Digital transformation of chartered accountants the Boiling Frog syndrome
Digital transformation for accountants or any other service industry reminds me of the so-called ‘boiling frog syndrome’. Recently, I delivered several presentations to the chartered accountants’ community in and around town.
Digital transformation and the Boiling Frog syndrome
This phenomenon mirrors the issues linked to change management in a large number of businesses concerned with digital transformation. Surprisingly, I found chartered accountants to be the epitome of the ongoing changes in the service business, an area much impacted by automation and new generation IT systems and cloud.
Digital impact on chartered accountants: already old hat
The definition of ‘digital’, including automation and the convergence of cloud/IT and mobile, is broadly accepted even though the ubiquitous ‘digital’ moniker is quite recent. When it comes to chartered accountants however, the story goes deeper into history and reminded me of things I had heard and seen as a young man even though the context has changed.
My Father, in the 80s, came up with one of the first (if not the first) accounting automation system, at least this side of the channel. Let it be known that he was an IT director with a background in IT which started in the early. His newly designed HR and accounting system included stock management, payroll management, the whole trappings.
He had also created a very sophisticated book-keeping subsystem (considered a visionary initiative in those days). This system could collect stocks through remote personal computers, powered from a distance by a Mainframe computer.
That central computer was connected through the Transpac X25 network. It was a bit like seeing E.T. connect to remote information systems via a phone connection at the time. It was really ground-breaking. Most companies had to wait for years to get something which worked like that.
“You have automated 90% of our work!”
“You have automated 90% of our work”, the chief accountant commented when my Father released his new system. And what do you think happened after that? Absolutely nothing, of course. The accounting team went on using pen and paper. They were sinking in the comfort of their routine, and patiently waiting for retirement age. Which came in due course. They were right not to fret after all.
35 years later: the scene changes
It’s not surprising at all, I should mention, that it is far more convenient for many to procrastinate and prefer routine to change. It might even pay in the short term, but could prove quite dangerous in the long run however.
35 years later, accountants are finally faced with the need to change. And even to change fast. Their tasks will have to increasingly evolve towards consulting, as recommended by the ACCA (Association of Chartered Certified Accountants).
Well, on paper, this isn’t such a difficult task.
Accountants have everything which is required to succeed: finance skills, know-how and the habit of working in the service industry. But if we dig deeper, we find that there will be a strong need for employees to evolve and be able to drive the business.
A far more difficult task than that of keying in data manually into systems and validating accounts. A lot of training and support will be required, not everyone can become a skilled consultant. And not everyone will welcome that change.
What will happen to the accounting industry then? It looks like it’s been like a frog which stayed for too
long in boiling water and did not see or understand what was happening to him. Other sectors (healthcare, banks, education, travel and tourism…) may be given less time. Let this example encourage them to reconsider their need for a real digital transformation.
Note: I have reproduced per below the recommendations issued by ACCA to British accountants a few years ago. I’m not sure they have all stood the test of time. It’s not always easy to predict what will happen and when. Having said that, most of their predictions are highly plausible.
ACCA’s 10 tips to British accountants facing a professional disruption
- In 2015, every accounting firm will offer their clients an application granting them access to their business/accounting information using a Smartphone or tablet;
- Accountants will have to stay up-to-date to maintain their role as guardians of corporate data;
- The Accounting sector needs new ways to measure and evaluate technological costs and benefits of cloud computing;
- Accounting will shrink as a profession, while software vendors progressively integrate financial expertise with products that are increasingly considered self-learners;
- The CFO of tomorrow will have to have as much technological knowledge as financial knowledge;
- If accountants do not seize technology, they will go extinct just like dinosaurs: both as individuals and as a profession;
- By 2020, audits could be conducted in real time. Auditors will extract data directly from the information systems, that are linked to real time stocks using sensors (stocks, livestock, employee count);
- If accountants do not position themselves as emerging trend experts (i.e. crowdfunding, new payment platforms, …) other professions will do instead;
- Accountants must use emerging technologies to attract talents and develop existing talent;
- By 2025, all digital data will be available to everyone.