In Part 1 of the “Becoming the Most Trusted Advisor” series, I discussed the paradigm shift – the move toward giving your clients what they want as opposed to just what they need. Now that you can collaborate with clients and access their data in real time, you have opportunities that allow you to:
- Move from being isolated from client-run accounting systems to having 24/7 access to every client’s accounting and documents.
- Move from once-per-year meetings to being deeply involved with each client’s business, acting as a strategic advisor.
- Take a leadership role with clients, where you help them find the individual solutions that fit their needs.
- Turn your relationship from serving to partnering for success.
In this article, I’ll explain how accountants can go from being the most trusted servant to becoming their clients’ most trusted advisor.
Letting Go of Your Doubts – Opt In
Before you can really make the leap to become a cloud-based firm that focuses more on advisory services, you need to fully opt in taking your firm in that direction. Commit yourself, your staff, and your firm to make some fundamental shifts in your business model. Most likely, you, your staff, and your clients will need to overcome the inevitable fear that comes with making such a big change. Even if you’re willing, you may have lingering doubts about whether cloud-based, accountant-centric tools are more than just a passing fad.
Perhaps more importantly, you might ask yourself the following question: “What happens if I don’t adopt these new business models?” A recent study by the Oxford Martin School on job losses due to computerization and automation addresses this question in an alarming way. It suggests there’s a 94% probability automation will result in job loses for accountants and auditors in the next two decades. The study is summarized in The Economist in “The Onrushing Wave.” Roger Gregg, CEO of Invitco, recently wrote an entertaining post that puts this study into context for the accounting profession.
Some History in Context
If you look at history, you’ll see many patterns that repeat. It’s as though we’ve been here before. As new innovations come along, there are many doubters. So many people focus on why new products won’t work, and many struggle to comprehend why the new “thing” is relevant. Do you remember when you first heard about TiVo? Was it difficult to comprehend what “pausing live TV” even meant? I guess I should only ask that question to people over 40, but you get the point. You can see why people didn’t just rush out and get one. They first had to figure out what the thing did and why they would pay money for it.
Some of the doubters have great reasons to adopt slowly. We’ve all been burned by one technology or another that showed such promise when we watched the demo, but then didn’t work out too well. These experiences make us take a more conservative, wait-and-see approach to new innovation. And perhaps more so than other businesses, accountants cannot afford for their systems to fail in the middle of busy season. This makes sense on many levels, and it’s why accountants have historically been on the “slow side” of adopting new technologies.
Ever since Luca Pacioli published his book Summa de arithmetica, geometria, proportioni et proportionalità on double-entry accounting in 1494 in which he defined the fundamentals of accounting, there have been no changes to the essential processes of recording transactions into journals and ledgers. Now I might be going out on a limb here, but I doubt those fundamentals will change anytime soon.
However, the pace of technological change is faster than ever, and it’s affecting more business models than ever before. So it’s worth pausing to consider whether the current technology trends warrant a dramatic shift in your thinking as to what business you’re really in.
If today’s changes seem scary, keep in mind that we’ve already been through several foundational shifts like this before. Each shift has created both pain and new opportunities. But for sure, these changes could never have been stopped by simply ignoring them or opting out.
For example, in the 1960s and 1970s, we had card readers, dumb terminals, and centralized data. Clients recorded transactions in manual journals, and accountants owned the general ledger. Then there was a big shift in the 1980s, with the advent of “personal computers” and accounting programs clients could use in their own offices. Clients got control over the general ledger, and accountants became isolated from client records. In the 2000s, we started to see integration – connected services, desktop integration, web connectors – with data still primarily on the desktop, but moving to “servers.”
Today, the big shift is the move to cloud-based software, mobile devices, and remote access to all information. While these trends are not that new, the adoption tipping point has finally happened.
In today’s business world, the reality for business owners is that to thrive they must serve customers online. Customers expect to interact with every business directly on their website and through a variety of electronic communication methods. Today’s small and medium-sized businesses (SMBs) must embrace such technologies as ecommerce, web-based customer support, web meetings, web marketing, and collaborative relationships with their customers and suppliers (including their accountant).
