Technology investments decline as accountants become more strategic

Technology investments decline as accountants become more strategic

Given the need for targeted investment, accountancy practices will have to be selective when making upgrade decisions

To read the full 50+50 report, click here.

Considering the challenging economic landscape facing the UK accountancy sector, it may not come as a surprise that the top UK accountancy firms’ spending on technology was down on previous years.

According to Accountancy Age’s recent 50+50 report, the top 100 firms invested £23 million in tech, a decrease of 15% from 2021.

Whilst this may seem as if firms are tightening their belts and practising caution in regard to large outgoings, it appears the nature of the investment rather than the total spend that matters.

Toby Stanbrook, chief operating officer at Mazars, says the firm continued to “invest strategically” throughout 2022, focusing on people-led transformation.

“Our migration to a fully cloud-based firm has been a fantastic example of this focus on infrastructure transformation and the launch of our innovation lab in our new London office has allowed our team and clients to work together on new technologies,” he tells Accountancy Age.

“We continue looking for opportunities to invest, focusing on the needs of our clients and teams.”

Larking Gowen has also focused its technology investments on its people over the last 12 months. Partner Ashley Smith says there was an effort to unify communication through Microsoft Teams, in addition to keeping networking infrastructure and team-issued IT kit up to date.

The firm has also made a conscious investment to use its tech spend to improve the experience of its hybrid employees, making sure all its AV equipment in meeting rooms is up to date.

“Our digital strategy focused initially on getting our underlying IT infrastructure right,” Smith explains. “We moved to an evergreen platform hosted in Microsoft Azure, which enabled a true ‘anytime & anywhere’ experience for all our team.

Smith stressed that the investments had been targeted to ensure the firms’ IT infrastructure and platform can grow, scale and evolve in the future.

Modulr’s Tom Kelly agrees technology investment is not always about “big, costly transformations.” “Instead, firms should focus on tech that adds the most value to their clients and their practices,” he says.

Stanbrook agrees, noting it can be very easy to increase spend without adding value. “Managing value on the back of the spend is crucial for a real return on investment,” he says.

“Where investments deliver strategic value, increased opportunity or decreased cost over time the decision on spend is far easier.”

Focus of investment

Given the need for targeted investment, accountancy practices will have to be selective when making upgrade decisions. For Mazars, this has meant focusing investment in two areas: its core technology platform and its innovation platform.

For the former, the practice has delivered a large-scale migration to the cloud and optimised services, Stanbrook explains. “The migration to cloud underpins all of our business requirements and allows us to manage the security and operational aspects of the estate significantly,” he says.

Mazars’ innovation function is responsible for delivering client-focused projects. “The innovation investment has supported our teams in their discussions with clients, streamlined processes, increased analytics and developed new routes to market,” Stanbook says.

For Larking Gowen, investments have also been made toward efficiency savings. Smith says the firm is looking to invest in areas of automation and artificial intelligence which will assist the firm to “work smarter.”

Greater need for simplification and interoperability

As practices become more targeted with their investments, it is likely they will become more discerning of their vendors. Smith says the sector would like to see a greater degree of interoperability between core service providers, as practices adopt “best of breed” solutions.

“This will avoid the need to spend time taking data from one system and inputting it into another,” Smith explains. Similarly, Smith expressed the need to move away from the traditional “desktop” based software packages in place of SaaS packages with open APIs.

“Easy integration is a must for the future.  While AI has been talked about for several years with little practical usage examples, I think we have seen from the last few months this is now a rapidly maturing area and we hope to see great steps forward in the next 12-18 months.”

Stanbrook agreed there was a need for simplified machine learning and AI tools to support and augment Mazars’ work. However, he recognised it would take time for this to occur given the pace of change within the tech sector.

“Technology is constantly streamlining our business with greater automation and increased ability for added value to clients through data. The future will definitely have greater opportunities in the areas of machine learning and AI,” he says,

“At the moment both technology and skills in this area are maturing. As focus increases on data analytics and accounting we expect simplified machine learning and AI tools will significantly support work with more requirements for new skills in the industry.”

 

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