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One of the things I talk about is that technology advancements happen behind you. Rather than in front of you. AI effectively has been around for a very long time, but was truly democratised with the launch, say, of ChatGPT about a year and a half ago.
When I talk about technology advancing behind you is that people woke up one day and suddenly there was this whole availability of an entire toolkit that previously didn’t exist. No, but what has happened subsequently and has happened over the last couple of years is that what was traditionally the preserve of the larger consulting firms or the larger accounting firms, you’re looking at your upper mid-tiers of the McKinsey’s, PwC’s, KMPG’s, etc, all of that technology is effectively being democratised. Suddenly we have access to all these toolkits that suddenly we didn’t have access to previously. This stuff is here and it’s revolutionary. That’s probably the biggest leap forward that we’ve had in a long time. The fact that like finding a new function on your phone, firms will find the ability to either new tools in the marketplace.
If we look at AI as a great example, AI has been really prevalent in the high-end audit world for many, many years. Now, it’s been so democratised that they’re actually doing it in pre-accounting, and pre-accounting work before it even gets into the accounting, reconciliation, and journal entry stages. They utilise these tools to basically see if there appears to be any kind of anomalous information in there, or there’s errors. It really is a fascinating tool.
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Let’s think of the crisis of talent these days. One of those, the abilities for firms to automate the automatable. What has traditionally been for a lot of accounting firms, are disjointed disparate systems. So, when you have data spread across several locations, it’s very difficult to get a concise view either of an account or of a client or of a data set. What things like AI allow you to do is to be able to is, extract the information out of product X, put it into product Y, and make sure that the flow happens automatically. That can be through a simple robotics process automation, which is kind of like, if this happens there, do that over there. Quite simple.
Think of it as a really clever out-of-office agent. It’s basically saying, when a message comes in, reply in this manner. Through to extracting data out of Excel spreadsheets, to providing ideas as to what’s happening within this client or being able to formalise or emotionalise a letter to a client, rather than just blurting out a series of facts. AI can be used in a whole variety of means and manners. But I think one thing that must be ensured is that there’s guardrails around how that is utilised. AI is kind of all-pervasive at the moment. And I once saw it described as a mansplaining service. I just thought that was absolutely fantastic. It seems to be authoritative without even having any background or context as to what’s going on.
What things like AI allow you to do is to be able to is, extract the information out of product X, put it into product Y, and make sure that the flow happens automatically.
Fitzgerald says.
Look, there’s always a risk of not keeping up and probably a lot of the firms that I see, unfortunately, there’s a lot of loyalty has been put into their incumbent vendors. Unfortunately, that loyalty has not been reciprocated when it comes to developments or advances in the technology that they’re using.
What happens in that scenario is that the firms progressively get further and further behind their peers that have adopted newer technologies, such as technologies to enable them to be more efficient in the office. I am doing several projects right now with a number of firms, where we’ve discovered that they can be anything up to two generations behind what some of their peers are doing.
Now, AI will come into that, but it will only come into it once they’re up to date with the rest of their technology, which will allow them then to leverage off of the databases that they have and the capabilities that they have within the firm. From a guardrail perspective, you have to ensure that your systems are capable of leveraging AI, but you must also ask the question, what do I want AI to do for me?
It’s one thing to say, here’s the answer, but you actually have to understand what the actual question is that you’re asking of the AI tool. This is where taking a step back and looking at either your processes, either compared to your peers comes in handy. As well as then outlining, what you actually want to achieve by utilising AI.
From a guardrail perspective, you have to ensure that your systems are capable of leveraging AI, but you must also ask the question, what do I want AI to do for me?
The single one that comes up all the time is, ‘what about security?’ What’s it like with security? Security is a big thing at the moment. If you’re running old servers, that is probably the most insecure environment that you could wave a magic wand at. It really is.
Look, it’s an understandable question. It’s a naive question because every one of these cloud providers has security the same level as, or better in some instances than the banks, right? So you trust banks with your money. You would never go to a bank and when you’re doing online banking and say, oh, what’s your security level? The assumption is there that they’re going to be protective of that. It’s the same level with regards to cloud computing.
The other advantage of it is if you’re still running old servers, if your offices get flooded, or heavens forbid, they go up in flames, it doesn’t matter. You can go down to Harvey Norman, pick up a laptop and plug it in, you’re back online again. And so, there’s an old acronym called PICNIC, which is a problem in chair, not in computer. So, generally, the problem when it comes to a security breach, is the person sitting in the chair, it’s not in the computer.
There’s an old acronym called PICNIC, which is a problem in chair, not in computer. So, generally, the problem when it comes to a security breach, is the person sitting in the chair, it’s not in the computer.
Look, there’s a couple of things. Accountants and bookkeepers effectively are custodians of their clients and they’re custodians of their clients dreams, hopes and dreams. In order to be able to deliver them the best service possible, and in order to deliver their team’s capability of being able to deliver those services as best as possible, they need to provide them with the best tools for the purpose that they’ve been asked to do.
The challenge for a lot of the firms that I work with, is that there’s vendors will come in and say, oh, we can give you, you know, we can give you like a 10 to 15% improvement on your productivity and bottom line. It’s like, it’s not worth it. 10 to 15%? Yeah, make it 50, make it 60, then I might be interested.
What they’re missing then is the fact that as apposed of what I mentioned earlier about one of my current clients, is that there are several generations behind compared to their peers. By the time they get to the same level as their peers, peers are already, one step ahead. This is the problem with the older technologies. The processes are fundamentally the same. The outcomes let’s assume a tax return, the outcomes are predetermined by the ATO and the government, you’ve got no control over that. What you do have is absolute control of how you get there. If you have manual steps or you have time delays in workflows, those delays are costing you time. The more that you can automate a process, the more and the better the outcome will be for everybody concerned, not just the accountants who don’t want to be glorified data entry people. They want to utilise their brain. They don’t want to just sit there typing in all of this, or re-keying in all of this information. That’s the advantage of these newer systems. They allow you the flexibility to be, I won’t say creative because nobody likes a creative accountant, but you know, creative.
There will always be someone cheaper than you. There will always be someone more expensive than you. There may not necessarily be someone with your niche experience in a particular area, which is where you have the opportunity to capitalise against, again, the abundance of opportunities rather than a shortage of talent. AI really does open up those opportunities to be relevant and competitive, it allows for critical growth. Also, for any accountant entering the market at the moment, there’s never been a better time to set up your own accounting firm. The tools that you have at your disposal compared to what a lot of your peer competitors are using are so far advanced. In areas such as doing the compliance process, the workflow management, the advisory tools that are at your fingertips, the reporting tools, visual and or otherwise, it’s just amazing. It’s just the opportunity of AI and its capabilities for firms that is fantastic.
Tune into this episode of the AD insider podcast to get a clearer insight, more detail and information regarding the ins and outs of AI from Alan Fitzgerald.
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