Going digital has the ability to change numerous industries, including tax & accounting. But how should accounting firms prepare for digital transformation?
The subject of digital transformation is being discussed virtually everywhere you look. There are statistics on the investments being made and projections on impact it will have on the GDP. But what is digital transformation?
Going digital refers to the move away from analog systems. Digitization in the tax & accounting profession has been happening for decades. The move to document management software, engagement solutions, and online tax organizers are just a few examples.
According to Salesforce, digital transformation refers to the “process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.”
While a portion of the tax & accounting profession transformed their practices while they were digitizing them, the pandemic spotlighted areas of the practice that were still dependent on the old analog system. Clients paying with paper checks and dropping off physical files are just a couple of examples. Where firms had digitized many internal operations, their interactions with clients and talent were still greatly based on physical presence and in-person connecting. This physical dependence made a move to remote work much more challenging for those organizations.
Not surprisingly, digital transformation was kicked into high gear while the world was social distancing. People had to experiment with new, virtual ways to collaborate, conduct business, and interact. As the world gets more comfortable with its preference for virtual engagements, and talent expresses the desire to maintain remote work arrangements, organizations will need to focus on their digital transformation strategies. But how?
To begin, look into the available technology. Cloud technology is perhaps the foundational tool for digitizing work processes. By running operations through the Cloud, clients and accounting professionals can interact virtually and in real-time using the same data. This process also allows people to work when and where they want to, changing the whole paradigm of how we work by enabling this flexibility.
Artificial intelligence, robotic process automation (RPA), the Internet of Things (IoT), mobile devices, and more have all augmented accounting teams’ abilities. For years, staffing capacity has been a challenge for the tax & accounting profession; the pandemic and the increasing number of professionals choosing other jobs or work environments have only exasperated this issue. Implementing these technologies can lessen staff workloads and enable them to perform at their highest and best use. What results from this, of course, is greater job satisfaction by allowing better work/life balance for employees while also enabling them to feel professionally fulfilled by delivering higher value and impact to their clients.
Identifying the focus area
Given all the technology options, the number of opportunities accounting firms have to digitally transform their processes may feel overwhelming. Instead of being paralyzed by the possibilities, firms should first perform a SWOT Analysis (assessing the firm’s Strengths, Weaknesses, Opportunities, and Threats) to determine its current state and that of the business. Having multiple people contribute to the SWOT will help ensure that all parts of the business are taken into consideration.
After completing the SWOT, look at what weaknesses could make your organization more susceptible to threats or prevent it from capitalizing on opportunities. Is the organization fully leveraging identified strengths? If not, what needs to change? The key is to develop action items from the information gathered in the SWOT.
Once you identify the actions, prioritize them. What is the most significant opportunity or threat that needs to be addressed? Again, for many professionals in tax & accounting, anything related to talent is a high priority.
Does the organization need to facilitate a digital transformation to make it the most appealing and accessible for top talent? Remember that compensation alone is not the only draw for talent; surveys have found that staff are willing to leave a job if they are not allowed to work remotely or have a flexible schedule. To make such offerings to new recruits tenable and effective, digital transformation is required.
As you prioritize these actions, be mindful of the scope of the transformation. There are likely interdependencies between multiple actions or ideas to address, so avoid boiling the ocean. Identify where the starting point might be by asking yourself questions such as:
- What will be most impactful?
- Where are the most significant pain points being felt?
- What can be addressed in the next project?
Given the existing workload, many within the tax & accounting profession may feel they don’t have time to do this level of planning — and this is one reason professional service organizations are hiring project managers. The firm leader can set the direction, then a project manager can then gather the data, pull the team together, maintain the communication, monitor the risks, and ensure the project stays within scope. These non-traditional hires alleviate pressure on experienced tax & accounting professionals while also gaining efficiency and building future-ready organizations.
Like many large-scale business evolutions, digital transformation is a journey, not a destination. Just like computers and mobile devices have become commonplace, so too will working and living within digital processes. As technology continues to develop, our processes and expectations will continue to change; some will evolve, and some will completely transform.
Tax & accounting firm leaders should stay aware of what is changing around them, including within other industries, and continue prioritizing what is needed to keep their organization competitive and viable.