Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm Today

Key Contributor:

Randolph (Randy) P. JohnstonCEO and FounderNetwork Management Group Inc. and K2 Enterprises

2 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

3 Technology and the talent gap

4 The workplace of the future 5 Measuring what matters to your people – with analytics

8 Theseedsoftomorrow’saccountingfirmarebeingplantedtoday

9 About CPA.com

9 About XCM

Table of Contents

3 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

The unprecedented accounting talent shortage is atopconcernforallaccountingfirmswithnon-partner professional employees. While the number of accounting graduates is up approximately 50% from 2005 to 2017, the number of CPA exam candidates has remainedflat(ataround40,000)forovertenyears.*Thisflatsupplyofcandidatesmakesithardtostaffthe positions that are the heart and soul of a CPA firm–promotableassociates,seniorassociates,andmanagers.

Inresponsetothischallenge,manyfirmshavegottencreative.Today,theyaredeployingarangeofstrategiestocontinuetogrowandthriveinthemidstofthetalentdrought, including: • Increasingstaffandteamefficiency,and

effectivenessonengagements• Hiringremote,seasonal,andnon-credentialed

employees• Leveragingmoderntechnologyasacompetitive

advantage• Using offshore outsourcing for some engagements• Increasingstaffsalariesandbenefits• Eliminatingunprofitableengagementsandreplacing

themwithmoreprofitablework

While these approaches can play a large role for accountingfirms,theyalsohavelong-andshort-termimplicationsonfirmculture,riskmanagement,

andprofitability.Inthiswhitepaper,we’llfocusonthe impact of technology on talent – today and in the workplace of the future.

When asked to identify their top three challenges, respondents in the 2019 Accounting Firm Operations andTechnologySurveyidentified“recruitingandretention” as the single most common challenge (28.8%),asshowninFigure 1 on page 4. In fact, this concernrankedamongthetopthreeineverycategoryoffirmswithmorethantenemployees.Itwasthetopconcerncitedforbothmedium-sizedfirmswith11-50staff(40.6%)andlargefirmswith51-100staff(50.0%),anditwastiedforthird(with“raisingprofitability”)amongextra-largefirmswith101+staff(28.1%).

The challenges to recruiting in this market are only gettingmoreacute.Whilethetop100firmshaveenough employees to create strong internal training programs,smallerfirmslackthescaleneededtocreate these programs internally. Recruiting is most challengingatfirmswithbetween11-50and51-100staff, where recruiting and retention was cited as the topconcernbydouble-digitpercentagesat40.6%and50.0%respectively.Thesurveyalsoreportedthatthetoptechnologychallengecitedbysurveyparticipantswas“workflowandefficiency”.

Howcanfirmsaddressthesechallenges?Whiletheyhavemanydifferentoptions,technologyisatthetopof the list for many, offering practical ways to schedule andperformworkmoreeffectively.Today’stechnologysolutionscanautomatethetime-consumingprocessof exchanging data between different tools, decreasing theamountof“busywork”requiringhumanattentionand increasing the capacity of staff to perform higher-valuetasks.

Technology and the talent gap

*Data from the AICPA Examination Division

4 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

What Are the Top Three Challenges of Managing Your Firm Today? Topfiveresponsesoverallandforsegmentswithmorethan10employees

Change is hard – especially in the accounting profession, which has seen its share of technology trendscomeandgoovertheyears.Firmleaderssimplymaynotseetheneedtoshifttried-and-truework processes to experiment with the latest tools and technologies, preferring instead to stick with a single software publisher’s suite of applications.

Buttheadventofcloud-basedsolutionsisforcingtheindustry to rethink the old ways of doing business. Thesesolutions(suchasMicrosoftOffice365,MicrosoftPowerBI,GoogleEnterprise,andSalesforce)haveenabledanewapplicationstrategy:usingintegrated, best in breed solutions. That’s largely becausethesetoolshavestronginterfacetoolsforprogrammers – application program interfaces, or APIs–thatmakeiteasierthanevertodevelopcustominterfaces and data integration capabilities. For example,firmscanuseAPIstoselect,assemble,and

integratetheirown“techstacks”–atrulycustomsuiteofsolutionsthatmeetthespecializedneedsofafirmand its processes.

These capabilities are only getting more powerful. API-focusedeffortssuchastheOpenDataInitiative(ledbyMicrosoft,SAP,andAdobe)areseekingtofacilitateeveneasierdataintegrationandreportingacross multiple platforms in the future.

Willyourfirmcreateitsown,customtechstackusingopensolutions?Increasingly,thequestionisn’tifyouwill do so – but when.

Thepotentialbenefitsarepowerful.Byfurtherautomatingandcustomizingtheirbusinessprocesses,firmscanseizearareopportunitytonotonlyoptimizetheirownbusinessprocessesandtools,buttoadvisetheir clients on how to do the same.

