For many tax executives and finance professionals, 2019 has been the year that several emerging trends could no longer be denied. Yes, machine learning and artificial intelligence are automating many basic accounting functions. Yes, businesses worldwide are streamlining their workflows and integrating cloud-based services. And yes, customers and companies are expecting less computation from their tax departments and more advice, analysis, and—dare we say it—leadership.
At Thomson Reuters, we observe, analyze, and, yes, profit from the evolution of business technology. But we also feel it is our responsibility to help customers understand the social and cultural dynamics affecting their organizations as well as the consequences of not understanding them. (A sudden lack of employment, for instance.)
For example, one doesn’t need a crystal ball to predict that, in 2020 and beyond, the developments cited above will no longer be considered trends, they will just become the way things are. In this environment, deniers can look forward to long days full of frustration and resentment. But those who see these developments for what they are—opportunities to enhance the role tax and finance professionals play in an enterprise’s success—can expect a future filled with many exhilarating challenges.
Demand, Competition, Technology
Advances in technology are often cited as the drivers behind these changes, but that is only partially true. The larger truth is that customer demand and competition drive most technological innovations, including those affecting tax professionals. We now live in a 24/7, on-demand society where people expect instant access to their data—for banking, health care, insurance, investments, education, etc.—and require a higher level of service from every business entity they interact with. All businesses must adapt to this new reality, and there is no special exemption for tax professionals.
If enthusiastically embracing technological change is too much to ask, it behooves tax professionals at least to recognize that cloud-based services and digitization are altering how business is conducted around the world and expectations about what sorts of services financial advisors should provide. Furthermore, ever-shifting trade policies and frequent regulatory changes are forcing tax executives to provide more real-time input into everyday decision-making. That’s why virtually every professional tax and accounting publication, including this one, tells you to say goodbye to routine tasks that can be done faster and cheaper by computer—e.g., invoicing, payroll processing, bill payment, inventory tracking, etc.—and say hello to AI-powered data extraction, predictive analytics, and strategic forecasting as well as to more face-to-face interactions with clients and other stakeholders, including C-suite executives and board members.
Some anxiety over this transition is understandable, because it means letting go of familiar processes and adopting new ones. But the goal of automation is not to replace human beings with smart machines. The larger purpose of intelligent technology is to unburden people of the time-consuming tedium of constant repetition, empower them to contribute more productively to the overall success of their enterprises, and help them to meet the rapidly evolving demands of the modern marketplace.
Forecasting the Future: Cloudy
In the world of tax and accounting, the need to shift from a largely reactive business model to a more proactive one is why Thomson Reuters recently purchased Confirmation, an audit-confirmation service that delivers the efficiencies and advantages that only a sophisticated cloud-based platform can provide.
Consider that the traditional audit-confirmation process requires companies to send both an email or fax and a physical letter to all banks, suppliers, and other third-party entities connected to the business, then wait four to six weeks for a reply.
In contrast, Confirmation uses digital integration and other innovations to cut the average response time for audit confirmations to a mere forty-eight hours. The platform also provides tools for bulk messaging of standard form letters, automatically sends follow-up emails, tracks and organizes responses, and can forward the results to banks, law firms, or other entities that need them.
Now, it can be argued that the relative inefficiency of the traditional system keeps a lot of accountants busy. And that may be partially true. But it’s also true that time spent on all that mailing, follow-up, and waiting is time not spent on demonstrably more productive activities. Large organizations, in particular, must send and track hundreds of audit confirmations and can’t conduct the necessary risk assessments until a response is received.
From an organizational perspective, the inherent inefficiencies of the traditional method are sludge in the system, a source of friction that slows down the whole enterprise. In addition to saved time, cloud-based systems offer service options and workflow advantages that traditional methods simply can’t match. Among them are:
- better security/fraud protection;
- improved quality control;
- greater transparency;
- faster response times;
- remote data-sharing;
- more efficient workflow;
- easier data management;
- faster/better reporting capabilities; and
- better customer engagement.
Confirmation isn’t the only program that radically reimagines a familiar business process, and Thomson Reuters isn’t the only company that develops such programs. What all of these cloud-based services have in common, however, is that they enable companies to rethink their workflows and develop processes that are more agile, flexible, responsive, and integrated.
Why Software Can’t Replace People
But for finance professionals who worry that software may one day eliminate their jobs, it is perhaps more important to recognize what these systems cannot do. No matter how sophisticated it is, no software program can analyze and understand the true complexity and cultural context of any given business. Nor can it plan for the future, decide on a strategy, or compare its own analysis with the multitude of competing personal and political priorities that exist in all organizations. More crucially, software programs cannot converse with clients and stakeholders, answer their questions, address their concerns, or do anything to alleviate their fears. And if there is one thing that unites business leaders around the world in 2020, it’s uncertainty about the future—fear, that is, that unforeseeable events may somehow threaten the viability of the enterprise.
In the future, what individuals and organizations will increasingly want and need from their financial advisors is confident guidance through what has become a treacherously complex period of instability, one that shows no signs of ending. What business leaders want to know is, Are we making the right decisions? Does our strategy make sense? How can we be more competitive?
Today’s financial advisors are in an ideal position to answer those questions. Accountants are experts at understanding the hidden narrative in a company’s financials, and now are asked more often by those in operations and leadership positions to explain the story behind the numbers. Forecasting, risk assessment, statistical modeling, scenario planning, predictive analytics, future-proofing—these are all just fancy terms for the most basic questions humans have been asking for millennia: What should we be afraid of? And how should we deal with it?
Cloud-based services, machine learning, artificial intelligence, blockchain, and other developing technologies are simply the building blocks for a range of new tools designed to help professionals of all kinds manage the increasing speed and complexity of an uncertain world. At the moment, the global transition to cloud-based services is driven by large companies, but midsize and small businesses are also recognizing that, in order to remain competitive, they must adapt, too.
Work of (and for) the Future
As a provider of cloud-based services, Thomson Reuters is in the business of anticipating future work trends and providing customers with the tools they need to compete more effectively in the global marketplace. When we purchase companies like Confirmation and HighQ (another recent acquisition in the legal-matter-management space), we do so because these products provide technologically elegant improvements to antiquated work processes—
processes that were developed in a different age, to meet different needs. The increasing speed, complexity, and interconnectedness of the modern business world have rendered many of these conventional processes inadequate or obsolete.
So yes, the first wave of digital automation has commoditized many basic accounting functions, but the second wave promises to expand and enhance the role tax professionals play in enterprise success, not diminish it. Nobody wants a machine to tell them what to do. What they want is intelligent, insightful analysis from a human being who knows how to think above and beyond the numbers. In 2020 and beyond, the most successful financial advisors will be those who can provide that insight, using the best available tools to identify the clearest path forward.
Tad Simons is a technology journalist who writes about enterprise management and workflow issues for the Thomson Reuters Thought Leadership team.