How Accountants Can Survive Digital Disruption: ICAA

Accountants needed to create a digital strategy, consider client adoption of technology and move 100 percent of internal systems to the cloud recommended Tim Gullifer, president of the Institute of Chartered Accountants and partner of Deloitte Private, at Xero’s national customer and partner conference earlier this month.

Other advice to firms included “onshoring” low-value compliance services, removing duplication of workflow processes and eliminating capital IT expenditure on servers.

The first extract from Gullifer’s speech, published on BoxFreeIT yesterday, outlined the threats and opportunities facing accountants. In this second extract Gullifer gave advice to accountants on new, digital-aware business models and how they can reduce operational costs.

Tim Gullifer, ICAA

The key questions for our profession are: how is digital disruption affecting ours and our clients’ organisations?

And how well are we responding to minimise the threats and maximise the opportunities presented by this change?

Whether you are delivering goods or services online, recruiting new talent via LinkedIn, developing a mobile app or ditching the document retention department, you’re already experiencing the upside of digital technology.

In some ways, today’s innovations – broadband, smartphones, the cloud, the ability to analyse complex data sets, social media and other tools that make it possible to digitise business processes – are just extensions of the computing and online advances of the past few decades.

Yet it is a mistake to see the digital revolution as purely a function of technology, rather than one of business evolution.

Even as extensions of existing technologies, these innovations are powerful, pervasive and have multiple direct impacts.

Digital reduces barriers to entry, blurs category boundaries, and opens doors for a new generation of entrepreneurs and innovators. This is what we call the digital disruption phenomenon.

The digital potential for our sector is huge. There are many dimensions which have been game changing for the way we work and will continue to revolutionise the profession.

As I mentioned, these technology innovations range from personal computers, the explosion of packaged software, the internet, email, IT outsourcing, mobile technologies and apps – and more recently social media and the cloud.

So we’re in the thick of it. What to do?

There are three primary responses we can implement to minimise threats posed by digital disruption and, just as importantly, to maximise our digital disruption.

The first is reshaping corporate strategy.

The second is replenishing revenue streams – building new sources of across segments, geographies and business models as legacy streams dry up in the wake of digital disruption. The cloud isn’t just about increasing efficiencies, it is also about supporting a brand new business model . As some companies look to spin out non-core functions, new opportunities arise to bring together previously uneconomic capabilities.

The third is recalibrating cost structures – making changes in terms of people, supply chain and overheads to better control costs and compete with digitally powered, low-cost newcomers.

Each of these primary responses have nine applicable levers that we can pull. Let’s take recalibrating your cost structure for example.

One of the most profound business challenges posed by digital disruption is that new digital solutions have substantially lower cost structures than incumbent systems.

To remain competitive, our profession must recalibrate how we approach the three principal drivers of cost. The cost of our services to clients, staff costs and administrative overheads.

So how do we respond to recalibrating our staff costs?

We can enhance recruitment in multiple ways – using online search engines like Seek and My Career we can post positions for candidates to search for roles.

We can promote our employment propositions and find people using Facebook, LinkedIn and Twitter.

My firm for instance uses these three networks extensively to tap into the high quality of networks of its own staff and alumni to find candidates.

We use them to encourage candidates to ask staff about the experience of working with our firm. We developed an app called “Find me at Deloitte” and have staff link it to their Facebook pages.

This has reduced the money we spend on conventional recruitment techniques by 80 percent in the past four years.

We’ve also found that the candidate is more engaged, because only engaged employees will refer their networks to us for employment offerings.

Plus the engaged employee earns $5,000 for every person hired. But they both must still be employed after six months. Its not Find and Replace me at Deloitte.

The second one is online training which allows organisations to reinvent conventional ideas of training and information sharing.

At the Institute, our Chartered Accountants Program, where we train our new Chartered Accountant members, has now transitioned to an online platform.

All modules are now delivered through a blended model of online and face-to-face. We are now delivering the CA program to Malaysia and will soon be looking at India and China.

By using the relatively cheap and easy to implement internal collaboration and communications tools now available, companies can increase the exchange of knowledge among staff, foster internal networks and unlock the huge reserves of tacit knowledge residing with the business.

There is significant potential to use digital technologies to access talent in offshore locations for back office and other tasks.

At Deloitte we have been doing this for some time and we now employ 18,000 employees working in Hyderabad providing back office and front office solutions in tax return preparation, and financial statement audit verification and accounts preparation, along with other administrative areas of marketing communications and business development. Of these 18,000, 3,000 work specifically for the Australian firm.

Our Staff in US India work 24/7 for all Deloitte offices worldwide on three shifts as the sun moves. Xero is our solution; In fact I call it on-shoring not off-shoring.

So what does this mean for the accounting profession?

It means that the profession has before it an opportunity to reinvent itself in the digital economy – for firms and practises to transform, and in relation to clients, shift from being compliance-focussed to becoming creators of high-value services and support.

The very nature of accounting is changing drastically. Once only about crunching numbers, the profession today involves more technological abilities and out-of-the-box thinking.