental scan
Assess how technology can enhance efficiencies, productivity and quality, lower costs, attract staff, and maintain and add new clients – what can be automated?
B. Align with the long-term strategy and formulate a realistic implementation plan
Firms should identify which technology is best aligned with their strategy (e.g. growth targets and service offerings) and consider the relevant business need, available budget and marketplace opportunities. The return on investment (ROI) should be calculated, but the risk of not investing in new technology (RONI) should also be considered.
C. Adopt the cloud
Cloud technology has become a key player in the accounting industry. Practitioners can now serve clients from anywhere in the world.
The cloud eliminates the extra costs of, for example, an IT contractor to do updates and back-ups. It is also more secure than in-house servers—but data management is key. Know the providers and where they store the data to track how it is being secured. Be aware of any relevant laws and regulations, such as data protection legislation.
D. Identify and support an information technology champion
Staff should be empowered to follow technology trends and co-operate with the firm about opportunities and challenges, options, processes and the internal training necessary. The firm should identify a passionate team member to take the lead in implementing a new technology initiative, with support and guidance from leadership.
E. Involve clients in technology decisions
Involving clients in new technologies and upgrades through virtual meetings and client portals will build confidence and trust, without travel or additional time and cost. This creates transparency and highlights a long-term vision. Technology is an accelerator, but using it effectively requires a clear strategic plan, and the right people and clients.
3. Talent management
Investment in talent management is a top priority. Technology developments have an impact on recruitment and retaining talent, for example, recruiting data scientists and broadening the reach beyond academic qualifications. Practices should equip their staff with new skills and train accountants for the digital economy. In the period up to 2022, the World Economic Forum predicts that employees will need 101 days of retraining and skills development.
Moreover, skills such as empathy, and effective communication and collaboration with colleagues and clients are becoming essential to future performance. Four generations are now working in firms — each with different skills and personalities. Successful firms will recognise the demographics, including ageing leadership, and the rise of millennials and Gen Z, and take advantage of the differences between generations.
Five talent management initiatives include: offering ongoing learning and continuous development (lifelong learning); empowering staff to innovate; engaging in transparent career progression conversations; introducing flexitime; using a variety of recruitment techniques
Top 10 Skills Needs to Thrive in 2020 (The World Economic Forum)
Complex problem-solving;
critical thinking;
creativity;
people management;
coordinating with others;
emotional intelligence;
judgment and decision-making;
service orientation;
negotiation;
cognitive flexibility.
4. Evolve the firm’s operating model and build advisory services
The majority of revenue generated by SMPs is through traditional services, but there has been an increase and diversification in the provision of business advisory services. With their in-depth knowledge and understanding of their SME clients, SMPs are well positioned to provide a range of services. The traditional pyramid model is likely to change as outsourcing and automation create efficiencies. A firm may hire and retain fewer junior staff, but more digitally-proficient mid-level staff, resulting in a flatter, more project-based structure.
A. Move from transactional to strategic services
Higher value work will be future-focused based on analysis and interpretation, not lower-value tasks, such as data recovery and conventional reporting. With automation, opportunities will open to analyse data to offer strategic value-added advice to clients. Technology tools will enable communication of information in real-time.
B. Re-evaluate the services provided & marketing strategies
Notable global trends include information technology services, human resource policies and procedures, and enhanced corporate reporting. This diversification and expansion of the service offering is critical to ‘future-ready’ SMPs and a key tactic to being competitive. The accountant’s role as adviser, mentor and coach is to work as a ‘business partner’ and trusted business adviser.
C. Move into a niche market
It might no longer be possible ‘to be all things to all clients’. Specialisation in a niche market could be a way forward. A firm may decide to recruit a new partner who specialises and has strong experience in one sector, or partners may surround themselves with experts to provide clients with a more holistic advisory service.
D. Use networks, associations and alliances to add value
The benefits of joining networks, associations or alliances are access to new clients; a broader client experience; international collaboration opportunities; training and development; tools and resources; and branding and marketing.
E. Conduct a regular strategic review
It is important to schedule time to periodically review the firm’s strategy, structure, services, culture and operating model as a priority. A realistic review will enable leaders to head in the right strategic direction.
In summary
It is crucial to take the necessary steps to ensure that your practice can adapt to the ever-changing landscape of the profession and embrace new opportunities. At LEAF, we can assist you with the necessary practical tools and guidance to go boldly into the future.
Reference
IFAC: Practice Transformation Action Plan – A roadmap to the future, May 2020
Need help?
If you need advice, guidance, assistance or training, our experienced specialists at LEAF are ready to help your firm to push above and beyond the norm.