I was pitching my company to a room of around 200 hugely successful entrepreneurs at U of T’s Creative Destruction Lab startup accelerator. Although I have no idea of the real numbers, my CPA brain quickly tried to estimate the net worth of the room, and just as quickly tried to apply the conservatism guideline so as to lessen the blow to my ego.
After the pitch, it’s time for questions from the audience. The founder of a prominent accounting technology company asks something striking: “My company is going to make accountants obsolete, so why would you build a business targeting them?”
I answered, “Yes, your company, or others like it, will automate a lot of repetitive work accountants and bookkeepers have done in the past. But that work, which may historically account for 80% of our hours spent, really only relates to 20% of the value we bring to the table. With companies like yours taking 80% of the low-value work off our hands, CPAs now have the chance to spend that time doing the high-value work that we used to have less time for, and we can do it with better data. I appreciate what companies like yours are doing, you’re ensuring my profession is a going concern.”
The questioner wasn’t a CPA, so I’m not sure if he got the joke, but it wasn’t the answer he expected. This new environment we’re entering presents huge opportunities, but there will be both winners and losers along the way. How does the saying go? “Only wet babies like change.”
It was important to find out what CPAs thought about these imminent changes. With the help of CIBC, we hosted a session with senior partners from a diverse range of firms: Big 4 down to sole proprietors. We asked them a battery of questions (the white paper with all responses can be found here), and the results were mixed.
Traditional issues like staffing and succession planning still represented the highest priority (over 60%) on the minds of practitioners, meaning the massive disruption our questioner referred to hasn’t made it to the apex of CPAs’ consciousness. That doesn’t mean CPAs aren’t thinking about it, but it suggests we aren’t feeling it…materially at least.
In fact, the firms are quite aware change is coming and are preparing for it, with 83% of respondents saying their firm has designated a partner to champion new software tools and understand how to effectively implement them into their clients’ workflows. The results do however point to some confusion around big data and AI. About half say they’ve invested in AI, with the other half at least discussing it. Additionally, 46% say AI will affect their practice more than any other technology. Yet, 0% – literally no one – thought the same of ‘Big Data’.
This is a problem if it implies a misunderstanding about one of our biggest opportunities as CPAs. We aren’t AI experts, but the opportunity AI presents doesn’t require us to be either. Big data is the key ingredient to both building and improving AI. To reap the vast benefits of AI we still need clean reliable data. Consequently, the people who 1) build and maintain the processes and systems to provide that data and 2) interpret and analyze the results, will remain valuable for years to come.
And isn’t this just what we’ve always done? This change is in many ways no different than the introduction of excel. We never learned to code excel, we just learned to code IN excel.
Historically, accounting has always been about producing clean and reliable data to make predictions with, and decisions from. Just because that data comes in real-time at massive quantities (something we’ve always dreamed of), does that mean we are no longer the best arbiters of this important corporate function?
Let’s also remember the current state of AI. The Terminator isn’t coming to do your journal entries. It’s more like the evolutionary equivalent of an amoeba, basic non-learning AI, that is only now taking over our simplest repetitive tasks. The most advanced cloud platforms like Xero are working to fully automate the workflow from end-to-end; but their entire vision rests on practitioners tying all the many data sources together, and using the output to provide actionable advice. If Arnold can’t do your journal entries yet, you can be sure it’ll be a while before he’s providing complex tax or business advice.
Some companies may be betting on our demise, but others know we are the right people for this new, but still kind of the same, job.
So who should we believe? CPAs have always prided ourselves on having an adaptable skill set, but now we need to place a bet on it. Three years after that pitch at U of T, I’m still building a company that’s devoted to training CPAs to capture these emerging opportunities, so I guess you know which side I’m on.
CPA and Proud!