Going digital has the ability to change many industries, including tax and accounting. But how should accounting firms prepare for digital transformation?
The topic of digital transformation is being discussed virtually everywhere you look. There are statistics on the investments made and projections on the impact they will have on GDP. But what is digital transformation?
Go digital refers to the abandonment of analog systems. Digitalization in the tax and accounting profession has existed for decades. The shift to document management software, engagement solutions, and online tax organizers are just a few examples.
According to Salesforcedigital transformation refers to the “process of using digital technologies to create new – or modify existing business processes, culture and customer experiences to meet changing business and market demands”.
While parts of the tax and accounting profession have transformed their practices by digitizing them, the pandemic has brought to light areas of practice that still depended on the old analog system. Customers paying with paper checks and depositing physical files are just a few examples. Where companies had digitized many internal operations, their interactions with customers and talent were still largely based on physical presence and in-person connection. This physical dependency has made the transition to remote work much more difficult for these organizations.
Unsurprisingly, digital transformation was kicked into high gear while the world was socially distancing. People needed to experience new virtual ways of collaborating, doing business and interacting. As the world becomes more comfortable with its preference for virtual engagements and talent expresses a desire to maintain remote working arrangements, organizations will need to focus on their digital transformation strategies. But how?
To get started, consider the available technology. Cloud technology is perhaps the fundamental tool for digitizing work processes. By executing operations through the cloud, clients and accounting professionals can interact virtually and in real time using the same data. This process also allows people to work when and where they want, changing the whole paradigm of how we work by enabling this flexibility.
Artificial intelligence, robotic process automation (RPA), Internet of Things (IoT), mobile devices, and more have all augmented the capabilities of accounting teams. For years, staffing capacity has been a challenge for the tax and accounting profession; the pandemic and the growing number of professionals choosing other jobs or work environments have only exacerbated this problem. Implementing these technologies can reduce the workload of staff and allow them to optimize their performance. This, of course, results in greater job satisfaction by enabling better work/life balance for employees while allowing them to feel professionally fulfilled by delivering higher value and impact to their clients.
Identification of the area of intervention
Considering all the technology options, the number of opportunities accounting firms have to digitally transform their processes can seem overwhelming. Instead of being paralyzed by the possibilities, businesses should first perform a SWOT analysis (assessment of business strengths, weaknesses, opportunities and threats) to determine its current state and that of the business. Having multiple people contribute to the SWOT analysis will help ensure that all parts of the business are considered.
After completing the SWOT analysis, consider what weaknesses could make your organization more vulnerable to threats or prevent it from taking advantage of opportunities. Does the organization take full advantage of the identified strengths? If not, what should be changed? The key is to develop action items from the information gathered in the SWOT.
Once you have identified the actions, prioritize them. What is the biggest opportunity or threat that needs to be addressed? Again, for many tax and accounting professionals, all things talent is a top priority.
Should the organization facilitate a digital transformation to make it the most attractive and accessible for top talent? Remember that compensation alone is not the only attraction for talent; surveys have revealed that staff are willing to quit their jobs if they are not allowed to work remotely or have flexible hours. To make these offers to new recruits sustainable and effective, a digital transformation is necessary.
When prioritizing these actions, keep in mind the extent of the transformation. There are probably interdependencies between several actions or ideas to address, so avoid boiling the ocean. Identify the starting point by asking yourself questions such as:
- What will have the most impact?
- Where are the biggest pain points?
- What can be addressed in the next project?
Given the existing workload, many members of the tax and accounting profession may feel they don’t have the time to do this level of planning – and this is one of the reasons why tax and accounting organizations professional services hire project managers. The business leader can set the direction, and then a project manager can then gather the data, bring the team together, maintain communication, monitor risk, and ensure the project stays within scope. These non-traditional hires ease the pressure on experienced tax and accounting professionals while gaining efficiency and creating future-ready organizations.
Like many large-scale business shifts, digital transformation is a journey, not a destination. Just as computers and mobile devices have become commonplace, so have working and living in digital processes. As technology continues to develop, our processes and expectations will continue to change; some will evolve, and some will completely transform.
Leaders of tax and accounting firms must remain aware of what is changing around them, including in other industries, and continue to prioritize what is needed to keep their organization competitive and viable.