Date posted: 18/07/2017 6 min read

Accounting's quantum leap into technology

As technology evolves accounting firms need to invest in systems capable of growing organically with a business.

In brief

  • Technology continues to change the accounting profession.
  • There is a challenge around what technology is capable of delivering.
  • Is a move away from off-the shelf products the answer to the next technological evolution?

Technology has been changing the accounting profession since its inception. From the invention of double-entry bookkeeping, to the introduction of computing, spreadsheets for calculations, the availability of small business accounting software and the cloud revolution, there have been quantum leaps in the capability and outcome of technology in the accounting sphere.

There has come a point at which the possibilities of technology are outpacing their implementation. In every area of life, we have come to expect that technology will deliver.

But there is a challenge around what technology is capable of delivering.

A quick reflection on the past ten or 20 years of technology in practice can help shine the light on this.

The super system

Not all that long ago, a business would generally work towards a super system, where one piece of software would do everything. In the accounting world, this meant that the system in place would have your ledger, your tax software, as well as your client customer relationship management, a database, document management, workflow along with time and billing.

The rise of the super system posed challenges. One piece of software could not possibly be the best at delivering on all things.
Then came the cloud which opened up a whole new paradigm. We don’t need one system anymore, because different systems can communicate to each other in this new world of connected API’s (application programming interfaces).

Goodbye poor, super system, goodbye double data entry, now we get the best of both worlds. We are at a point of a theoretical nirvana – t he ability to choose an eco-system of the best technology products that will deliver all the things that we know technology can do.

An ecosystem of applications

At this point most firms I talk to would laugh, as despite the apparent solution in front of us, few can get an ecosystem of these talking applications (apps) that actually delivers.

And why is that? Of course, there are small irritants, like the number of logins to remember for all of those apps. I propose that there are three key problems.

Firstly, not all API’s are equal. Not all apps talk as well as they can to other apps as one would expect.

This means integrations between apps in many cases, to work properly, require manual work-arounds, possibly double-entry, or at worst the acceptance of sub-standard behaviour from at least one of the apps.

Secondly, there are still gaps in the market. The “best in breed” app in many cases may not be cloud based, or have an open API. What does one use instead, or in the interim?

Finally, the cookie cutter is becoming even more prevalent. It would seem the more open an application is, the more generic it becomes.

The more automation there is, the more your process must follow the software, rather than the software following yours.

Highly tailored solutions are harder to open up in an API sense than one that follows conventions that work for a lot of simple use cases. The accounting space seems to have become particularly prone to this with products galore that provide a level of automation, but seem designed for micro-firms rather than fully-tiered staff and security models with lots of clients to manage and specific authorisation flows.

The last point has become a major issue. The expectation with technology is that we can automate. Yet despite constantly reshuffling all of the application pieces, there are still a lot of poorly delivered solutions and manual workarounds gluing the apps together. Few apps actually gel with the firm and its processes, even when we’re not talking about the obvious cases where the firm’s processes are flawed in the first place.

It would seem the more open an application is, the more generic it becomes. 
Doubled-up data between systems seems to be growing, not decreasing. The answer may be in the next evolution. A move away from off-the shelf products that form a cohesive eco-system, to something I would call the orchestrator model.

The orchestrator model

This approach looks to using a central technology platform that will act as the orchestrator between key pieces of technology. Not only will it communicate with applications that provide the best functionality, it will take and store all that data centrally.

This approach would enable a system to then manipulate, automate, report and manage that data, deferring business problems to apps as necessary, as well as control key business process where it needs to.

This would allow you to build your own systems where there is value in core process and intellectual property, while at the same time delegating to third party apps where needs can be met in the market.

This approach requires serious investment. It means deconstructing and optimising business process, and having a deep understanding of where automation can deliver the biggest benefits.

Big business can afford to do this with enterprise platforms like Microsoft Dynamics or Salesforce. The next stage down and you can look to platforms that specialise in orchestrating data, automating workflow and building data-driven applications like Maestro or K2.

In each case, the key data is yours, you can truly get the best out of the apps out there, but you can also take control and automate key business process yourself, designed to work the way you work.

This leaves accounting firms with a real investment question. If the app ecosystem is struggling to deliver, is it time to seriously consider investing in your own platform that can grow with the business and provide the automated workflow, real-time reporting and optimised work performance we have come to expect from technology?