Fix data and connectivity problems before AI accounting tools can deliverby
While new generative artificial intelligence tools have the potential to transform accounting, until the age-old issues of messy data and vendor cooperation are fixed we may find that the promised revolution doesn’t arrive.
We’ve recently been blitzed with new releases trumpeting what the latest generation of artificial intelligence (AI) software will do for accountants, and each new day your fearless technology editor is greeted with news of a new development that will revolutionise the accounting industry.
The likes of Pixie, Karbon, Client Hub and Canopy all get first-mover bonus points for finding accounting firm efficiencies, but is email sentiment analysis the revolution we’ve been promised?
Having lived through innumerable hype cycles, it’s tempting to dismiss any new boom as marketing puff. As our editor at large John Stokdyk recently pointed out, we’ve had at least one version of artificial intelligence play out before us recently, with Pegg, Wanda and co all now consigned to the recycling bin of digital history.
Connecting and embedding
However, what sets this breed of tools apart from previous attempts is their inter-system connectivity – the fact they don’t exist in a vacuum. In the past, what was billed as AI turned out to be an isolated spreadsheet packed full of IF-THEN formulas, or even a less-than-artificial team of outsourced humans.
This time around, AI merchants are using not only their models but also connecting with and embedding into existing technology, such as cloud accounting systems, document management and practice management software, and putting them to practical use. Who wouldn’t want to log on in the morning and find their correspondence neatly dealt with and ready for review in the drafts folder?
But eventually, the technology hype express must meet the cold, hard buffers of accounting reality. In this case, it’s the realisation that the system is only as good as the data it’s connected to.
Sure, you can now draft correspondence to clients about a networking event in the style of a Gilbert and Sullivan light opera, but if your records aren’t up to date how will you know if your libretto has arrived in their inboxes?
Will tech firms risk their defensible moats?
Then there’s the red signal of connectivity. To fully realise the potential of this new tech, you need to find ways to make the systems talk to each other and pass over data.
As anyone who’s had dealings with technology companies will know already, getting them to talk to each other is hard enough, let alone agree on connectivity that could risk their defensible moat for the greater good. Vendors talk a good ecosystem game, until one of the players encroaches too far onto their turf, or they spot a way to move in on theirs.
For a recent parallel, there’s Open Banking, which promised faster and safer access to a rich set of financial data. In some ways, it was a miracle that standards were agreed in the first place, and there have been plenty of efficiencies gained, despite the high-street bank incumbents dragging their feet every step of the way. However, these gains have been hard-won, and herald more of a quiet revolution than a big bang.
While there is huge potential in the new tools coming to market, until these age-old accounting issues of messy firm and client data are fixed and the majority of vendors agree to cooperate, we may well find ourselves in a similar situation to the Open Banking era, with a few new flashy toys that save time rather than the promised whole-scale transformation.