The workplace of the future

2019 Overall (All Respondents)1. Recruiting and retention

(28.8%) 2.Raisingprofitability(25.3%)3.Cybersecurityanddata

privacy(25.3%)4.Attractingnewclients(22.7%)5.Offeringvalue-addedservices

overandabovecomplianceofferings(22.7%)

Medium-Sized Firms (11-50staff)1. Recruiting and retention

(40.6%) 2.Raisingprofitability(26.1%)3.Cybersecurityanddata

privacy(24.6%)4.Attractingnewclients(23.2%)5.Driving/implementingchange

(21.7%)

Large-Sized Firms (51-100staff)1. Recruiting and retention

(50.0%) 2.Offeringvalue-addedservices

overandabovecomplianceofferings(30.0%)

3.Raisingprofitability(26.7%)4.Identifyingopportunitiesfor

practiceimprovementandcostsavings(26.7%)

5.Communicationinthefirm(26.7%)

Extra-Large Firms (101+staff)1.Cybersecurityanddata

privacy(37.5%)2.Driving/implementingchange

(31.3%)3. Recruiting and retention

(28.1%) 4.Raisingprofitability(28.1%)5.Offeringvalue-addedservices

overandabovecomplianceofferings(25.0%)

Figure1:TopChallengesFacingFirmsTodaybySize

1Source:6thAnnualAccountingFirmOperationsandTechnologySurvey,©2019AdeptPractices,Inc.,availableatCPATrendlines.com.

5 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

Measuring what matters to your people – with analytics

Automation is a key component of the workplace of the future.Whattrajectorywillaccountingfirms’pursuitofautomationtake?AsFigure 2 shows, process tracking isonlythefirststep.Fromthere,expectfirmstobeginusingrulesandoutsourcingforsimpletasks,movingonto more robust automation reinforced by learning – and then,ultimately,trueAI-drivenreasoning.Inthenot-so-distantfuture,morework–andmoresophisticatedtypes of work – will be automated. The accountant of thefuturewilldolittle(ifany)dataentry,focusing

insteadonmanagingthereal-timequalityofacontinuous process, performed by both humans and machinestoserveclients.

Inthisenvironment,firmsthathavenotadoptedtoolswith strong APIs that can be integrated into a coherent application stack will struggle to progress to the next steps – some of which are already beginning to appear inleading-edgeworkplacestoday.

Howcanfirmsdelivercoachinginnearrealtime,sothattheirpeopledon’thavetofailatataskinordertolearnwhattoavoid?Thisisakeyaspectoftheworkplace of the future, and data sets will play a huge role in making it a reality. Just as important, data can be used to help keep top talent challenged, learning, and happy–throughreal-timeperformanceinsights.

Advanced,integrated,workflowmanagementsystemswillbethevehiclesforthesedata-driveninsights.Scheduling,clientrequestmanagement,portal,workflowtracking,deepanalyticsreporting–thesearealltoolsforreducingbusyworkandprovidingenhancedaccountability,flexibility,andtransparencytotheentireteam,andtheycanallbehandledbyworkflowmanagement systems.

PROCESS TRACKING

Worktrackingandworkflowmanagementcreatesanintegrated,transparentworkplace,withkey

performanceindicatorsforallmajorappsandprocesses

RULES AND OUTSOURCING

Repetitive,low-valueworkisautomatedwithrules-based

businessprocessmanagementorisperformedusingoffshore

outsourcing

LEARNING & AUTOMATION

Artificialintelligenceandroboticprocessautomationareusedtocreateandtrainbotstoperform simple repetitive tasks

inaprocesssuchasthoseoutsourcedinthepreviousstep

REASONING

Morecomplexprocessesarefurtherautomatedwithouthumaninputusingmachine

learningandAI.Interfaceslikechatbotsprovidecontinuous

real-timeanalysisandreportingofproblemsasthey

begintooccurFigure2:Thefutureworkplaceislikelytorelyonthiscontinuumofemergingworktrackingandautomationtechnologies

6 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

Anotherimportantpieceofthefuturepuzzleishowfirmscanusedatasetstodelivercoachinginnearreal time. It’s also critical that you keep your top talent – your stars – challenged, learning, and happy, and thebestwaytodothatistoprovidereal-timeinsightsinto performance. Figure 3 shows a dashboard from XCManalyticsasaService,whichsummarizestaxreturn tasks with key operational data, including number ofjobsbystatus,comparativestatisticsontimerequiredtoperformdifferenttypesoftaskscomparedto the prior year.

Asthesestatisticsclearlyshow,thereviewprocessatthisfirmhasboggeddownwhencomparedtotheprioryear’s actual performance, especially for unranked and difficultreturns,andmayindicatethatthequalityofthereturn preparation is also down compared to the prior year.

Itissaidthat“whatgetsmeasured,getsmanaged,”andaccountability and transparency are an important part ofanystrategicinitiative.Thesimpletaskoftrackingand reporting on performance compared to goals makesitcleartoeveryoneintheprocesshowtheirperformance measures up against expectations, and keeps the entire team accountable for their results.