All of these require centralization of data and the cloud is the best option, whether it’s a private cloud, a public cloud, or a hybrid.
The Internet Is the Ultimate Mainframe
A good way to think about the latest trends toward cloud-based, centralized data, accessed via mobile and remote devices, is to imagine a pendulum.
In the mainframe era, the pendulum swung heavily toward centralized data, hardware, and applications. The benefits of mainframes were that we could always rely on a “single source of the truth” for data, applications, and even the hardware and system software.
But when the PC revolution came along, it meant “freedom for users,” where everyone could have his or her own data, hardware, and software. This was so attractive because it meant we didn’t have to “go to the computer”; instead, we had one of our own. So you can see why PCs took off so successfully.
But the Internet has changed everything. It has caused the pendulum to shift back to centralized data and applications, but it keeps the freedom for users because it allows them to access this centralized data from anywhere, on any device. I like to think of the Internet as the ultimate mainframe.
From “Client-Centric” to “Accountant-Centric”
With the PC revolution came software solutions that were “client-centric.” These systems put the client in control all of the technology and data they use to run their business. I call this the “me generation.”
The problem this caused the accounting profession was that it put distance between the accountant and the data the accountants need to perform their services. The shoe box lived on during the PC revolution, even if the contents of the shoe box often contained digital data. And of course, most of that client-entered data needed extensive cleanup before accountants could produce financial statements or tax returns. So the client-centric systems have caused just as many problems for accountants as they have solved for clients.
Perhaps even more importantly, these client-centric, desktop software products haven’t been able to provide businesses with an easy way to do business on the Internet with ecommerce, mobile access, and anytime/anywhere access.
The bottom line is that client-centric, desktop accounting systems just cannot deliver.
Today, virtually all innovation in the accounting and small business process area can be categorized as being collaborative, or even accountant-centric; that is, accountants want to take advantage of these new innovations. I call this the “us generation.”
“Productizing” Your Services
The most trusted advisor uses accountant-centric tools and “productizes” his or her services using those tools.
What do I mean by “productizing” your services? Instead of just recommending products clients will purchase and use themselves, in the new paradigm, accountants will purchase and use software solutions that help them deliver their services to clients. When you think of providing accounting services to clients, think “outservice” as opposed to “outsource.”
By reimagining your business model and reengineering your business practices to leverage new technologies and tools, you can create not only a great business today, but a sustainable business for the future. The fact is, after 30 years of client-centric systems, a majority of businesses still want their accountant to “just handle” the accounting. That was really difficult before the Internet, because accountants couldn’t reach the data without “asking” the client for access. In addition, having 24/7 access finally allows us to provide advisory services as well as outservicing the bookkeeping and accounting. Advisory services are the Holy Grail for accountants. The compliance is necessary, but the advisory services are what clients really want from their accountant.
Specialize for Success
When thinking about the types of businesses you’ll serve, there is no doubt that specialization is becoming highly desirable by clients, if not required. The reason this makes sense is that if you’re to provide deeper levels of services, and become more involved in each client’s business processes, you’ll need to understand the unique issues for their industry in general, and the unique issues that are specific to the client’s business.
In our “What SMBs Want in 2014 Survey,” we asked business owners if they want their accountant to be a specialist in the SMB’s industry. In 2013, 53% said they require or prefer this, but that number increased to 62% in 2014.
Agility Trumps Ability
Although specialization allows accountants to focus in on fewer tools and processes, success in the new world will demand that you’re flexible and agile with regard to learning and using new tools. There’s almost no way to legislate the same tools for all of your clients. You’ll need to work with many tools and be willing to learn and use new ones as they’re developed. More than ever, the most successful accountants will invest heavily in continuing education on technology.
Commit and Act
Finally, the key to making it happen for you is to simply start down the path toward becoming your clients’ most trusted advisor – the one they seek out for advice, not only for the debits, credits, and taxes, but for the strategic planning advice they desperately need. You won’t get there overnight, but real change starts with commitment, followed by action.
In my next post, I’ll discuss how to dive deep with your clients, as well as the importance of building trust and leading your clients to success.