Just as cars replaced horses in the early 1900s, our world and the accounting profession itself are facing another major technological shift: the use of artificial intelligence (AI) and machine learning in our everyday lives and work.
Henry Ford reputedly said, “If I had asked people what they wanted, they would have said faster horses.” The quote may be apocryphal, but with the pace of technological change that we’re experiencing in the 21st century, I very much doubt that people today could envision a world without AI and machine learning.
After all, this change hasn’t happened out of the blue. This shift started with the emergence of modern “cloud computing” as popularized by now former Google CEO Eric Schmidt at an industry conference in 2006. But the idea of network-based computing has been around much longer than that and actually dates to the 1960s. And, of course, many of us were introduced to this high-tech future as kids watching Star Trek and other sci-fi thrillers.
Over the last decade, many in the accounting profession saw cloud technology as a potential disrupter and/or didn’t believe that it would become so widespread. But now cloud computing has become the standard, and many people in the profession have not been disrupted by it. On the contrary, they have used it as an opportunity to better serve their clients and be more profitable in their firms.
AI and machine learning systems have been making our personal lives easier for longer than you might realize. Typing the beginning of a query into Google and seeing the remainder of the question automatically populate is a product of machine learning. Or watch as Google Maps suggests an alternative, faster driving route based on real-time traffic speeds using anonymized location data from thousands of smartphones.
Voice recognition systems such as Siri are also examples of AI that uses machine learning to get better at imitating human interaction. For example, Siri recognizes phrases such as “Hey Siri” and draws upon a database of recorded speech segments to select a response that reflects real-life conversation.
In the accounting technology industry, machine learning systems are already working in the background within cloud accounting platforms. Many technology companies are using machine learning principles in their accounting software to handle tasks that are repetitive and predictable, reducing the time accountants spend on those tasks.
At the enterprise accounting level, assurance leaders at PwC envision a future where, with 100% of data available for analysis — as opposed to select samples — auditors will be able to leverage AI and machine learning to study a business in its entirety. It’s only a matter of time before this technology is available to the entire accounting industry, not just at the enterprise level.
The timesaving implications of AI and machine learning are extraordinary. For example, AI-based systems are cutting the hours required to manually review contracts in the finance industry, The Economist reports. The article states that JPMorgan Chase deployed natural-language processing software in 2016, enabling the company to sift through 12,000 commercial-loan contracts in seconds, far less than the human processing time of 360,000 hours.
As AI and machine learning advance, more and more of an accountant’s traditional tasks may be taken on by robots. A McKinsey report on “Where Machines Could Replace Humans — And Where They Can’t (Yet)” shows that work activities with about 70% of time spent processing data are highly susceptible to automation. The work activities that are less susceptible to automation include tasks that involve human connection, emotional intelligence, and complex analysis such as managing others, applying expertise, and interacting with stakeholders.
It’s undeniable that this new world will create short-term growing pains for many in the accounting profession. Not only will AI and machine learning eliminate many tasks in the profession, but this technology is already giving our clients increased reliance on do-it-yourself financial services. Instead of resisting this not-so-distant reality, it’s important to cultivate a cultural mindset that sees this new technology as an opportunity — not a threat — for your accounting firm.
In particular, the use of AI and machine learning will increasingly give you the gift of time. You’ll no longer need to spend as much time entering and processing data. This means you’ll have more time to offer value-added services that your clients desperately need to help them grow and stay in business.
You have the opportunity to not only be a “trusted adviser” — someone who can be relied on to tell the truth — but what I call a “Cherished Advisor,” a trusted, highly valued strategic partner whom your clients depend on to understand what the numbers mean at a holistic level and how to use them to make smarter business and life decisions. Even when computers give your clients the financial data they need, they still lack the time and expertise to truly understand it and make changes in their businesses and lives to create better financial outcomes. That is where we, as Cherished Advisors, can change the game.
To prepare you and your firm for this new world, start by doing the following four things:
- Identify the areas in your firm that can be replaced by technology so that you can free up more time to offer additional advisory services to your clients.
- Remain up-to-date on the latest technology developments to not only identify the best solutions for your firm, but also to be able to educate your clients when they come to you with questions.
- Think of your practice as a business and productize your services. Establish a process for how you deliver your services so you know your costs and efficiencies. You can use that knowledge to free up more time to spend with your clients.
- Build the soft skills and the analytical skills to create long-lasting client relationships, not just the technical expertise. To do this, it is important to implement training and mentoring in your practice to properly develop these skills in yourself and your team.
Remember that the human side of the client-adviser experience can never be replaced by technology, only enhanced. By learning how to take advantage of AI and machine learning technology, you can tell your clients the story behind the numbers. This will allow you to grow your firm and offer the highly valued advisory services your clients desire to meet their financial goals in business and life.
*Article originally published by the Journal of Accountancy
About the Author:
Amy Vetter, CPA/CITP, CGMA, is a keynote speaker, author and technologist. She’s a member of the AICPA’s Information Management and Technology Assurance (IMTA) Executive Committee and leads IMTA’s Emerging Technologies Taskforce. She authored the book, Integrative Advisory Services: Expanding Your Accounting Services Beyond the Cloud, published by Wiley. Learn more at www.amyvetter.com and follow @AmyVetterCPA on LinkedIn, Facebook and Twitter.