Mansoor Sarwar, Regional Director at Sage Middle East talks about the cultural shift picking up pace in the financial markets due to various technological breakthroughs and steps that accountants should take to accept these changes and stay relevant.
The results of the Sage Practice of Now Report 2019 that surveyed over 3,000 accountants globally indicate a distinct cultural shift in the industry. Things are changing at a rate not experienced since technological breakthroughs, such as the desktop PC and the deregulation of the financial markets. While various reasons exist for this cultural shift, our research found that it is mainly in anticipation of the changes that will take place over the next ten years.
Will your practice look the same in 2030 as it does now? Remember to consider the technological and societal changes taking place today when you answer that. How will you prepare your business for the new realities of our time?
A changing profession
According to 90 percent of the accountants surveyed, there is a definite cultural shift taking place in the industry. What’s causing this? The data suggests that it has been prompted by both clients and the marketplace that require more than the typical compliance work and number-crunching needed until now.
Give in to market demands
Market demands are anything a client could request of a practice, like doing the year-end taxes. Market demands are, however, becoming increasingly focused on consultative and partner-oriented advisory services. Increasing client demands have become significant enough to merit a distinct response and segment in the graph. Practices are typically founded to cater to market and client demands. They wouldn’t be very successful otherwise. But how can they continue to cater efficiently to modern market demands?
Comparing your practice to newly established firms in your region is the easiest way to see how best to cater to modern client demands. You could look up their services and marketing products online, and establish what they focus on, and what specialities they bring to the market. Look into the culture of their business as well. Are they operating mostly via social media channels? Do their staff work remotely, or are they based in physical offices? While these practices might seem odd to some, they are completely acceptable and normal to others. They enable practices to save money which, in turn, allows them to pass cost savings on to their clients who often appreciate such forward-thinking because it saves time and reduces cost in achieving their objectives.
You could think about what a practice would look like if it were a start-up today. Technology would logically be at its core. In the era of tax and payroll digitalisation, you’d be unlikely to set up paper-based processes with clients who still use boxes to store receipts. Would you want a 100 percent digital client list? Trying to retrofit this radical approach to existing practice is neither sensible nor sustainable. What nuggets of wisdom can you gather from this and turn into practical changes within your firm? You might not be able to do much at first, but start discussions now with your staff about where you’d like to go.
How to respond to regulatory changes
Accountants know the drill: Governments implement new legislation, which places a strain on businesses. These businesses then ask their accountants to help them make sense of the new laws, and often, to then take care of ensuring compliance with these laws.
Has regulation become worse? There have been multiple recent financial scandals that have forced the worldwide legislature to respond. Ironically, legislatures in Western economies have simultaneously been trying to reduce red tape. It has resulted in a reshaping of the regulatory landscape rather than an increase or reduction of it. Changing regulations remains a core business driver for accountants. It also spurs innovation because constantly changing regulations compel accountants to stay on top of their game. According to The Practice of Now Report, accountants worldwide believe this is part of the cultural shift.
While your practice might specialise in regulatory requirements, you also need to maintain the pace of change your clients’ demand. Can you enrol in some training to find out what you need to know? The Practice of Now findings suggests that you should ask these questions frequently. If changes are required, implement them immediately.
Making the most of digitalisation
Accounting and technology have been linked for over 50 years – the electronic calculator was the first tool to bring the profession into the modern era. Now, AI, cloud computing, and bots have drawn the industry deeper into the future by changing the way accountants work.
The Practice of Now Report indicates that accountants believe technological adoption is not happening at the required pace. In fact, 85 percent concur that their local industry needs to increase the rate of adoption to remain internationally competitive. When asked why they think practices are so far behind, respondents claimed that a lack of time (13%), money (38%), and expertise (25%) were limiting their digital transformation. Accountants can be confident that technology is a game-changer. Historic transformations have shown this time and again. Not adopting new technology is certainly a step back.
The solution is to simply keep digitalisation top of mind. Since technology is evolving at such a rapid rate, adoption cannot be expected to take place just once. New and useful products are coming to market on a regular basis, and they’re worth your attention. For example, how effective is your adoption of blockchain and the switch to decentralised ledgers? How is machine learning changing fundamentally the low-level admin jobs within accountancy? If all this sounds like Greek to you, you need to build the competencies of your practice to make it compliant with 21st-century solutions.
Research some technologies and consider how they can impact your current processes and tools. Look at how these technologies are being implemented within businesses. You may consider investing in training and technologies, but ensure you take your clients on the journey with you because, in the end, they will benefit the most.
Adapting to generational changes
Much has been said about Millennials. The US Census Bureau reports that those born between 1983 and 2000 comprise the largest living generation by age. What’s more, 2018 marked the first year that people born in the 21st century came of age. Millennials were born into a world of technology and will incorporate it into all activities without giving it a second thought. According to the Sage report Walking the Walk, Millennials have a unique set of values that sets them apart from other generations. In fact, 62 percent of Millennial entrepreneurs say they have given up profits to stay true to their personal values, and 66 percent agree they prioritise life overwork. More than half believe that they will start more than one business in their lifetime.
Millennials are a key reason for the cultural shift taking place as they create businesses that impact the profession. They might need accounting services, but they can also take care of the day-to-day processes themselves. What they require most is service-oriented business partners who can guide them through the peaks and troughs of business life. Does your practice provide that? If not, how can you make changes to ensure you stay relevant?
The Millennial generation is not only affecting the client base – they are also entering the profession. There is much to gain by having Millennials on your staff. What better way to attract Millennial-run businesses to your client portfolio than to have your own staff who they can relate to and who have the same value set? Be sure to look after your Millennial workforce. Research shows that they have little tolerance for low-level work or tedium, and high expectations for career advancement.
Times are changing
There are many challenges facing the accounting profession in the present unprecedented time. The pressure is on for practices to evolve and adapt. For some, this could mean radical changes. At the very least, it will require a root-and-branch evaluation of your processes. However, research shows that there is simply no other option if you are keen to prepare your practice for the next decade of growth.