How to keep up with technology and the cost of doing nothing
The accountancy world, rather like the legal world, is in a state of flux. Accountants are adapting fast to new technologies so as to retain market share, profit margins and talent. The profession is transforming due to productivity optimisation – today’s accountant is not as burdened with task-oriented projects. Thanks to the shift in dynamic accounting technology software, accounting is becoming more automated and the role of many accountants is changing, at least in part, to that of a business advisor (which brings other opportunities and challenges).
The choice of new technologies is vast – knowing what to deploy and how best to deploy it in the business is not easy. Our own experience of supporting accountancy firms reveals five key technology investment trends:
When critical strategic decisions have been made about what to deploy, there are some key legal and commercial considerations to ensure that the opportunities offered by technological adoption do not turn into headaches.
Where do you need to invest to maintain a business? What might you invest in to gain market share or improve the bottom line?
Choosing tech is like any other business decision. You need to do your diligence. Research from the Queensland University of Technology has shown business leaders often make poor decisions when it comes to technology because they don’t accurately weigh the benefits with the costs (and, yes of course, accountants stand a much better chance of getting this right!).
Think about what the ‘oppo’ is up to. Competitive analyses have been around for decades, but can you widen the scope beyond potential threats and barriers to see what technology your rivals are leveraging?
AI has a way of making all things equal and allows a start-up to compete head-to-head with a well-established player. Besides, more than 50 percent of business and tech professionals are considering implementing AI, according to Forrester. But remember: the key rule is only to invest in technology that fills a hole or makes real business sense.
You know your customers and users. Most marketing and product development decisions are already based on what appeals to them. However, these client insights can help prioritise your technology needs and shed light on where to improve their experience. Have you surveyed your clients?
Don’t forget to get buy-in from your internal stakeholders. Appropriate resource needs to be allocated to the project and (of course) budgeted for to ensure that it runs smoothly, including setting up a project team and test user group.
Many advanced technologies require more than a financial investment – they demand your time. It’s difficult to rely on technology to take over completely. To avoid such a mistake, you should add a human component to all interactions and constantly do A/B tests to determine the best options.
Technology solutions require experts to help you choose and deploy optimal solutions so spend some money on hiring external resource if you don’t have access to the right skillsets.
Due diligence is underestimated – physical, financial and technical diligence on your vendor can be tedious but it is paramount. And, of course, don’t forget to speak to several referees who have deployed the same solution.
What about the legal stuff? Is the new tech replacing existing functionality or required to ‘plug-in’ to other platforms already in use across your business? What rights do you have to terminate those existing relationships or create connections with relevant platforms? Contracts for new tech platforms should cover the following:
– Data migration
– Parallel running?
– How much configuration (or customisation) is needed?
– Deployment: phased or big bang?
– Availability and other key service levels/downtime
– Data privacy and data security
– Remedies for breach and termination rights (including rights linked to unavailability and persistent service failures)
– Liability and indemnities
– Compatibility and the use of APIs/SDKs
– Roadmap of solution development
– TUPE risks
– Disaster recovery and business continuity – what is Plan B and how quickly can a workaround be deployed to keep your fee earners from screaming at your IT helpdesk?
– Last but not least: cost certainty
Your ability to negotiate these topics may depend on your bargaining power, but consideration of these issues will help you assess the level of risk and allow decision makers to proceed on a well-informed basis.
One of the new requirements for businesses under GDPR is to conduct a DPIA when performing any data processing, including certain specified types of processing, that are likely to result in a high risk to the rights and freedoms of individuals. Under the GDPR, failure to conduct a DPIA may leave you open to enforcement action, including fines. Not undertaking DPIAs remains a shortcoming for many firms unnecessarily exposing them to regulatory action and damage to reputation.
Initially, DPIAs were conducted using spreadsheets and other basic tools; now there are a number of software options to assist businesses in conducting DPIAs and accelerating the process. Accountants are increasingly using these software options to conduct consistent, comprehensive DPIAs and to share the information with relevant stakeholders.
Many ICO fines relate to data breaches caused by poor security. This should be a key focus especially if your solution processes client data. Your contract should include adequate provisions designed to allow you, as controller, to comply with Art 28 GDPR (controller/processor processing provisions) which include a focus on security. In addition to that (which is pretty generic and open to abuse), seek contractual reassurances about specific security levels and security accreditations – such as ISO 27001. You should also consider including requirements for the vendor to confirm what penetration testing they have done, what they will do in future, and agree to provide you with the results of the report and to implement remedial actions. You may also wish to share your own security standards with the vendor, check they can comply with these, and embed them into the contract.
It takes real effort to police contracts but doing so will help to avoid nightmare problems, especially when deploying complex, time critical and/or cost sensitive solutions.
Take the time to implement and follow robust governance procedures. For example, is the supplier deploying all relevant patches in a timely manner? This is a common failing and can lead to security vulnerability.
With the technological evolution continuing, the role of the accountant is increasingly becoming that of a holistic business advisor. Future personnel will need different skills to thrive in the workplace of the future and accountancy firms will need to adjust their recruitment strategies to recruit individuals who are skilled strategic advisors and tech savvy; as well as having the requisite professional skills (which are increasingly taken for granted by clients).
Increasing digitisation of the working environment, together with 24/7 connectivity and the pervasive take-up of social media platforms are also driving accountancy firms to rethink their business models of how and where work can be done. Indeed, many businesses are now becoming less hierarchical and more collaborative.
Accountancy firms, wherever they are on the technological journey, will need to ensure that they are both managing the legal and commercial pitfalls associated with the adoption of new technologies and paying close attention to the skills, training and productivity of their personnel – getting this right will ensure they are well equipped to thrive in an increasingly competitive market.
James Gill is a partner at law firm Lewis Silkin and leads the firm’s Commercial and Technology Group, and Oliver Watson is an associate in the same group.