Metamorphosis of the Digital CPA
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Cloud technology has enabled a transformation in client accounting services, but this metamorphosis is not complete. Erik Asgeirsson, president and CEO of CPA.com, will lead a discussion on the mindset, strategies and future readiness of the Digital CPA. Being a digital CPA is not about using technology, it is about employing technology to transform your business model and be prepared for the new industries and expectations ahead.
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Metamorphosis of the Digital CPA
- 1. Walt Disney World Swan and Dolphin Resort Orlando, FL D02: Metamorphosis of the Digital CPA June 8, 2015, 12:30-1:45 Erik Asgeirsson, president & CEO, CPA.com #PSTech IN PARTNERSHIP WITH
- 2. American Institute of CPAs® #PSTech Erik Asgeirsson President & CEO, CPA.com • Industry leader with over 20 years of experience leading technology organizations • Consistently recognized as one of Accounting Today’s “Top 100 Most Influential People” • BS Electrical Engineering, George Washington University, and MBA in Finance, NYU Stern School of Business
- 3. American Institute of CPAs® #PSTech Today’s Discussion Defining the Digital CPA The Mindset Strategies
- 4. American Institute of CPAs® #PSTech Defining the Digital CPA
- 5. American Institute of CPAs® #PSTech Key Factors for the Digital CPA
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- 8. American Institute of CPAs® #PSTech Firm Service Lines Audit Tax BPO Impact of Technology to Major Firm Service Lines • Efficiencies • Innovation • Efficiencies • Innovation • Transformative • Revenue Growth New Opportunities Emerging Dramatic Change Past Few Years
- 9. Changing Firm Value Proposition Value Automation Today Tomorrow Trusted Advisor Trusted Advisor Growth Specialization Business Insights Commoditization of low end Higher Margin Low margin/fee pressures Automation Of Services Transactional Decline Transactional Bookkeeping
- 10. American Institute of CPAs® #PSTech Effectively Communicate 10
- 11. American Institute of CPAs® #PSTech Wiss & Company’s Approach 11
- 12. American Institute of CPAs® #PSTech “In times of disruption the bridge builders win.” - Nicholas Carr, author of “The Glass Cage” 2014 Digital CPA Conference Keynote 12
- 13. American Institute of CPAs® #PSTech Differentiate Defined purpose Leverage the Cloud Start now The Foundation • “Accounting Services - Harnessing the Power of the Cloud” • Geoffrey Moore • “Start with Why” • Simon Sinek • “The Big Switch” • Nicholas Carr • “Future Smart” • Dr. James Canton
- 14. American Institute of CPAs® #PSTech Mindset of the Digital CPA
- 15. American Institute of CPAs® #PSTech “Today a small firm doesn’t mean simple and a large firm mean sophisticated. Technology has leveled the field.” - Greg Lafollette, CPA.CITP CPA Practice Advisor Thought Leader Hall of Fame Member
- 16. Top 100 Top 500 Small Firms* Widespread Adoption: The Great Equalizer (CPA firms and outsourced F&A firms)
- 17. American Institute of CPAs® #PSTech Digital CPAs are Progressive CHASM Where are you? CPA Profession
- 18. American Institute of CPAs® #PSTech Attributes Entrepreneurial Innovative Risk taker Leader
- 19. American Institute of CPAs® #PSTech Strategies for the Digital CPA
- 20. American Institute of CPAs® #PSTech The Cloud is the Computer ‣ Next stage of IT democratization ‣ User-friendly online interfaces: easy buying, easy configuring, easy monitoring ‣ New applications (what is the cloud’s spreadsheet?) ‣ IT as enabler, not gatekeeper Source: “The Big Switch & Beyond” – Nicholas Carr, author, 2014 Digital CPA Conference Keynote
- 21. Growth of Amazon Cloud Services More than a million active customers in 190 countries, including 900 government agencies, 3,400 education institutions and more than 11,200 nonprofits. 11 Regions in the U.S., Brazil, Europe, Japan, Singapore, Australia, and China with 28 Availability Zones. Global network of AWS Edge locations now consists of 52 points of presence worldwide, including locations in the United States, Europe, Asia, Australia and South America. Reduced prices 47 times since AWS launched in 2006 [Dec. 2014]. Every day, Amazon Web Services adds enough new server capacity to support all of Amazon's global infrastructure when it was a $7 billion enterprise.
- 22. 22 Source: “20/20 Vision for 2020: The New Small Business Application Market” – Bob Anderson, Gartner, Inc. 2014 Per Gartner SaaS, cloud market will be significantly larger than on premise software by 2020
- 23. American Institute of CPAs® #PSTech “Driver to go to cloud based services is not cost, but agility and functionality.” - Doug Menefee Enterprise CIO Advisory, Amazon Webservices
- 24. American Institute of CPAs® #PSTech Cloud Accounting – Value Proposition to Your Clients
- 25. American Institute of CPAs® #PSTech 2020 Vision for Small Business Applications Suites replaced by loosely coupled applications Cloud deployment for almost everything Importance collaborative workflows (internal and external) Mobility first – Everywhere, in every application, on every device Embedded and Predictive Analytics - Big Data Streams Integration, Open API’s as we move from suites to federated apps Application marketplaces Security takes on new meaning for you and your clients 25 Source: “20/20 Vision for 2020: The New Small Business Application Market” – Bob Anderson, Gartner, Inc. 2014
- 26. Cyber Security and the Cloud • Ongoing high profile cyber attacks • Key is to manage, contain, and react to the threats • Cloud offers significant opportunities from both capability and security perspective • Important to always think about security and leverage best practices (SOC, etc.)
