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Automation and the digital practice: What do they really mean?


Richard Sergeant outlines his challenge to look at two of the biggest buzzwords of the accounting technology world and is looking for your views and opinions.

18th Jan 2023
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“Advisory” is a wonderfully loaded term, almost guaranteed to raise the hackles of the accounting profession. Not least around what it implies, whether or not accountants should engage with such services, and conversations around its relationship with compliance.

There are, however, other equally ambiguous terms that seem just as controversial to me. Specifically, “automation” and the often interchanged “digitisation/digitalisation” – two separate words with completely different meanings. And of course, the idea of the “digital practice”.

While respecting the rights of all pedants, the reason why the terms are ambiguous is they are used to convey something aspirational; a direction of travel that accounting firms should be aiming for but with no clear obvious point of arrival.

While there is no harm in this per se, the fact that firms are high users of technology, and that a fair amount of automation already exists to help with processes and processing, leaves the question: what are we aiming for exactly?

A quest to explore

This article kicks off a series that aims to explore some of the issues and opportunities raised by these terms. It will also try to use them as a lens to explore what kind of services we want to offer clients, what it means to practices of all sizes, and how it should impact the relationship with software vendors.

Some of the key itches to scratch are listed below, but I’d welcome your thoughts in the comments as to where else to explore.

Where has the time gone?

Regardless of how much technology you load up into the practice, and even put into the hands of clients, no one seems to have any more time on their hands. 

The idea that somehow technology and automation can save you time and money doesn’t seem to have materialised in a way that means all accountants can rest easy on the beach while things take care of themselves. 

So should we believe that one of the benefits of technology and automation is giving us more time? Or is there something else at play?

Can we automate too much?

Are we automating things just because we can, because the default position is that automation is generally a good thing?

The creation of triggers and actions and the passing of data seems to be quite different to relying on the automation of calculations that come up with decisions. Some would argue that automation should only be done where the process is fully understood and controls are in place. This means we could rule out approaches (now and in the future) where the technology is just too complex for us to get our heads around.

The other aspect of automation, whereby we allow systems to pass data to each other, or create actions based on triggers, seems much less contentious. However, are we trying to put automation into areas where it is just not suited and can it mean the loss of the human touch, especially in areas that directly impact client contact? 

What is a digital firm?

What is actually meant by being a digital firm? At one stroke, it seems to be something highly patronising and highly ambitious. Although it is almost impossible to have a practice today without technology, there are huge variations in the amount and variety of solutions used and the attitude and inclination to use them. Some of this is driven by the preference of the firm and some of it by the client.

But what really distinguishes a digital firm, and how do you know that you are one?

Do we know how to use the technology we already have?

How much of an expert are we on the software we have invested in? When thinking about the future, we often consider the “next thing” rather than examine whether the solutions are already to hand. Vendors have a lot more to do here in providing the support and education that would allow their customers to become true experts in their tools.

To what extent is the digital firm ideal created by vendors, and how far do their solutions take us towards that ideal already? 

Does automation bring choice?

Is automation as it stands today about automating what we can, or what we should? At the moment, we are limited by what we are willing to invest in as most tech available to accountants looks to provide integrations through APIs. 

So does this integration encourage more innovation and choice through connecting specialist software, and is this better than looking to larger suppliers who may have a more self-contained system?

What is the cost?

And let’s not forget one of the most important questions – how much? Does automation or being a digital firm provide financial cost savings and leave you in a net positive position overall?

Is going with a single vendor better than going with a number of vendors? Ultimately, is it financially worth it? 

Heading for clarity

Like the debate over advisory services, I’m hoping there are plenty of strong views and varied opinions. Given that some of these themes are central to the propositions for the software suppliers, the opportunity to build clarity around what is meant as well as what is implied is too good to miss.

If you’d like to take part in aspects of the research and make your views known, please leave a comment below.

Replies (6)

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By D V Fields
18th Jan 2023 13:16

Automation is about reducing the amount of human interaction with a process. It is not restricted to using software Apps; believing that it is would be very shortsighted.

Account production software to convert a charity trial balance to a SORP compliant set of accounts is in my experience more time-consuming than using say Microsoft Excel to convert same relevant data. It takes more time to get the data into the right format for the software - allowing for trial an error - whereas using Excel is far more interactively intuitive.

People make decisions not computers. Automation frees up time to do more valuable work - which in turn allows for more informed decision making.

I am looking forward to the challenge against HMRC that the VAT Return must be correct because the MTD compliant App said so - just as they (and others) advised.

Use Apps for Artificial Intelligence at your peril. Presumably the AI didn’t know to warn.

Thanks (1)
By SteveHa
18th Jan 2023 15:22

I worked, for 6 months, in a contractor accounting firm, and I hated it (and to be honest, it hated me). Conveyor belt accountancy at its best, with minimal contact with clients. Everything was done via online portal and automatic population of accounts and Tax Returns.

It just felt very very wrong to me.

Thanks (1)
Replying to SteveHa:
By D V Fields
18th Jan 2023 16:23

Many years' ago I recall having a conversation with someone who didn't know the double entry for a purchase invoice. On examination it was because "SAGE" did it for them. AI is just a further "dumbing-down" - for those who allow it.

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By johnjenkins
19th Jan 2023 10:53

You will never replace one to one. You can fine tune with AI but the basic has to come with "knowing your client". You cannot put enthusiasm,energy,experience into a computer. Don't get me wrong, there is certainly a place for digital stuff.

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John Toon
By John Toon
19th Jan 2023 11:48

I have opinions and I'm not afraid to use them...

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By robin.abbi
19th Jan 2023 12:16

Cyber risks: automating away the human-in-the-loop prevents certain types of attack. Conversely, having the resilience to revert to manual processing should a system be compromised is a strength.

Business continuity insurers and PII providers might play a role in nudging businesses and professional firms toward technologies or practices perceived as lower risk.

Governments are looking at CTCs (continuous transaction controls) to insert themselves into digital workflows. And where a workflow is not digital, governments have the power to make it so, however painfully for the profession.

Code is law: whatever functionality the accountancy software providers provide or remove significantly influences, arguably controls, how tasks may be performed. Worth noting here that software providers are monetizing their platforms in ways other than just subscription or licensing fees from users.

Market forces: eventually the market will settle the argument as clients vote with their wallets, one way or the other. There is evidence that as generation Z enters the workforce and start their own businesses, often as side gigs, that their expectations of accounting services are shaped by digital experiences in other parts of their lives.

With crooks, insurers, government, software houses and market forces influencing what and how much automation the profession adopts, it's an open question which way things will go.

Disclosure: I'm the founder of Bmbix.

Thanks (2)