Figure3:Dashboardswithdeepanalyticsprovidereal-time,actionablepracticeintelligencetoyourteam.(Images©2019XCM®Solutions)

7 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

A good example of this can be found in Figure 4, whichshowsaninteractivebusinessdevelopmentdashboardfromXCManalyticsasaService.Thistoolprovidespartnerswithreal-timedetailsonhowtheyareperformingontheirannualbusinessdevelopment

goals.Byprovidingtransparent,real-timereportingagainst goals, it is easier to make and justify decisions aboutwhoshouldleadbusinessdevelopmenteffortsfor a practice area, or who should be promoted from seniormanagertoequitypartnerstatus.

Figure4:Abusinessdevelopmentdashboardkeepspartnersaccountableforachievingsalesgoals.(©2019XCMSolutions)

8 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

Automationisbeingdiscussedanddebatedinvirtuallyeverymajorindustry,butfewaremorelikelytobenefitfromautomationmore,andmorequickly,thanthoseinthe accounting profession. That’s because automation isbestappliedtorepetitivetaskslikethosefoundthroughoutaccountingprocesses.Thisevolutionwillundoubtedlyhaveanimpactonaccountingstaff.

At minimum, the accounting workplace of the future willalmostcertainlyrelymoreheavilyonautomationthanisevenavailabletoday.Practicesusedtodaybyleadingfirms–suchasautomatedintegrationsbetweenbest-in-breedapplicationsandcomprehensiveperformance analytics – will become the standard forallapplicationsusedbyfirms.Justasthe10-keyadding machines and typewriters of the 20th century havelargelybeeneliminatedfrommostfirms,thework of the future accountant may not incorporate many of the tools we use today. The tools of the future will incorporate technologies like blockchain, robotic processautomation,artificialintelligence,andmachinelearning – and they will change our work in ways we cannot yet comprehend.

Firms looking to compete in the workplace of the future needtoolswhichwillhelpthemthrivetoday,whilealsopositioningthemtotakeadvantageofthenew,data-drivenfuture.

Whatcanfirmsdotodaytoprepareforthisfuture,andto make sure that they’re well prepared to attract and retainthetalenttheywillneed?

Here are three of the best places to start:

Adoptreal-timecloud-basedworkflowtracking systems with strong APIs sothatyoucancreateoptimizedprocessesandincreaseyourfirm’scapacitybydoingworkmoreefficientlyandeffectively

Assembleanintegratedstackofcloud-based best in breed applications that meetyourfirm’sspecificbusinessprocess needs today, that can be integrated with other tools in the future

Createaccurate,integrated,real-timeperformance analytics so that your entire team can know where they stand against their goals on a continuous basis

Regardlessofwhereyourfirmisonitsjourneytoamoredata-drivenandautomatedfirm,thereisapressing need to begin the journey immediately. The rate of technological change will continue to accelerate, andfirmswhoignorethemarchofautomationmaybeovertakenandmadeobsoletesoonerthanexpected.

Theseedsoftomorrow’saccountingfirmare being planted today

9 Creating the Accounting Workplace of the Future: Address the Top Challenges of Managing Your Firm

Learn more: CPA.com/WorkflowCall:781.356.5152

About XCM

XCMoffersacompleteproductivityenablementandworkflowplatformthatempowersyoutomanagealltypes of work— within all departments, acrossmultipleoffices.

It’sanopenplatformsystemthatworkshorizontallyacrosstax,accounting,finance,audit,andoperationsapplications. XCM manages millions of processesper year, enabling professionals to complete more work,inlesstime,withgreaterquality.Ourdeviceandbrowser-agnosticcloudsolutionsofferreal-timeanywhere, anytime access to work.

Thoughweintegratewithseveralpopulartaxandaccounting packages, the real payback is through your greatest asset — your people. XCM is the onlyproductivityenablementandworkflowplatformendorsed by the AICPA, and complies with the controls andapplicablecriteriaoftheAICPATrustServicePrinciples.

Formoreinformation,visitXCM and stay connected on Twitter and LinkedIn.

About CPA.com

CPA.com’s mission is to empower CPAs for the digitalagebyprovidingtargetedtechnologysolutions,educationandbest-in-classstrategicresourcestohelppositionCPAsandtheirfirmsforsuccessintoday’s digital world.

CPA.com’spartnershipwithXCM,aleadingproviderofworkflowautomation,providesCPAsaprovenpartnerthat can expertly consult on business processimprovementtoachieveproductivityenablementviaworkflowautomation.XCMhashelpedmorethan34,000usersrealizethevalueofautomatingworkflow.

Explore the resources CPA.com and XCM offer, including white papers, success stories and educational webinars on how to build a fully automated,end-to-endworkflowinyourfirmandgetmoreoutofyour human capital. CPA.com is a subsidiary of the AmericanInstituteofCPAs(AICPA),theworld’slargest member body representing the accounting profession.Formoreinformation,visitCPA.com and stay connected on Twitter and LinkedIn.