Accounting software giant Sage just recently released an accounting trends report entitled “Practice of Now 2019” with results from an independent survey of 3000 accountants from around the world to see what’s on their minds regarding the future of the profession and how shifts in the current landscape are altering their outlook on the profession in the next 10 years.
At it’s core, this accounting trends report gives insight into some critical areas to know about to help keep your firm on the right side of change.
This accounting trends report is 26 pages long but luckily I have done the dirty work and have summarized the key highlights.
Without further ado, here they are:
1. 90% of accountants believe a cultural shift is taking place in the profession
When respondents were asked about what was driving this sentiment, a few things stuck out.
For one, accountants are realizing that clients have changing demands and expectations, likely being driven by technology. Clients are looking for more than number crunchers and expect help in other areas of their business.
Another large factor leading to this sentiment is the mainstream adoption of cloud technology and artificial intelligence, helping forward-thinking firms to lead the pack and help guide changing client expectations.
Accountants also listed generational attitudes such as millennials having a large impact on the workforce as a major reason for the cultural shift taking place on the profession (and as this article of mine demonstrated, what millennials value today in their job is drastically different from previous generations).
The important thing to note is that accountants overwhelming agree that a major shift is taking place in the profession and this will require them to change the way that they operate.
2. 82% of accountants are considering recruiting non-traditional employees
This is largely in line with a trend that I had identified within the World Economic Forum’s “Future of Jobs” report (see trend #4 here), so the fact that Sage’s accounting trends report echos these findings likely means that this is a pretty strong indicator that there is a powerful trend taking place at the moment.
Basically, a future-oriented firm can’t just have accounting number-crunchers. Firms and accountants need to employ skills that were typically not critical to have years ago. Amazingly, 57% of respondents believe that the additional skills that they need to hire for are in the areas of technology literary, followed by relationship building skills at 46% and business advisory skills at 44%.
What this translates into is that people expect technology to play a larger role at accounting firms in the future with more and more automation happening. This automation will bring about the need for people to know how to operate this technology and will require accountants to focus on areas other than crunching numbers, namely, managing client relationships (ie. soft skills) and offering more advisory oriented services which are harder to automate.
3. 62% believe that traditional professional development activities won’t cut it
Survey respondents largely believe that professional development activities will need to change as the landscape in the profession continues to shift. Instead of focusing on technical training as has largely been the case with professional development, programs should be developed to educate accountants in other areas such as technology, creativity & strategy, largely stemming from changes in technology and shifting client expectations.
Again, accountants will need to know how to be managers of technology and will need to excel in areas where there are gaps in technology. Soft skills thus become increasingly important.
4. Diversity is critical to the success of a modern firm, yet only 30% say they’re actively seeking to diversify their workforce
This one is a bit surprising. While 90% of respondents understand that there’s a huge cultural shift taking place in the industry, only 30% of respondents say that they were actively seeking to diversify their workforce.
So let me get this straight. Almost all accountants surveyed understand that modernization and innovation is taking place in the profession, yet less than one-third of them are addressing the issue of diversity. This is mind-boggling.
Diversity and innovation go hand in hand. By having a well diversified workforce, you will get ideas, perspectives and experiences from people of all different walks of life. If you only have one monolithic group of people in your firm, you are doing yourself a great injustice.
Want to know a quick way to tell if your team is diverse? Check out the team section on your website…
5. Firms are lagging with regards to digital transformation
The optimistic part of this accounting trends report is that accountants understand change is taking place, which is a good first step. The pessimistic side of things is that most aren’t actually going through the digital transformation required with 25% of surveyed respondents saying they lack the expertise required to be able to do so. This puts them in a state of analysis paralysis.
Additionally, many believe that digital transformation just has to do with embracing new technology. However, as Michael Office, the Global VP of Accountants at Sage, correctly puts it,
“It’s not just about technology. It’s about support and advice. Who can come in and enable business transformation or help transform your processes and the way you engage with your clients?“
To sum it up, firms need to actually start going through their digital transformation and think about it more than just technology.
6. 5 characteristics that will differ the firms of tomorrow from today’s
From Sage’s research, the software company believes that firms of the future will differ in a few ways from the firms of today, namely that they will be characterized with:
- No more manual data entry
- More real time relationships
- More real-time alerts based on financial data
- More proactive relationships
- Higher fees
Sage says that firms should employ these traits within 10 years time. Now that’s just crazy. Firms of today should be, and could be, relatively close to these traits. In 10 years from now, we’ll be in a completely different paradigm shift. So while I agree with these traits, I do not agree with their timing.
I really liked one of the opening lines from this accounting trends report which states that Sage sees, “evidence of the continuing shift from a transactional profession to one focused on partnership and consultancy“. I believe there is likely a place for highly transactional firms, though those are the ones that will need to have unmatched levels of automation in order to remain competitive. For those that aren’t, I would agree that different kinds of relationships with your clients will be required to remain competitive.
Clearly, accountants of today believe that there is a huge shift currently taking place and they understand some of the critical changes that are required to be made, but I am also a bit concerned about whether they will be able to implement the required changes in time, especially with that one worrying statistic about firms actively seeking diversity, a critical component of any modern and innovative firm.
In case you’re interested, you can read the report in full here.