A host of challenges will confront CPA firms heading into the new decade. Some challenges will be familiar and some are unknowns—the rapid pace of technological advancement in artificial intelligence (AI), machine learning, robotics and IT make it hard to predict what kind of change the next 10 years will bring.
What is abundantly clear, however, is that CPA firms that have resisted investing in stronger IT infrastructure, like the cloud, for example, are behind the proverbial eight ball. Even CPA firms that have been slower to adopt modern IT and security technology and best practices have put themselves at risk of falling too far behind to catch up.
Leveraging the cloud, AI and other modern, sophisticated IT approaches that enable stronger, more secure access, increased data security and scalability—to name just a few advantages over increasingly outdated legacy IT ecosystems—has become the norm for an emerging new class of forward-thinking CPA firms that are set up to thrive and adjust to what is sure to be a rapid and possibly unpredictable decade of change.
So, the first thing CPA firms need to know is this: if you haven’t invested time, treasure and human capital into upgrading your IT ecosystem to the cloud, you’re already in a precarious position heading into 2020. It’s time to take a leap forward so you not only keep up with other CPA firms, but also adapt and scale right alongside technological advancements and your firm’s growth.
In addition to data security concerns, which will continue to be a major focus, there are a host of other items to be cognizant of as a CPA firm heading into the new decade.
Let’s take a look at four key areas to keep an eye on as your CPA firm heads into 2020.
Data Security and Data Privacy
The cyber threat matrix is almost inconceivably vast and constantly changing, making it nearly impossible for even highly experienced, larger IT teams to counter every data threat. Add to this the increased regulations around data privacy in Europe (GDPR) and the impending push for stronger data privacy laws in the U.S., and CPA firms have a complex data security and data privacy environment to navigate.
The cloud, AI and automation are a CPA firm’s survival kit for the next decade. Effective human-only, manual monitoring of any given legacy IT network is extremely difficult today and will become impossible in the next decade.
Cloud-enabled AI Network Scanning, which is always-on, reduces vulnerabilities and increases incident response times. AI-driven, cloud-enabled email monitoring for phishing emails is consistently more effective than other methods. Having automated, AI-led email monitoring is really the only effective approach to mitigating the biggest cybersecurity risk of all: an employee willing to open an email and click on a button that lets the bad guys in. What’s more, AI eliminates the lag inherent in most antivirus software programs, which are always attempting to catch up to the latest threats because of required signature updates.
The anytime, anywhere access capabilities, consistent, reliable data backups, data redundancy and greater document sharing and controls, make the cloud and AI ideal tools for maintaining current and future data privacy compliance.
While data security and data privacy will remain huge issues for CPA firms, many see the cloud, AI, automation and Big Data radically altering the way firms will operate in the impending decade.
A Radical Shift in CPA Firm Services
CPA firms that were early adopters of the cloud have enjoyed greater efficiency, stronger security and increased productivity, particularly when they partner with an experienced cloud services provider. Increased automation and decreased reliance on human beings executing manual processes (like software updates, security updates and more) has empowered CPA firms with an invaluable resource: time.
IT firms with well-run cloud ecosystems have moved beyond “Break and Fix Mode” and can now focus on larger, strategic initiatives and improving innovation. Data security amplified by AI has reduced vulnerabilities due to human error and traditional security software lag.
AI and automation, in particular, are being deployed to handle paperwork, rote, mundane jobs and many back-office tasks that were labor intensive and time consuming.
In the next decade (some even say in the next five years), CPA firms that leverage the cloud, AI and automation will have more time to innovate and provide greater strategic advisory services to their clientele. As the audit and compliance process changes radically over the next decade, CPA firms in a strong IT position will be able to provide more valuable services and increase profit margins by removing previously inefficient and time-eating manual processes. What is likely to occur is that more progressive, modernized CPA firms will be able to provide greater value to their clients while improving their bottom lines.
A New Way to Audit
AI has the ability to organize and analyze unstructured Big Data in real time. CPA firms traditionally perform audits using highly structured, already aggregated data. In the new decade, AI will start with unstructured financial data, organize it from various sources, and output data sets and financial analyses to a dashboard. AI will be able to do all of this at the transactional level and in real time.
Again, CPAs will be freed up to shift their focus from gathering historical data, which will be done automatically, to providing strategic advice based on analytics produced in real time.
AI and Big Data collection, aggregation and analysis will fundamentally change the way CPA firms do business in the next five to 10 years.
A New Breed of CPA Talent
As AI and Big Data play a more prominent role in the way CPA firms operate, data science and engineering talent will become increasingly valuable hires. Data scientists and data engineers will direct AI so that it can understand the nature and structure of the data sets it will be processing and analyzing.
What’s more, the CPAs at a given firm will need to work closely with data scientists and engineers to provide the business context for this data. Big Data and AI mean new and different workforce talent will be infused into accounting and the business experts, CPAs, will have to add to their skill set to act as a bridge between tech and business strategy.
“Accountants in the future will need to effectively communicate business information to the technologists designing the AI-powered financial (and other) systems. To perform this role effectively, accountants won’t need to become software coders or database designers, but they will need to understand enough about how those systems work to collaborate with the data scientists and data engineers,” wrote Ken Tsiac and Jeff Drew in the Journal of Accountancy.
Rick Richardson, CPA/CITP, CGMA, of Richardson Media & Technologies, perhaps captured the challenges faced by CPA firms best in Tsiac’s and Drew’s Journal of Accountancy story: “It’s a matter of survival. If we don’t set almost unreachable goals, we will never catch up, let alone move ahead of the change curve.”
In many ways, CPA firms face similar challenges to nearly every conceivable industry as the next decade approaches. Whether it’s data security, data privacy, new ways of operating or adapting new business models to meet a clientele’s evolving needs, having the right IT tools, IT talent, and cloud hosting and service partner will be essential to CPA firms looking to thrive in 2020 and beyond.