The Practice of Now 2018 - Insight and practical advice for today's accountant based on the latest independent research - Sage
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The Practice of Now 2018 Insight and practical advice for today’s accountant based on the latest independent research
Contents 3 Introduction 6 The state of play: What’s new? 11 AI: Here comes the revolution 17 The evolving client and their higher expectations 22 Becoming the Practice of Now
3 Introduction Accounting is a challenging and changing profession. Its continual modernisation over recent decades has directly tracked the growth of technology. Our independent research explores accountants’ attitudes towards this and examines how their clients are changing.
4
Within this report we will learn that nearly all Technology brings clear benefits for accountants, This all-new 2018 edition builds on this with fresh
accountants say their clients demand more, and but they need to learn new skills, anticipate independent research that’s more extensive and We spoke to 3000 accountants
also expect their accountant to provide business the future and reorient their thinking to far-reaching than ever. It uses expert input to bring from around the world
advice. This shifting tide is forcing accountants put their firm ahead—all while anticipating the story bang up to date. We invite you to read
to explore ways to become ever more productive, and adapting to the increasing needs of through the report, comparing and contrasting Commissioned by Sage, Viga carried
freeing them up to spend time becoming their clients and offering competitive service. your own views to those the research has found. out independent research surveying
clients’ trusted advisor. The research shows 3000 accountants from across the globe
Accountants need to create the Practice of Now. Sage believes accountants and their clients
how to accommodate this change, accountants (US, UK, Canada, Brazil, Spain, France,
cannot, and should not, be left behind as
are considering the benefits that Artificial Launched in 2017, the Practice of Now report
technology advances. Accountants have
Australia, Ireland) to understand what
Intelligence (AI) can bring to a modern practice, set an incredible precedent by consulting the landscape for accountants looks
a duty to themselves and their clients to
with two thirds of accountants turning to AI accountants across the globe to tap into their like today and will look like tomorrow,
harness change, evolve their practice, and
for automation. Fewer repetitive tasks and current thoughts and concerns—and to find offering practical advice on how today’s
bring about exciting new possibilities.
fewer mistakes makes for better interactions out how they anticipate their practice looking accountants can continue to thrive
with clients and improved service offerings. tomorrow. Expert insight then examined
and become the Practice of Now.
the scope and impact of changes being
brought to practices all around the world.
5
83%
of accountants say their clients expect
42%
of clients expect their
more now than five years ago accountant to provide business advice
Becoming the This is why
Practice of Now 2/3rds
of accountants are turning
to AI for automation
Fewer repetitive tasks
and fewer mistakes
means…
…better interactions with clients
and improved service offerings.
6 The state of play: What’s new? Comparing some of the findings this year to what we learned last year shows how the world of accountancy has changed and evolved.
7
Let’s start with some good news
56%
Over half of accountants say that practice
revenue has increased in the last 12 months, “ Those prepared to embrace new ways
with only 12% seeing a decrease. of working and evolve their business
model really are reaping the benefits.
2017 saw difficult trading conditions for any kind Early on accountants were distracted by
of business, so that the majority of accountants the suggestion that offering additional
are bucking the trend is good news. This is services could take away from their core
despite the fact many accountants have been accountability of offering taxation services
concerned about the rise of client accounting and advice. But as the cloud has become
software packages and how a “DIY approach” mainstream, accountants are realising
of accountants say
could drive clients away. As the 2017 Practice there’s more opportunity than there is risk.”
of Now report showed, 38% of accountants
saw emerging technology as the biggest Jennifer Warawa
threat to the accountancy profession. EVP of Partners, Accountants
revenue is up
and Alliances at Sage
In fact, former accountant and EVP of Partners
and Alliances at Sage, Jennifer Warawa, puts the
This is supported by another data point from
rise in revenue at the feet of cloud software.
this year’s research that stands out compared
to last year.
8
67%
of survey respondents
have their heads
in the cloud
The clear majority of accountants believe “Accountants adopt technology in a pragmatic way
that cloud technology makes their role and not in an ideological way,” says Klaus-Michael
easier by enabling collaboration with Vogelberg, Chief Technology Officer at Sage. “Once
clients and improving service offerings. a technology delivers value I have observed that
accountants quite happily embrace it. At the end
Not only that but over half of accountants
of the day it’s all about productivity. It’s about how
(53%) have adopted a cloud-based practice
you can actually improve the client experience.”
management solution. The long-heralded
cloud revolution has clearly happened But Jennifer warns it isn’t just about the
and it’s positive for the industry. technology.
