As Accountex 2018 is just around the corner (especially if you live in east London), I’m handing today’s Daily Insight over to one of t he event’s leading speakers, Steve Cox, chief evangelist of UK accounting software group IRIS. He’s going to share his thoughts on the digital challenge for accounting:
The extent to how the accountancy industry is changing is now evident. Making Tax Digital (MTD) for VAT is now in beta phase, the deadline for the General Data Protection Regulation (GDPR) is almost upon us, and recent updates to Anti Money Laundering (AML) were approved by HMRC in March.
However, it’s not just the legislative changes that accountancy practices need to consider as we digitise the economy. And we should not isolate technology changes either; artificial intelligence (AI), blockchain and the Internet of Things (IoT) will affect digital transformation, but they are not the be all and end all.
So, what else is there to consider as the tsunami heads for the industry?
Practice mergers are driven by the early retirement of practice partners
First, the market is growing and expanding. According to BDO, M&A deals totalled $2.6trillion in 2017 and are predicted to reach a record high of $3.2trillion this year. The market for mergers is stronger now than it has ever been.
IRIS found further evidence of change in its Voice of the Accountant research – nearly two thirds (60 per cent) of accountants agree that practice mergers are driven by the early retirement of practice partners/owners and 44 per cent believe the UK market will continue to consolidate into a smaller number of practices overall.
Alongside market changes is the evolution of the workforce: by 2025, 75 per cent of workforce will be millennials which marks a step change in the working environment – not only for employees but the way services are provided to clients. And millennials are driving the technology changes in practices, with nearly two-fifths (37 per cent) under 30 in the technology driving seat.
Economic landscape will look very different
The economic landscape will look very different too. The UK government is changing to a digital entity, inspired by countries such as Sweden, Singapore and United Arab Emirates and we are not doing too badly: in 2016, the World Economic Forum placed us at No 10 in promoting information and communication technologies and providing online services to the population.
Digitisation will evolve, so accountants must consider this aspect as they move towards value-added services and most importantly business intelligence – upon which accountancy practices can develop further service opportunities.
There are a multitude of macro-environmental factors to consider as we progress in the economy, business and life. As the tsunami edges in our direction, we shouldn’t try to direct the wind, but adjust our sails to embrace and take advantage of the new seas ahead.
Steve will be at Accountex 2018, speaking about the Climatic Flip in the Practice and Compliance Theatre at 4pm on Wednesday 23 May. Be sure to join him.