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2023: The year automation makes sense?

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Will 2023 be the year when automation finally finds its place in the accounting world? And will it be at the expense of something more valuable? With his festive reflection hat on, Richard Sergeant goes in search of answers.

14th Dec 2022
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Skills or capacity?

This year has certainly continued the debate on the issue of recruitment and skills in the accounting profession. The recent emphasis on the skills crunch was an interesting read and in particular whether or not new trainees are being given the technical skills they need. 

I don’t think there is a single accounting firm in the UK that isn’t busy or could do with an extra pair of hands on deck. But I wonder if this is as much to do with capacity gap rather than skills. Another session at the AccountingWEB Live Expo revealed research from Steven Cox, Head of Market Insights at IRIS, which showed that the size and shape of the practice world have changed in the last few years. 

In particular, a spike in overall numbers to some 94,000 firms, with most of these at the small and larger ends of the spectrum. One of the conclusions here is that many more people are choosing to start up in practice after consolidators swoop in, some taking a few key members of staff with them. In this case, the ‘squeezed middle’ and larger firms are more likely to feel the pinch. These kinds of needs-must dynamics might actually drive the much-heralded benefits of automation more quickly than simple efficiency or growth.

Will we MTD?

At the heart of the bookkeeping problem with MTD ITSA is the volume of data and the diverse inclinations and habits of clients. It seems increasingly likely that in order to deal with both effectively, the matter of efficiency is going to be key. How do we stay on top, how do we push and pull and prompt and coerce clients, how do we minimise the amount of actual work required to ensure it’s both manageable and profitable?

This surely brings us back to the question of automation. Whether led by practice management systems, ledger products or one of the alternatives, it seems almost inconceivable that unless your clients are very simple (of which there are many) then some burden-easing will be necessary. 

Whether or not MTD ITSA will be executed as planned (at the time of writing April 2024), and announcements here are as hotly anticipated as the TV Christmas specials, we wait to see. However, whatever happens, it is likely to be buying time only. The question of how an MTD service is likely to be underpinned is surely to be on the minds of many through 2023.

Acquisitions 

The merry-go-round of consolidation in the vendor space was very much a feature of 2022. Vendors often buy one another these days on the basis that it is quicker than building a rival and competing in the open market. Of particular interest this year has been with Bright Group and Sage. The former was bolstered by buying first Accountancy Manager and then BTC, making its suite of compliance and workflow tools seem fairly complete. Stitching this together coherently is obviously a strategic aim, along with making its overall offering more cloud-enabled (its flagship payroll product BrightPay is iterating to the cloud in 2023). Together the passing of data, tasks and client communication is surely not too far away. Automation works even better when you own all the pieces.

The same could be said for Sage with Futrli, following hot on the heels of Go Proposal to entice with the prospect of an ‘onboarding to advisory’ solution via Sage for Accountants. 

And let’s not forget IRIS Elements, the project to take the on-premise giant to a new cloud suite for all, with the former Senta practice management system at the heart.

All roads to me seem to be pointing to one thing — pull together and automate.

The year of the business owner

But while this is my prediction, it’s not necessarily what I am hoping for.

I like the prospect of increased automation. I see it as becoming more necessary than anything else, but what I don’t want to lose sight of is the fact that it’s the outputs which are important. 

What I would like to see is 2023 being about getting the best for the business owner. The self-employed and landlord clients are in danger of having to be treated like sausages because MTD ITSA may force their advisers into compliance machines. 

The need to service may overtake any value in the service itself. And if this is the case, then it could be the same for other clients too. With the current economic climate, the pressure on business owners and their families could be acute. And there’s no value in having a solvent business and an insolvent owner.

So, festive reflection hat on. An accountant's and bookkeeper's job is hard enough, here’s hoping that automation can make that better. But not at the expense of the human touch where it’s needed most.

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By Hugo Fair
15th Dec 2022 23:10

I totally agree with "I don’t want to lose sight of the fact that it’s the outputs which are important" ... in the context given here.
BUT, given that the topic is 'automation', it's equally true that the inputs are important!

At the simplistic level - all that automation tools do is to take a set of inputs and pass them to a set of outputs (after varying amounts of validation and transformation into a different format).
And without human 'intelligence' (aka knowledge, experience & that hard to define commodity known as common sense) the instances of 'misunderstanding' by the software go unchecked.

At the risk of sounding like an old cracked (vinyl) record, we are a LONG way away from reliable automation where the software even flags up potential anomalies for humans to review, let alone self-corrects its own errors. There is work being done on this topic (particularly within quantum computing) but it is expected that decades are needed before that is commercially available.

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