Almost two years ago, the world as we knew it changed, completely and irrevocably. Forbidden from leaving our homes except in the most extenuating of circumstances, offices around the country became ghost towns, colleagues became faces on a computer screen, and businesses were forced to transition to full-scale remote work overnight. In the accountancy world, some of the biggest industry players had already been investing heavily in digital technology and training for some years, while smaller practices (as has been widely reported, for example, in studies from the World Bank and the OECD) tended to lag behind.
In this article, we’ll be exploring the state of tech adoption in the accounting space in the leadup to the pandemic, the technology trends currently dominating the industry, and the impact of digitalisation on the next generation of accountants.
From avant-garde to mainstream
In September 2019, PwC announced that it would be investing $3billion in digital training and technology. This decision was based on research it had conducted, which revealed that a third of jobs were likely to be severely disrupted or even disappear entirely within the next decade. In December that year, KPMG also announced significant investment ($5billion) in digital leadership across three areas: technology, people and innovation. The year before, in August 2018, EY had announced its own intention to spend $1billion on new digital services and solutions, and appointed new Global Chief Client Technology and Global Chief Information Officers.
In the years leading up to these announcements, accounting organisations and academics were already contributing to a growing body of literature exploring the technology trends set to take the accounting space by storm. A particularly prescient survey from the Association of Chartered Certified Accountants (ACCA) in 2013 pointed to mobile connectivity, cloud-based systems, digital service delivery, cyber security, robotics and artificial intelligence (among others) as some of the technologies with the biggest potential to impact the profession over the next decade. It concluded with a scarily accurate prediction: “Unless accountants embrace technology they will follow the dinosaur into extinction – individually and as a profession.”
Many firms struggled to adapt
Long before the COVID-19 pandemic, then, it was clear that the need to invest in and adapt to new technology was well understood across the accountancy industry. However, what is also clear is that the focus on digital innovation by some of the industry’s biggest names in the leadup to the crisis was not reflective of the sector as a whole.
Indeed, a 2019 survey from Sage revealed the extent of the work to be done. Published in September 2019, 85% of respondents to the survey said they believed the industry needed to pick up the pace of technology adoption to remain competitive on the international stage. Despite this assertion, just 35% believed themselves to be early adopters and investing in the best available technology. Many firms reported feeling inhibited in their quest to accelerate their adoption of digital solutions; nearly four in 10 were hampered by a lack of money, while a quarter reported that they lacked the expertise to proceed further with their plans.
A global emergency
The impact of the pandemic was essentially to force the hands of those firms who had resisted, for whatever reason, the inevitable march of digitalisation that (as we have seen) had been gathering force before anybody had even heard of COVID-19. It also created a significant divide between those firms that had already been investing in technology and were using cloud-based solutions, specialist software and automation as part of their business practices, and those who were now scrabbling to catch up. In a Financial Timesarticle published in January 2021, Stuart Collins, Chief Financial Officer at global accountancy and business advisory firm BDO, said: “Over the last three years, we have been implementing an agile working strategy focused on cloud-based and mobile applications. In retrospect, this investment has proved invaluable as it meant that we were in a good place when the pandemic hit with almost all of our people able to work remotely from day one.”
By contrast, a global study of accountancy firms published in April 2020 found that firms without technological solutions in place prior to the pandemic (and that were therefore putting their time and energy into implementing these to facilitate remote working and communications, as opposed to business as usual) rated themselves as less successful in their response to the crisis. It also revealed that firms with at least one cloud-based system already in place at the onset of the pandemic fared much better than those without. Furthermore, a recent Xero report entitled “Picking up the pace: trends in small business technology adoption and use” revealed that SMEs that embraced technology during the pandemic were on average £32,000 better off than their tech-averse counterparts.
Overall, the upswing in technology uptake was so great that a McKinsey Global Survey, taken just months into the pandemic, calculated that businesses were seven years ahead of where they would otherwise have been in terms of the percentage of digitised services they were now offering their customers.
A new landscape for a new generation
So, what does this vastly changed landscape mean for accountants in training, or those looking to take their careers to the next level? At a time when dramatic predictions about the extinction of the profession due to robotic process automation (RPA) and AI are not uncommon, what skills and attributes are needed to help firms and individuals successfully navigate this period of incredible change and leverage the varied opportunities it presents?
There is no doubt that repetitive and process-driven tasks will become increasingly automated in the future. But far from destroying the profession, automation will offer huge opportunities to those willing and able to adapt. Richard Anning, head of ICAEW’s IT faculty, suggested in a 2019 article that technology will leave skilled accountants free to focus more on strategic initiatives, including process improvement, cost control and capital optimisations. This is even more the case as we continue to adapt to the post-pandemic world – Deloitte’s 2020 Global Automation Survey found that almost six in 10 respondents said their organisations are now focusing training efforts on ‘soft skills’ such as active listening and critical thinking, while over half of respondents are offering opportunities to reskill in areas such as creativity and problem solving.
The modern CFO
Those aiming for the finance world’s top positions must also be willing to upskill and adapt. The role of the CFO has also changed significantly over the past few years as technology investment, an agile change management approach and critical thinking in the decision-making process have become increasingly pivotal to businesses’ survival. At a time of significant economic turbulence and (for many) reduced cash flow, companies have increasingly turned to their CFOs for leadership. In a Sage blog post, Darren Heffernan, president, midmarket for Trintech, commented that the role “has become more strategic, more operational, more as a really strong number two to the CEO of the business. What was interesting to me when this crisis hit was everybody defaulted to ‘let’s go to the CFO, let’s check our cash balance, let’s check our costs’.” In agreement with this assertion is a recent Deloitte report, Four faces of the CFO, which states that “it’s increasingly important for CFOs to be strategists, helping to shape overall strategy and direction, and catalysts, instilling a financial approach and mind set throughout the organisation to help other parts of the business perform better.”
CFOs have also become increasingly responsible for the evaluation of, and investment in, digital solutions for their businesses. A McKinsey Global Survey of CFOs revealed that the percentage of finance leaders who say that they are responsible for their businesses’ digital activities tripled between 2016 and 2021. As we have seen from the early technology investments announced by the Big Four prior to the pandemic, these investment decisions can have a huge impact on a firm’s ability to adapt. Indeed, the McKinsey survey showed that technology adoption has an impact on a company’s overall resilience, with those who had adopted digital and/or automation technologies in response to the COVID-19 pandemic more likely to report that they were significantly more prepared for future crises. It’s no surprise, then, that 94% of respondents to Deloitte’s Q4 2021 Global CFO Survey stated that they expected their company’s investment in digital technology and assets to increase compared with the pre-pandemic trend.
Joining the revolution
In this article, we have explored how the COVID-19 pandemic resulted in a rapid increase in the rate of technological uptake across the global accounting space, which has consequently led to a significant shift in the skillset required by accountants and financial professionals entering the industry today. It is clear that those who fail to adapt to the inexorable shift to digitalisation will struggle to keep pace with the new demands placed upon them by employers and clients alike, while those with the right skills and the drive to change things for the better now have a unique opportunity to make their mark on the industry.
At Cambridge Judge Business School, University of Cambridge, our Master of Accounting programme is unique in its focus on equipping the next generation of accounting and finance leaders with the skills they need to excel in a post-pandemic world. We train them not to be technical accountants, but to be communicators, critical thinkers and innovators with the vision and the creativity to make complex decisions and to effect lasting change.