- 27. American Institute of CPAs® #PSTech “If you look at the history of the American capital market, there's probably no innovation more important than the idea of generally accepted accountancy principles.” - Larry Summers Former Secretary of Treasury 27 Standards are Evolving as Well…
- 28. American Institute of CPAs® #PSTech New Standard for Client Accounting Services Most Significant Non Audit Standard Change of Past 35 years (SSARS 21): • Creates a bright line between accounting (preparation) and reporting (compilation and review) services • Adapts the older standards for the current electronic and cloud based environment • Very significant change for Firm Client Accounting/BPO Practices
- 29. American Institute of CPAs® #PSTech Copyright © 2013 American Institute of CPAs. All rights reserved. 29
- 30. American Institute of CPAs® #PSTech Legend Examples No assurance is provided on these financial statements. These financial statements have not been subjected to an audit or review or compilation engagement, and no assurance is provided on them. No assurance is provided by ABC CPAs on these financial statements. ABC CPAs did not perform an audit, review or compilation engagement on these financial statements, and no assurance is provided on them. ABC CPAs adhered to Statement on Standards for Accounting and Review Services (SSARS) No. 21 issued by the American Institute of Certified Public Accountants in the preparation of these financial statements. No assurance is provided on these financial statements.
- 31. American Institute of CPAs® #PSTech New Thinking Required Key Areas: • Revise Positioning and Services • Write-up & Compilation Service • Client Accounting & BPO Services • Value of CPA Firm • Updating of Engagement Letters • Updating of Service Delivery • Legend requirement is an OPPORTUNITY to highlight firm value
- 32. American Institute of CPAs® #PSTech Increasing Automation ‣ Automation of “tacit” (psychomotor) skills: pilots, drivers, soldiers ... ‣ Automation of intellectual skills: accounting, medicine, law, management ... ‣ Automation of creative work: architecture, design, teaching ... ‣ Efficient orchestration of commerce ‣ Concentration of profit Source: “The Big Switch & Beyond” – Nicholas Carr, author, 2014 Digital CPA Conference Keynote
- 33. American Institute of CPAs® #PSTech Dangers Ahead Complacency, Bias, Deskilling: “The Glass Cage” Source: “The Big Switch & Beyond” – Nicholas Carr, author, 2014 Digital CPA Conference Keynote
- 34. American Institute of CPAs® #PSTech Trusted Advisors Role ‣ Transcend the routine ‣ Develop specialized knowledge ‣ Stay ahead of automation wave ‣ Be valued for expertise and insight ‣ Translate data into wisdom Source: “The Big Switch & Beyond” – Nicholas Carr, author, 2014 Digital CPA Conference Keynote
- 35. American Institute of CPAs® #PSTech 80% of CPA’s Think Their Role will Change Significantly in the Future Requires professionals to be more intimate with clients and the shifting marketplace More aware of globalization Better understand digital tools Develop insights into business processes that create value 35
- 36. American Institute of CPAs® #PSTech New Look to Client and Firm Engagement Accounting Today, January 2015 36
- 37. American Institute of CPAs® #PSTech Additional Reading “Future Ready CPA Study” • CPA.com and Dr. Canton • www.CPA.com/future-ready-cpa “Accounting Services - Harnessing the Power of the Cloud” • Dr. Geoffrey Moore • http://www.cpa.com/whitepapers/accounting-services-harness-power-cloud “Model of Success” • Jeff Drew, Journal of Accountancy • http://www.journalofaccountancy.com/issues/2015/apr/accounting-firm-business- models.html 37
- 38. American Institute of CPAs® #PSTech Your Feedback Needed go.trustradius.com/cpa
- 39. American Institute of CPAs® #PSTech CPA.com Resources Insert screen shots
- 40. American Institute of CPAs® #PSTech Resources Digital CPA Webcast Series • “2 emerging services for Trusted Business Advisors: Affordable Care Act & SALT” • July 16, 2015, 2-3pm ET CPA.com Blog Follow @CPAcom on Twitter • #DigitalCPA 40
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Editor's Notes
- We did a study late last summer w/ the Global Institute of Future Studies and Dr. Canton – talk about how we did the study w/ focus groups then surveys. Click for the pop out: When we think of the mindset a couple stats are relevant (90% believe digital future fast approaching , but only 8% think the profession is ready)
- And 80% see their role changing significantly! So what does that mean? The Digital CPA’s are thinking in this way and building the bridge now to this 2025 role.
- What service lines are seeing the impact of these strategies?
