Wayne Schmidt: Accounting Practice Advisor at Karbon, who has 30 years of experience in the accounting industry. Launched Xero in Australia in 2009.
Karbon: Karbon is the growth engine for your accounting practice, accountants around the world use Karbon’s workflow management to scale their firm, serve their clients and be more productive.
While accountants have migrated their clients to cloud accounting software, accountants themselves aren’t following their own advice.
Of the roughly 9,500 registered accounting firms operating in Australia, only a small percentage have migrated their own systems into the cloud.
This reluctance to move with the times seems to be driven by inertia, fear of change or a misplaced belief in their own capabilities.
I have spoken to firms who apparently believe that emails are more secure if the data is physically stored in their office building – as long as the front door is bolted shut at the end of each working day. It’s ludicrous when you consider the millions of dollars Microsoft and Google spend on security for their cloud platforms compared to the budget of a typical accounting firm.
It’s common for a firm to store tens of thousands of emails on a Microsoft Exchange server at great expense rather than moving these to cloud productivity suites such as Google G Suite or Microsoft Office 365.
A well-established firm in Melbourne recently invested $100,000 in a new server room. It’s completely redundant and inefficient technology, that’s already being dumped by other industries. And yet this accounting firm decides to just upgrade the technology with their existing provider – who is of course more than willing to take their money, no questions asked.
Even inside the country’s biggest and brightest accounting firms, the majority are missing out on the latest technology by running server-based practice management solutions. Not only does a firm miss out on the competitive advantage delivered through innovation but it tends to cost a lot more too.
Refusing to adopt
One reason why firms are lagging on adopting technology is that they simply don’t know any better, and they’re not sure how to find out.
Not only does investing in outdated servers undercut firms’ profits, it breeds inefficiency within their business.
Delaying technology adoption also restricts the industry’s ability to communicate more efficiently with their clients. This looks particularly bad when clients have already transitioned to more modern platforms such as CRM and chat applications.
Firms aren’t conducting their own technology reviews to look for new efficiencies. So many don’t know where to start. They aren’t fostering close relationships with IT experts who can advise them on cheaper and more efficient upgrades.
Age is, of course, part of the problem, too. Management in the accounting industry is dominated by baby boomers, with the average age of public practitioners well over 50, according to CPA statistics.
Frustration among Millennials
The reality is that for established firms, time is not on their side. Millennials, a growing percentage of senior staff, will feel frustrated by a firm that fails to embrace technology.
Firms need to be at the forefront of tech-driven innovation to be an attractive workplace for Millennials. They have zero interest in working in a firm that’s afraid of change and still operates in the same way as it did a decade ago.
Without adopting the technology, the accounting sector will be left behind by its customers. More than eight in 10 Australian businesses expect either rapid or unprecedented technology change in the next three years. This is far higher than the global proportion (28%), according to Accenture’s recent Technology Vision research.
Where do you start?
Take incremental steps. Start with your Exchange servers. Next, look at apps, ancillary products and then practice management software to make your firm more efficient and better at communication. Automation will free your firm to focus on business advisory and higher value services, rather than just being a tax collector for the government.
Successful accounting firms need to be bold and willing to evolve – to the point that change becomes ingrained and applies to anything and everything that happens.