This should be seen in the context of offering
service excellence, which the survey suggests
is just as much a priority as it was last year. “ It’s very much a cultural thing. Adopting
cloud technology drives a different culture in
Amongst many other benefits, cloud technology
a business and unlocks new opportunities.
allows an accountant to be connected to
Initially people think the ways of working,
their clients 24/7. As a result, the accountant
and workflow, are all separate. But it’s
has an “always-on” view of client data. This
intrinsically tied together. And I don’t think
can make tasks such as preparing quarterly
this was what accountants anticipated.”
or yearly returns much easier, but it also
allows the accountant to watch for problems Jennifer Warawa
and provide timely advice to the client. EVP of Partners, Accountants and Alliances
at Sage
9
Let’s look at the challenges
accountants tell us they are facing
40%
of accountants
feel less confident
Compared with 12 months ago, accountants say professional development. It’s important
they feel less confident about the prospects for to carve time out of your day to get a
their practice. broader view of what’s going on.”
Just 28% feel more confident about their Recent times have seen some dramatic
prospects. changes within the world of accountancy
and it’s easy to see how issues such as Brexit
“Don’t bury your head in the sand,” advises
or economic uncertainties might dent the
Jennifer by way of a cure. “I find some
confidence of anybody with a central business
accountants feel they haven’t time for
role, such as an accountant. However, it
things like going to networking events
seems that accountants are also feeling
with other accountants or undertaking
pressure from within their own industry.
10
67%
An overwhelming majority of accountants feel that
the profession is more competitive than ever, and “ It used to be that my accountant was down
only 7% disagree. the street or across town. Today, people want
an accountant who can really serve their
Accountancy as a profession is more competitive business needs and they’ll go all the way
today than at any time in history and is being across the country, and in some cases to
pushed by increasing and evolving client another country. The playing field has been
demands. How an accountant responds levelled and competition is everywhere.”
of respondents feel
to the challenge of competition and client
demands is ultimately going to determine their Jennifer Warawa
success or failure over the next 5-10 years. EVP of Partners, Accountants and Alliances
at Sage
competition is an issue11 AI: Here comes the revolution The world of accountancy is changing as a new revolution takes hold. Accountants are being freed from the administrative burden of data entry and entering a world where administrative tasks are becoming invisible.
12
39%
of accountants
describe themselves
as early technology
adopters
The top reasons for adopting new
technology are time and efficiency (64%) “ If it happens in the world of consumer
and improving service quality (44%). technology it follows in business or enterprise
technology soon after, because the lines
Kriti Sharma, Vice President of Bots between business and consumer technology
and AI at Sage, suggests that the boom are blurring. We are doing everything with
in technology we all use daily, such as the same devices – and demand the ease
mobile phones and tablets, is at least of technology we use in our personal lives
partially responsible for this figure. to be present in our working lives.”
Kriti Sharma,
VP of AI at Sage
But it’s the next survey finding that challenges
any belief about conservative attitudes amongst
accountants.13
66%
of accountants would
invest in artificial
intelligence (AI)
The clear majority of accountants Netflix recommending movies to you,
would invest in AI if it automated time- to enhancing cruise control so that cars
consuming and repetitive tasks. drive themselves on motorways.
This is one of the biggest changes compared While a robot in every workplace tending
to last year. In 2017, 68% of accountants to its primitive photocopier ancestor is still
predicted their role would change through science fiction, machine learning is one of the
automation, while 86% said they would be underlying components of modern AI that
happy for technology to make administrative describes the ability for computers to essentially
elements of their jobs invisible. In 2018, program themselves by making their own
anticipation has turned into intent. predictions based on probability. It’s having a
transformative effect across many industries.
Once just a hazy mirage on the technological
horizon, AI is now a reality with the world of
business, just as it is within the consumer
world where it’s behind everything from14
49%
Nearly half of accountants would most like to Candidates for automation already include
automate number crunching, data entry, email assigning incoming bank statement entries with
and diary management, followed by interaction the correct nominal codes—via training the
with clients to process simple queries (18%). machine becomes able to predict what codes
should be used—but in the near future the power
While AI offers powerful automation capabilities,
of AI to learn means it will become involved with
Kriti suggests accountants might want to broaden
operations like analytics and report creation.
their horizons.
of respondents
For example, software will be able to predict
a client’s cash flow based on the company’s
“ Accountants are seeing AI as purely
previous behaviour. Based on self-generated
an automation tool, but the number of
want to automate
data, AI will be able to make predictions and
accountants who’d invest in AI will increase
decisions. This isn’t limited to client data.
over the next two to three years as they start
By examining things like seasonality data,
to see the true value of intelligence services.
