This blog is the second in a four part series on how we can lead in public accounting to take advantage of some hard trends
Blogging and still singing Bob Dylan’s “The Times They Are A-Changin’”, you might remember the line “You better start swimmin’ or you’ll sink like a stone.” With most CPA firms having a large percentage of their revenues tied to the value of billable time, we might be sinking to the bottom holding on to this time clock if we don’t anticipate some of the changes ahead. In Flash Foresight, Daniel Burrus states a hard trend (meaning it is happening whether we like it or even acknowledge it) that mobility combined with exponential growth in processing power, digital storage, and bandwidth is transforming our entire world. In May, I served with Burrus on a panel for the Maryland Association of CPAs. The emphasis of the panel was on CPAs building a stronger competency of anticipatory skills, and the impact we can have on our clients and the profession.
Through a study by Oxford University, it’s been predicted that accounting clerk functions, payroll accounting functions, and bookkeeping functions have at least a 97 percent probability to be automated within the next few years. Accountants and auditor functions have a 94 percent probability and revenue agents, tax preparation and tax examiner functions have a 95 percent probability.
One of Burrus’ comments has stuck with me. He made the point that the power of technology and the mobile phone will be more transformative than any disruption we have seen before. This is already happening to taxi cab drivers with Uber and to hotels with AirBNB. We have seen numerous virtual CPA firms enter the market in just the last 2 years.
So, if automation will displace many of the human functions we perform now for an hourly fee, how will we capture our intrinsic value in the future? The faster we get at doing something (i.e., increasing efficiency) can directly impact hourly billing value under the present accelerating model. Also, I imagine charging $10 a minute is not going to go over well with most clients. If 50 to 70% of what we are doing now is automated, what value or service will we need to create for our clients?
As we migrate up the value scale of services to provide more advisory and anticipatory services, how well does time devoted to the task really capture the value of our wisdom, insight or analytical skills we bring to the conversation? My experience says most of the time, we undervalue this wisdom or point of view and the skills associated with it. Defaulting to time as the indicator of value leaves the price woefully short of the real value created for our client.
We are not regular swimmers in establishing value with factors other than time, and our time clocks are beginning to feel more like a millstone around our neck. My interpretation of Dylan’s line: “You better start swimmin’ or you’ll sink like a time clock.”