Original content provided by BDO New Zealand
By Adam Davy, Advisory Partner, Advisory National Leader, BDO New Zealand
Science fiction is full of ‘robots-usurping-humans’ stories and now we have an even more compelling reality of ‘robots-usurping-jobs’ news headlines – and not just in manufacturing and repetitive tasks. Indeed, this year we saw ROSS, 'the world's first artificially intelligent attorney' powered by IBM’s Watson take on a role handling a New York law firm’s bankruptcy practice. This machine is designed to understand language, provide answers to questions, formulate hypotheses and monitor developments in the legal system.
Such emerging technologies in cognitive computing and other forms of machine learning can certainly help enhance the services being delivered. But, the predictions are compelling. At our current rate, displacement will cascade across job functions and titles – even CEOs will not be immune. In fact, the World Economic Forum predicts that artificial intelligence (AI) and robotics will take more than 5 million jobs by 2020.
The accounting profession is amongst the white-collar jobs affected. We’ve certainly already seen significant change with the meteoric rise in clever cloud-based accounting ‘usurping’ some of the more repetitive bookkeeping or process-driven tasks. And many more of these jobs will be subject to automation.
The Future [Inc] Report by Chartered Accountants Australia and New Zealand and the New Zealand Institute of Economic Research predicts that a total of 885,000 (or 46% of) all New Zealand jobs will be at risk of automation over the next 20 years. In the accounting sector, it predicts that all but two roles within the profession - corporate treasurers and secretaries - are at high risk from automation.
I don’t see this news as 'doom and gloom' for all accountants in a world where empathy and passion are increasingly important factors in the general professional services sector – and where technology is an enabler of that component of service. Consider that smart ‘machines’ are increasingly entwined with our most intimate decisions – personal and business. The machines adhere relentlessly to codes and processes reliant on defined and known rules and outcomes. So, when it comes to winning a game of chess against a world champion – or tackling a repetitive accounting tasks - machines excel.
However, when the arena gets messy, unpredictable and ill-defined, such as working with a business owner who’s experiencing the emotional rollercoaster of a succession strategy, being able to adapt and translate that into an effective technological tool is a great deal more difficult.
No, this is more about 'doom and boom' for those well enough placed to take advantage of it.
The promise technology has held for evolving the accounting industry for many years is finally delivering. Our role is to ensure our clients are being freed up and empowered by the efficiency and cost-effectiveness of cloud-based accounting systems automating the menial, time-consuming, compliance-focused tasks usually done by their accountants – and focusing on where we can deliver real benefits. The ability to work off a single ledger from anywhere, at any time and in real time is also allowing accountants to work more effectively and efficiently with clients, freeing them up to deliver more value-added, business advisory services - tackling topics like business planning, governance and succession.
Look at the preparation of unaudited company financial statements and simple company tax returns for example. Automation will continue to increase the quality of inquiry, enabling advisers to ask a lot more questions, improving efficiency and providing more insight. Smart business owners will continue to pay for quality advice that delivers results. It just means accountants need to show outcomes and value, not just units on a timesheet. Fortunately, the market - the clients and businesses out there - will demand more.
I believe the challenge for accountants is to help business leaders respond to the speed of change. There will be more emphasis on non-traditional financial reporting by utilising big data in order to interpret it meaningfully. The accountant will still be viewed as custodian of reporting integrity, but we will need to use much more sophisticated, analytical tools. The idea of technological disruption posing more opportunity than threat to the role of accountants is certainly shared by one of the leaders in this space, our own home-grown, cloud-based accounting software firm Xero.
BDO is closely aligned with Xero as a Platinum Partner and a firm that has been deeply involved in supporting the evolution of some of their tools and ensuring New Zealand businesses are benefiting from the efficiencies, cost-effectiveness and opportunities the cloud-based systems offer. Indeed, it couldn’t be a more exciting time to be in the accounting sector. Rather than cloud-based software systems such as Xero superseding the role of accountants, evidence suggests businesses gain the greatest benefit when a symbiotic relationship exists between the two.
Xero’s own research has identified three commonalities among businesses that consistently performed higher than their peers: they had an accountant or bookkeeper; they had a plan for their business; and they were heavy adopters of technology. Around 85 per cent of Xero's customers are attached to either an accountant or bookkeeper and I know that Xero would like to see that reach 100 per cent. And I quote Xero managing director Anna Curzon saying “every Kiwi business needs a partner by their side helping them move through the peaks, troughs and opportunities in their business in an agile way. The more we can all work together to help businesses to thrive - to rewire economies to the betterment of small businesses - the better."
Even more powerful are the ecosystems that have developed around such cloud-based accounting software systems which present accountants with an opportunity to develop their offering. There are more than 500 add-ons available to Xero, for example, encompassing everything from inventory management to point of sale systems that can integrate with the accounting platform. For the business owner, it’s a monumental task to discern what is truly useful and which providers will be around next month, let alone next year.
Our role as accountants is filtering the mass of providers, making clients aware and helping them make decisions on how far they should invest in changing processes to gain benefits. Certainly, we have identified some very useful providers and our clients are reaping the rewards. Ultimately, I don't envisage a future where accountants will be replaced by robots; instead accountants will increasingly be required to bring their humanity to bear on their work.
The opportunities will be for all ages and stages of accountants. Older accountants for example will be among those best placed to add value to clients because their experience helps them empathise with, and make judgment calls on, a broad range of business situations. Technology will always be disruptive and whilst we face an unprecedented in shift which requires a degree of caution and forethought, we should embrace it and utilise it.
So, whilst futurists talk of change and evolution and the inevitable move to robotics in a logical predictable manner, they forget one thing - emotion. Find an accountant with empathy and passion, apply that to what the numbers mean to you...and there might be hope yet.