AI can help with practice management.
For example, accountants will be able to scale
the small stuff
their operations by using AI to review millions AI and automation aren’t just desirable
of transactions that would have traditionally because they make life easier. Research has
taken hours to do manually - spotting suggested that the tedium of repetitive tasks
anomalies and making recommendations.” can lead to a high staff turnover, introducing
additional costs for a practice such as
Kriti Sharma
recruitment and training. Automating these
VP of AI at Sage
processes makes complete business sense.15
55%
of accountants plan
to use AI in the next
three years
The majority of accountants plan to In other words, as with cloud technology, AI
use AI to automate tasks and improve “ Over the next two to three years we’ll see brings with it the fundamental reason why
the way they run their business. the expansion or the applications of AI many enter the profession of accountancy –
becoming much broader,” she says. “And the ability to become a client’s trusted advisor,
Kriti suggests that this timeline is conservative this will be at the front end, where users rather than merely a number cruncher.
and expects that, in fact, many accountants work, because at the moment there’s a lot
are likely to be already using AI within their of magic happening behind the scenes.” “It’s not about AI working in isolation and
business without even realising it. The big gaining human level accuracy,” adds Kriti, “Or an
changes coming soon are likely to be more to “ Everything around us is getting smarter. accountant trying to do everything by themselves.
do with where and how we experience AI. We’re getting very accustomed to looking at It’s about combining the two together. For
the future and getting insights. Clients will example, AI can flag the anomalies, saving time
start to expect more predictive analytics in and resources, making the accountant more
real time. Accountants have to respond.” productive. Man and machine working together.”
Kriti Sharma
VP of AI at Sage16
The accounting
smart assistant
On top of machine learning there’s another What’s most astonishing about Pegg is how it
AI technology infiltrating the business world: introduces “invisible accounting”. It abandons
Smart Assistants. accounting terminology and concepts that
have been used for centuries. The user
Kriti Sharma’s team at Sage is behind the world’s
has no need to be aware of double-entry
first accounting smart assistant, ‘Pegg’, a smart
bookkeeping, for example. Their accounting
assistant powered by AI, designed specifically
requirements are pared down to just a handful
to make admin invisible. Pegg can keep a real-
of questions: “How much money do I have?”,
time account of expenses, track incoming
for example, or, “How much am I owed?”
payments, and automatically balance books. The
more individuals interact with Pegg, the more It isn’t hard to see similar smart assistants
intelligent the smart assistant will become. one day coming to all accountancy practices,
and acting as a first line of contact for clients.
Indeed, some larger businesses including
accountancy firms are already experimenting
with using smart assistants in this way.17 The evolving client and their higher expectations With the Accountancy profession being more competitive than ever, the only sane response in dealing with a competitive environment is to double-down on the one thing a practice should always prioritise: serving their client base.
18
83%
An overwhelming majority of accountants “With everyone that’s providing a service today,
think that clients expect more from them today we expect more. We expect more attentiveness
in terms of services and resources than they did and we expect our advisors to be on hand.”
five years ago.
There is more contact than there has ever
Former accountant and Director of Accountant been. This presents space for the client/
Partners at Sage, Cameron John, places this accountant relationships to evolve and grow,
finding within the wider context of an increasingly and a new generation of business owners
of accountants say
commercial and consumer-driven society: are coming to expect nothing less.
clients expect more19
42%
of clients want
more than number
crunching
Nearly half of clients ask accountants to One of the largest worldwide demographics,
provide business advisory services over and surpassing even Baby Boomers in some
above accounting, compliance and tax work. countries, is the Millennial generation.
Defined as those born roughly between 1983
Cameron suggests businesses can either
and 2000, Millennials are rapidly defining
see this growing requirement as a carrot or
the new normal when it comes to business
stick, but in either case there’s no ignoring
practices—and business requirements. Having
it: “If your practice doesn’t transform then
grown-up with technology, they don’t even
the competition is going to eat you up, so
assume it will be part of their business life. It
you’ve really got to make the most of this.”
simply is. Their business plans are more likely
to start by registering a website domain, for
“ Gone are the days of “finish my accounts and example, than registering a limited company.
then send me a bill” – with no interaction. Our survey shows many accountants are
This is a service industry. It’s all about prepared for this. Intelligent use of technology
relationships and that’s what businesses now can meet this need and accountants aren’t afraid
are expecting.” to use it.
