I have attended many conferences, partner retreats and association meetings over the last few months and, as you would expect, THE topic that is top of mind for many firms is technology innovation and how automation will change what we know about providing accounting and tax services. But I find one thing very troubling in all these conversations – they tend to be myopic and don’t address what I believe to be the more “clear and present” danger. Let me explain.
Many firms are rightly thinking about automation, new service opportunities and how they can be more efficient in what they do. All recognize that they cannot compete financially with investments in these technologies being made by the Big 4 and many of the Top 20 firms. And while the conversation about what might be possible in the future is of academic interest, far too many are dismissing it as, “While that might be reality for the Big 4, we don’t serve American Airlines as a client and our clients don’t need that level of sophistication in their tax and audit services.”
Yes, it’s true that you aren’t auditing American Airlines. Yes, it’s true that the vast majority of your clients don’t need these sophisticated systems to audit their accounts. And yes, it’s true that it will be several years before many of these disruptive technologies are affordable and available to firms of your size.
But here’s my biggest concern with that thinking, and why I feel compelled to sound the alarm. What happens when the largest firms perfect the technology to the point of significant cost savings in servicing their Fortune 500 clients? The answer is THEY WILL MOVE DOWN MARKET because now it will be affordable and profitable to do so. They will be able to very profitably serve the Fortune 1000. The Fortune 5000. Local construction companies. Mom & Pop grocery stores. YOUR CLIENT BASE.
It is this threat to your future that I believe isn’t being talked about with the intensity and volume I believe it should be. What will happen when your longtime client goes through a generational change of leadership and they feel that – for a similar fee as yours – they would prefer having the name, cache and resources of a Big 4 behind them? And with the technology innovations, it won’t be long before the Big 4 can profitably compete for a piece of your client base. Let that sink in for a moment.
Implementing all the new technology that is being talked about today will certainly provide your firm with cost savings and operational efficiencies. But what are you doing today to ensure that the relationships with every current and future decision-maker in your client companies are rock solid to ensure that when the Big 4 come knocking – and they surely will – your client doesn’t open that door?
I encourage all MPs, executive committees, state society leaders and consultants to the profession to include this perspective in their discussions of the future, because this is a conversation we are not hearing anywhere, and one we believe is a “clear and present” threat that needs to be planned for.