Much has been written on outsourcing and its impact on the accounting profession. While everyone has their opinion and beliefs, it's time for all accounting firms to seriously evaluate strategic options that will help transform their service offerings and business model.These strategies should allow firms and partners to take advantage of technology and other resources. Solutions to the issues facing their small and midsized business clients and their owners should be the primary focus. The services and technical skills that most firms have delivered over the past 20 years are either becoming obsolete or commoditized, with shrinking margins. If you don't believe this, take some time and think before you answer the following questions:
* Can someone else provide the service cheaper? (It doesn't matter where in the world they are located.)
* Can technology improve your processes, quality and speed?
* Are the services you offer satisfying the requirements of our clients?
The initial tendency is to be defensive and say, "We are meeting the needs of our clients in an efficient and professional manner. We just completed our best year financially."
But are we as a profession really meeting the needs of our clients? Are firms positioned for the future? In the past, clients were reasonably happy with CPAs offering tax and accounting services. In the future, clients will demand services that are broader-based, and will require accountants who see the "big picture," rather than simply offering specialized skills.
Don't discount the value of specialization, but think more about the demand for the person who can manage relationships and integrate various solutions. Again, the tendency of most CPAs is to gravitate back to increased technical skills versus relationship skills. Daniel Pink, in his recently published book A Whole New Mind, stressed that we are moving from the "information age" to the "conceptual age." Knowledge workers were the core of the information age, while creators and empathizers will be the core of the conceptual age.
A good example of what I am talking about is in the area of tax planning and research. Skilled researchers who utilize technology will be most effective if they have relationship skills, rather than just technical skills. Technology and globalization will impact the services, while the value from the relationship will grow if the accountant can assist the client in identifying requirements and providing world-class solutions both internally and through alliances.
Most firms are starting to think differently due to the lack of qualified personnel and client requests for non-traditional services. The challenge is to get partners and experienced personnel to change during a period of prosperity.
Change typically does not occur without the threat of loss or the potential for a great reward. In my opinion, we are at that point, and firms must make the decision of excellence or mediocrity. The risk increases when firms resist changing processes and utilizing new technology to improve service and reduce time requirements. Specific examples of industry transformation are:
* Workflow systems that allow projects to be assigned, tracked and completed with a reduced amount of partner and review time. Tax returns and other projects can be transferred among firm employees, offices or outsourcers. Some of the companies that have been pioneers in this area are SurePrep, Datamatics, MphasiS, Xpitax and CCH. These applications will only improve, and all are written in a Web-based environment.
* Digital content management systems have grown from the paperless initiative, document management, records management and e-mail management. There are significant challenges that firms must overcome with regard to compliance and changing outdated processes. However, the rewards and improved client service are significant.
* Portals are the future platform for delivering services to clients. This secure environment will provide clients access to documents 24 hours a day. Some refer to this as the "self-service" model. Clients will enter or allow the portal to aggregate information digitally, rather than in a paper format. The financial services and legal industries are already offering these types of services.
The excuse that clients aren't asking for portals can only be addressed by the fact that it is what you don't know that you don't know that costs you a lot of money. Firms that are using portals report that clients love them once they understand the capabilities.
* Future hires should have different skill sets than in the past. Many universities are not changing their curricula fast enough to address globalization. In fact, firms should look at business majors and management information systems candidates who have better information technology skills and a broader-based business education. Training and learning coordinators from leading U.S. firms report that the training time required for personnel with IT backgrounds and database knowledge is much less than for those employees with traditional accounting degrees.
* Training and learning are critical to the attraction and retention of quality personnel. Partners are not exempt from utilizing the tax, accounting, practice management, e-mail and content management systems that are affordable and available today. Attitudes toward systems and teams are of the utmost importance. Rugged individualists will not win in the global economy.
Firms should not wait.
They should develop alliances and relationships with sourcing companies, as well as review their hiring strategies and standards. Don't be afraid to ask for help; you can get there much quicker and avoid many of the risks. The firms that ignore globalization and the current personnel challenges will struggle, while those that adapt and transform will move to higher levels of service and reduce the impact of commoditization.
Think in terms of your current firm and your future firm. The current firm must provide the cash flow for the future firm. How will your firm look in three years? What new services will you offer? What new alliances will you have? How many of your partners will retire? Peril or promise?
The choice is yours, and will be determined by your strategic plan and how well you execute. Simply focusing on charge hours will not be enough.
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