Cameron John
Director of Accountant Partners at Sage20
42%
of accountants get
44%
of accountants
why technology say technology
is important has benefits
One of the top reasons for adopting new The biggest benefit of technology is that it gives
technology is to attract new clients (42%), with “ Any businesses that is looking for an accountants access to information and helps “ Technology will not make for better
other reasons stated as time and efficiency accountant is not going to pick-up an them provide insight and advice to clients. interactions with clients and improved
(64%) and improving service quality (44%). accountant that isn’t using the cloud. service offering on its own. It affords
And people aren’t switching accountants Through the use of technology, accountants accountants the opportunity to have
Technology can take a practice in a wholly to try and find somebody who’s are able to go beyond being a service called better interactions with clients and
different direction and provide unique using older technology. Accountants upon once a year, or once a quarter. Technology an improved service operation.”
benefits. Jennifer Warawa points out that have to step-up to the plate!” nudges clients towards becoming “customers
businesses and individuals today are very for life” and allows accountants to potentially Jennifer Warawa
tech savvy—and anticipate finding this same Jennifer Warawa provide support 365 days of the year. EVP of Partners, Accountants
awareness and acceptance everywhere else. EVP of Partners, Accountants and Alliances at Sage
and Alliances at Sage21
Heads in the cloud
67% of accountants believe that cloud technology
makes their role easier by enabling collaboration with
clients. With 53% having already adopted a cloud-based
practice management solution.
The Practice
Artificial intelligence
More than half of all accountants plan to use
artificial intelligence to automate tasks and
of Now in 2018
improve the way they run their business. Letting
technology take care of the manual, repetitive
tasks frees-up the accountant’s time.
Competition
Empowered by artificial intelligence and with the cloud on their 67% of accountants feel that the profession
side, the Practice of Now has a laser-like focus on becoming is more competitive than ever. Standing out
the client’s trusted advisor and improving service offerings. by offering a greater range of services and
business advice has never been so vital.
Advisory services
83% of accountants think that clients expect more
from them today in terms of services and resources
than they did five years ago. Keeping-up with
evolving client needs should be a priority for all
practices.
Service excellence
Accountants remain focused on using technology
to provide excellent service to clients, with the
majority saying they want best-in-class technology
to offer the best services to clients.22 Becoming the Practice of Now There’s a message from this year’s research and it’s simply that smart accountants turn to technology to drive improvements to their businesses, and to create the space to become time-efficient business advisors for their clients.
23
In the same breath, technology is also driving ‘Technology drives the industry’ is a truism of
those client’s expectations and demands. “In the near future, if a task is highly repetitive, 30 years making, of course, since at least the “ We should all be turning to technology.
Meanwhile the technological onslaught the chances are that it’s going to be invention of the desktop computer. However, Businesses will get more detailed and
elsewhere, such as within government tax supported by a machine. But accountancy recent technological advances have brought, more informed insights. But it also makes
offices that are increasingly demanding and compliance will not necessarily get any and continue to bring, specific and significant relationships better and stronger because
electronic filing, shows no sign of slowing. easier. The bar is continuously rising. There benefits to accountants that are redefining businesses succeed when they get advice
will be a significant continuous increase in their work and even their purpose. It falls to the from accountants more regularly.”
the sophistication in accountancy tasks.” accountants to grasp these opportunities and Cameron John
Klaus-Michael Vogelberg to become a modern day uber-accountant. Director of Accountant Partners at Sage
Chief Technology Officer at Sage24
In recent years accountancy practices have We have seen throughout this report that
seen this process occur with the power of cloud technology is only the primary enabler
computing. They have seen the technology for accountants, freeing up valuable time
drive through not just a technological or alerting the accountant to potential
change but also cultural change within their problems that could prove costly both for
business that has led to increased revenue. their practice and their customers. However,
to truly become the Practice of Now, today’s
And clients are where the focus should be.
accountant must fulfil their half of the deal
Now that accountants are seeing the same
and follow through with better interactions
technological change happen with AI, which is
with clients, and improved service offerings—
simply a continuation of the cloud and mobile
paving the way to continued success.
revolutions that came before, they again see
their time freed-up to become the valued and
trusted advisor they’ve always aspired to be.
“ Accountants were originally concerned
that technology was going to take away
from their core service offerings, but
what it’s actually done is free them up
to do more higher value services for
clients. They’re now doing what their
customers always wanted them to do.”
Jennifer Warawa
EVP of Partners, Accountants
and Alliances at Sage25
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