The required step before AI and blockchain

Artificial intelligence, machine learning, and blockchain are buzzwords in the accounting world these days, and with good reason. After all, these revolutionary technologies appear poised to supplant many of the tasks and business practices that have defined the accounting profession for many years — a topic we discussed in the articles “The Robots Are Not Just Coming, They Are Already Here” and “CPAs’ Top 5 Questions About Blockchain, Cryptocurrencies“.

As exciting as these technologies are, accountants won’t be able to leverage them if they aren’t up to date on current technology — specifically, the cloud. In fact, the single most important step accounting practices can take to be future-ready is to have cloud-based accounting software. That’s because the ability to quickly access large amounts of data on an anytime, anyplace basis is essential for automation, blockchain, and artificial intelligence technologies to produce profession-altering advances such as real-time business transaction verification and full data set financial audits. 

If your practice doesn’t yet have cloud accounting software in place, you need to get moving, but you don’t need to panic or rush into a bad decision. It’s more important than ever that you do your research regarding which cloud accounting software and ancillary ecosystem software packages to implement. The system you choose should work well today and for years to come. With that in mind, here are a few things to look for when selecting software that will provide you and your clients the most value.

Cloud-based functionality

The most important aspect of cloud-based accounting systems is that they allow accountants — and, often, their clients — to access their data online (i.e., in the cloud) at any time, from any place, and on any device (computer, tablet, phone, etc.) This always-on connection allows for much easier collaboration among internal team members and with clients. In addition, cloud-based software provides automatic security updates, feature upgrades, and file backups. Clients have come to expect this from business partners, so it’s important you can demonstrate that you’re using the most up-to-date technology.

The No. 1 fear keeping firms from switching to cloud-based platforms is still security. While some of these fears are warranted, storing your data on the cloud is no less safe than using traditional methods. In fact, because cloud storage is managed by large software providers such as Amazon and Microsoft, it costs you a lot less than hiring a managed services provider to protect your servers because the costs are spread among all the subscribed users, rather than you taking on the full cost yourself.

To allay your fears surrounding security, start by asking the right questions of your cloud provider. An article recently published by SC Media outlines five important questions to ask, including the cloud provider’s privacy standards, your responsibilities for security vs. the provider’s, and whether the service provides an audit trail. It’s also important to practice your own smart precautions, such as setting strong passwords and carefully guarding who has access to your accounts. It’s also a very smart idea to keep at least one offline backup of your data via an external hard drive. That way, you’ll have a fallback option if there’s any trouble with your software.

Making the transition

Every firm is different, and different software options will appeal to different needs. Whenever possible, a single platform should be used to foster efficiency in your processes and shared learning. But if your firm is composed of multiple departments that serve vastly different clients, you may need to discuss which solution would meet each group’s needs.

Rather than replacing the software you have with similar online software, take this time to step back from your practice and design what it will look like in the future. You can start by stating your purpose as a firm. Why do you do what you do? This will help you define the industry or industries that you want to focus on as a practice — this is called your vertical industry niche. As an example, my interests lie in health and wellness. So, if I am serving health and wellness clients as a vertical industry niche, my purpose in serving them is helping their businesses grow so they can continue to help the customers that come into their businesses.

The vertical industry niche you target as a client base provides a starting point for research into how to set up your technology to best serve that industry. Do the legwork to determine those clients’ three biggest pain points and what they are looking to you to help them solve. For instance, in a health and wellness business, clients need cloud-based point-of-sale technology that provides the metrics they need to run their business. As an accounting practice serving these clients, you would need to make sure that the accounting information from that point-of-sale system properly integrates with the cloud accounting platform you are using so you can provide clients with information on their business in real time. Taking the time to do the research on what the technology should solve for you and comparing vendors based on those top pain points will help you deliver a better solution for your clients in the long run. Doing this research will also illuminate new service offerings your firm can provide.

Once you’ve compared options and decided on the software that’s right for you, it’s important that you dedicate the appropriate amount of time to the adoption process. You can’t simply choose a platform and get started right away. It’s essential to test the software with a few clients to get the process down. After that, successfully migrating your data and providing proper training and certification for your staff can be the difference between a dream transition and a disaster.

Most software will allow you to migrate data seamlessly from your current platform, but you’ll still need to do some due diligence to ensure that nothing gets lost in the move. It’s a great idea to set up a few mock client accounts for training to familiarize yourself with the software before you begin using it with your clients. Another smart practice is to begin using the software with your own internal accounting information first. Remember that you need companywide buy-in and education for everybody who will be using the software.

Automation and artificial intelligence

Once you have a cloud system implemented, you will have the right technology to take advantage of all the new innovations in technology. As cloud accounting has moved from cutting-edge to mainstream, artificial intelligence (AI) has become the newest disruptive technology to be adopted by an increasing number of accounting firms, including all of the Big Four. AI allows software to complete tasks without the need for human oversight. To quote PCMag writer Juan Martinez, “AI is a car driving you to work while you take a nap in the back seat.”

It’s important to consider the emergence of AI as you’re shopping for accounting software. You don’t want to get stuck with a software vendor that is behind or not making an investment in rapid innovation. Many accounting software platforms already have functionality for the automation of data entry and reconciliations, and more and more companies are developing and marketing AI features. As a result, it’s advisable ask potential vendors for examples of AI or machine learning features they have released in the current year and what’s on their road map for releases in the next year to three years.

If you haven’t already begun, now is the time to do the upfront work to get your firm ready for the technology innovations that will help sustain your practice into the future. If not, you risk winding up on the sidelines during a very exciting time in our profession.

Amy Vetter, CPA/CITP, CGMA, is an adviser, keynote speaker, and leader of the Technology Innovations Taskforce for the AICPA’s Information Management Technology Assurance (IMTA) Executive Committee. She also has authored the book, Integrative Advisory Services: Expanding Your Accounting Services Beyond the Cloud, published by Wiley. Learn more at amyvetter.com. To comment on this article or to suggest an idea for another article, contact Jeff Drew, a JofA senior editor, at Jeff.Drew@aicpa-cima.com.