- Given all of this here is where we see the value proposition changing to for firms. Accounting Today even had an article about ways to Protect your Firm, 1 was about not knowing enough about the industry and the liability of servicing a client that you don’t know enough about. (I tweeted this on 4/6/15)
- (rehmann) Here is a firm that is repositioning these services. Note how they are addressing client issues, technology use implied, and showing collaboration.
- The key is not to get hung up on the terms, but explain it in a way your clients will identify and see the value for themselves. Wiss created FWRD as their branding. Does the client want the bike, car or jet to move their business forward and here are the services they will get. (come back to how the technology really makes this possible today)
- Digital CPA’s are the bridge builders. They are thinking about the importance of technology as a part of running a business, but they are just as aware and focused on the NEW strategies and change management to lead to the way for staff, clients and the profession.
- Erik (moore)To effectively build your innovation strategy we have to have a solid foundation. 1st understand how to harness the power – discuss Moore’s discussion on the significance of automation and how this is changing the core of what the profession is doing and going. (sinik)Then you have to incorporate your firm’s why given this evolution. As we will hear today with our guest speakers firms are building practices that build on their personal why (explain the concept a bit for anyone not familiar). (carr)Once you have clearly defined your firm’s why and idea of how automation is changing the services of a firm lets think about the human touch. All this technology allows us to provide a new service that is in alignment with what clients are asking for, but the key is now you are using your expertise and thinking deeper about your clients not doing the transactional work that technology can supply today. (canton)So what is ahead in 2025? This is a question people build careers on being able to answer. We may not be able to exactly predict what it will be like, but we need to have a level set on are we preparing? Are we thinking about the future? Is the accounting profession ready? Now that we know where the profession feels weak we can address that which is what we want to help today.
- At times we will hear firms start to clarify what is possible for them by starting w/ the size firm they are. This does not need to be part of your mindset. Every firm has the opportunity to adopt, implement and become a specialized leader. The technology has been a great leveling agent, so if that is in your mind don’t let it be.
- I like to show this slide so you don’t have to take my word for it, but really see the success of firms embracing mindset. And it takes embracing one of being…. “Today a small firm doesn’t mean simple and a large firm mean sophisticated. Technology has leveled the field.” Greg Lafollette, CPA.CITP
- You may not see yourself as the Innovators or Early Adopters, but if you are thinking this way you are at a minimum in the early majority and leading the profession. At some point Digital CPA won’t be a necessary description b/c the majority of the profession will have these strategies, but right now those that are adopting this mindset and strategies are the ones leading the way for the profession.
- We have defined it. we have discussed the mindset so what are the strategies now?
- The studies are showing the widespread adoption of cloud and though the conversation used to be centered around cost savings now the move is really about agility and functionality. Get exactly the functionality you need w/ custom ERP’s if you will. And the agility of growing, attracting clients in your specialty wherever you want is key. I recently had a panel in NY and one of the practitioners, based in NJ, said her biggest competitor was in IA. You can make your specialty known and recognized and the cloud is now about helping you build out that business not just the cost.
- Fuse Phase Cloud Accounting Video
- A regulatory change that has taken place that should impact your strategy is SSARS21. W/ firms offering these trusted advisor and controllership services this standard levels the field in regard to requirement for CPA firms and non-CPA firms.
- These are examples that are in the guides coming out late July
- This means you need to rethink how to position and educate clients and banks on the accounting service you are doing. What does this have to do w/ a Digital CPA? The Digital CPA is more hands on with their clients and their accounting is one of the most advantageous and needed ways for you to offer them value.
- So let’s talk automation. We have all heard about it and trying for it for years. How this plays into automation is let’s take a step back and not just think of it in the impact on workflow for, how we think and interact. Discuss the bullet points.
- (carrying over on the impact of our thinking)
- So the strategy for the DCPA and the Trusted Advisor is…. (discuss bullets)
- Some stats to review that are influencing how these firms are thinking (CPA of Future study) the CPA of the Future will offer more consultative business development, risk management, and advisory services by 2025 More consultative services to help a business grow and manage risk are on the horizon.
- Here is a firm thinking outside the box and marrying technology w/ client and staff engagement. Not just about workflow, but how this also helps build the relationship w/ the client. http://digital.accountingtoday.com/accountingtoday/january_2015#pg1
- Future Ready.. Gives context of where is looks like the future of the profession is headed as you start thinking about the future innovations for your firm. Keeping in context is helpful to provide focus. This is also true w/ the Harnessing the Power… This gives ideas for service models. There are so many examples of industries that have been evolved substantially – older examples are travel agencies w/ the advent of online booking tools, and newer examples are Uber “everyone’s personal driver” Model for Success is an article that was just out in JOA really talking about an association and how they work together to do experiments and see what works for successful business models in accounting firms. Take a look.
- To further the research we work to bring to the profession CPA.com is working with TrustRadius to develop a buyers guide that evaluates the accounting software available today to give you a report on what products are a fit for various business models. If you are using accounting software we are looking for your input.
- Twitter – we have more handles you can follow from those here at this conference to keep the learning going.
- Closing slide