This is article is adapted from a longer piece by Steve Karro which first appeared in Charter Magazine in March 2014 – Read the full article here
Digital disruption is the shaking up of the way we work, facilitated by digital technology. Successful leaders will identify where they can shake up their own business to diversify and engage with clients…
Whether we like it or not, the wave of digital disruption has engulfed us. Firms that failed to adapt and harness the power of technology face a difficult future. On the other hand, those that have adapted quickly by making informed decisions on the right technology for their firm will ride the wave of success by creating positive differentiation. So we need to ask: How does digital disruption impact the accounting industry? And, more importantly, how do we ride this wave?
Digital Disruption 101
According to James McQuivey, vice president and principal analyst at Forrester, digital disruption is about building better products and processes, creating stronger relationships with customers, and bringing it all to market faster. He defines digital disruption as a process where you disrupt your own processes and products to create a better customer experience at home and at work.
The most obvious and commonly cited example is that of Apple under the visionary leadership of Steve Jobs, who took a mobile phone and turned it into an extension of our arms. The iPhone and iPad revolutionised the mobile device market, freeing us from the confines of the four walls of our workplace and turning us into a workforce that never stops.
The accounting industry is neither immune to digital disruption nor incapable of it. This phenomenon is not reserved for IT, electronics and the telecommunications industry, but for anyone who wants to break away from a competitor saturation point and create a significant differentiation.
Digital disruption for all
Cloud technology, broadband and smartphones are revolutionary forces that have blurred the geographical boundaries between Australia and the emerging economies. Easy and increased access to low cost yet skilled labour overseas has disrupted traditional models, resulting in outsourcing of labour-intensive tasks and driving up competition within the professional services industry, particularly across the big four firms. However the great thing about disruptive technology, is that it characteristically comes at a more accessible price point, effectively levelling out the playing field, and this wide scale accessibility is part of what makes it disruptive. Technologies and processes that were once reserved for an elite minority, become available to the masses and change the everyday customer experience and expectations. Consider another commonly cited example on this topic; the lower priced, mass-produced Ford Model T which changed the transportation market from 1908 onward.
Connecting the digital dots
For accountants, when making decisions on technology adoption, there is an opportunity to look beyond solutions that simply offer incremental improvement by automating mundane, repetitive tasks such as recording bank transactions, for those that actually change the client experience. After all, in this day and age, your reputation is only as good your clients’ tweets. Digital disruption can have great returns when it directly affects the role of the professional as the custodian of the customer experience and not just support staff.
Here is an example. If you automate just 50 per cent of the work of one of your support staff, your cost savings may be well over $29,000 a year at a conservative estimate. Compare this to the potential returns when the same time saving is applied to the accountant. A disruptive technology such as visualisation software, which changes the way accountants work with client information can results in a 50 per cent time saving which translates into monetary saving of at least $40,000 a year on salary. Critically, it also drastically improves the customer experience and increases the average chargeable salary from $67,000 to exceed $100,000 because of the extra value and service it enables the accountant to offer (as well as the reduction in time that would traditionally be written off). This complete process overhaul is the point at which profitability and success from the new technological solution reaches disruptive proportions and really counts for the ‘whole of firm’.
So if you want to make the greatest difference to your organisation’s success, don’t just look to be more efficient or make ‘me too’ changes without purpose. Speak to your people, shake up your processes, find your highest revenue earners and empower them with new ways of doing thing so they can generate the greatest return. While the prospect of digital disruption may be daunting, making the right changes today will give you the best chance at riding the wave of success tomorrow.
STEVE KARRO is the client solutions manager at Encompass Corporation. Visit the website to find out more about visualising your client information here: encompasscorporation.com
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