The key trends that will shape 2014
For those able to tear themselves away from tax returns at this time of year, the first weeks of 2014 can be a perfect time to reflect on the peaks and troughs of 2013, and start planning for the year ahead.
Our 2013 AccountingWEB tech champion Paul Scholes also kicked off 2014 with a comment that “The development of new technologies has always brought the biggest pressure to change and provides many predictions but, again, if you close your eyes, or are wrapped up in numbers, then you and your client base (who will, in all probability, match your own inertia) can perpetuate existing practices, well past their sell by date.”
To make sure you don't fall into that trap, we've consolidated all the themes that have been sent our way by accountancy experts and commentators to give you an overview of the key themes we expect to see in 2014:
1. Tough economic outlook
RBS head of economics Stephen Boyle speculated at a conference late last year that 2014 could be the “year of salvation” for the economy. But he warned businesses to expect slow growth rather than rapid acceleration. However, like Paul Scholes practice consultant Carol McLachlan saw the tough times continuing for accountants still doing business in old ways. “Economic growth is here but clients do and will demand more than ever for their fees and expect value for money,” she said.
In a recent CABA blog chief executive Kath Haines added that even when the economy comes out of one of its regular troughs, it can add to the stress on accountants. New recruitment tends to lag behind increased business activity and increasing workloads put pressure on people, creating levels of stress that can have a direct impact on health and general wellbeing. “We are already seeing signs that this is happening and the effects could become stronger as the year progresses,” Haines warned.
2. Gap between firms will widen
Steve Pipe set out a similar theme in his article The gap between firms will widen in 2014. The gap between the haves and have-nots in the profession has been widening in recent years and Pipe expected that trend to accelerate. Austerity will continue to change the rules and make life tougher for clients due to a “perfect storm” of prices increasing faster than earnings, higher taxes, negative real interest rates, less generous pension arrangements and cuts to services provided by the state. The hard truth for accountants, he said, will mean that clients will demand better value for money than ever before.
3. Election will affect tax policy
Simon Sweetman predicted in his blog that tax changes in 2014 will be driven mostly by the imminence of a general election. Attempts to simplify or rationalise the tax system will get nowhere or be left until after the election, he said. Strong showings either for UKIP or “some other weird minor party” could stir up political panic that the government may well try to quell with short-sighted tax reforms. “We shall see the use of smoke and mirrors. One obvious candidate is inheritance tax where (say) raising the nil-rate band to £1m would not make an enormous hole in the public revenue, would be something nice for millionaires, and could be spun by the Mail and the Express as a huge tax cut for middle income people even though it is nothing of the sort,” Sweetman said.
4. Universal credit - a disaster waiting to happen
Speaking of government initiatives, many in the profession have been voicing concern over the government’s universal credit project, which looks like it is beginning to fall apart at the seams. A report by the National Audit Office published in September said the universal credit system was badly managed and poor value for money. More than 70% of the £425m spent to date has been on IT systems, the NAO report said. The Department for Work and Pensions has already written off £34m of its new IT systems and does not yet know if it will be able to support national roll-out. This week The Guardian reported that work on the project was being delayed by departmental infighting on the best way to develop the computer systems. HMRC and the country’s accountants and payroll managers have struggled to meet the burdens and costs imposed by the unrealistic timetable for the government's big welfare project, but the DWP looks like it won't be able to meet its own deadlines. Universal credit already has the hallmarks of a classic government IT failure.
5. Technology trends - cloud first
Given the speed of adoption in 2013, this one hardly counts as a prediction, but Intuit and many other players hailed the cloud as the big buzz for 2014. Xero managing director Gary Turner expected to see a further acceleration in cloud software adoption as web apps catch up and even overtake their PC predecessors in some areas. “In parallel with this we'll also see accountants stepping farther away from PC era hardware and looking to the newer hardware form factors like tablets to support them more in their day to day work. I think we'll see more change in 2014 in both of these aspects than in the last five years combined,” Turner said.
The cloud itself won't be the story so much as how it affects accountants' working lives and behaviour. Steve Pipe reckoned clients are ready for the cloud, but many accountants aren’t. Firms that do not embrace the cloud will be among those who fall furthest behind, while better practices that embrace online collaboration will pull further ahead. Paul Scholes added that the transition to cloud was now a "no brainer". Many still see it as new and risky, "But have they tried it?” he asked.
6. Mobile accountancy on the rise
A quick look at AccountingWEB's mobile traffic stats reflects the continuing migration to mobile phones and tablets, as Xero's Gary Turner predicted. In the past three years, the level of mobile traffic has risen tenfold from 1.4% of all traffic in 2010 to 14.9% in 2013 (see chart below). Carol McLachlan sees personal technology emerging as a big theme 2014. Last year saw a big rise in mobile use due to better availability at reasonable cost, but as our MyFirmsApp/AccoutingWEB survey found, firms for the most part barely dipped their toes into areas such as building smartphone-friendly links into their websites. “2014 will see them doing more exciting things for users,” said McLachlan.
7. Self-help technology and apps
Staying with the mobile theme, McLachlan noted the popularity of apps and technology gadgets to monitor personal health and fitness. She agreed with the CABA analysis that stress will be a real danger for accountants as business picks up. As well as turning to cloud and mobile technology to help them cope with the workload, fitness apps can also help them deal with stress and its physical ramifications and develop personal resilience. This is a very timely reminder during self assessment season, and AccountingWEB will be following it up very shortly with a look at some of bio-feedback tools and calorie checkers such as MyFitnessPal.
8. Smart mobility
As we have noted many times before in our Gadget Zone blog, consumer technology usually filters quite quickly through to the business world. Given Carol McLachlan's advice about tough economic times and personal fitness apps, surely it won't be long before we see more technologies to help companies keep real-time measurements to hand about how they are performing against their targets. Welcome to what Jeremy Roche of FinancialForce calls “a new era of smart mobility”. Mobile tools will let users participate fully in corporate processes while away from the office - for filing and authorising expenes - and will use smartphones and tablets to capture information about people, projects, customers, suppliers, and products. Instant communication tools within accounting applications will let people collaborate more closely in financial processes and share information to productivity gains, he argued.
Do you agree with the above predictions and what do you expect to happen in the year ahead? Is the profession really set for for a year of change-driven stress or will it be just another year of shuffling progression?