This article in Accountancy Age identifies but underestimates the huge implications for the profession and the provision of accounting services to SMEs.
Ben McDonald of KPMG points to the potential that the new entrants into the market will not be as qualified, skilled and may not even have any accountancy training.
Whilst my comments clearly show that I believe technology is a good thing for the profession, the automation of processes will lead to lower quality information being provided.
What do I mean by this?
There have been new entrants into the outsourcing market offering very low cost solutions. Price competition is good but our SMEs must beware. Relying purely on information produced by a technology platform that has not been reviewed by a person with accounting skills is a very dangerous position. The quality of the new systems has meant that most people believe they know how to be a bookkeeper. But what happens when something goes wrong? How many of these new entrants understand the basics of double entry bookkeeping.
I have spoken to a number of businesses recently in this position who have seen huge variations in their monthly management accounts on which they have based investment decisions. Some of them worked out just fine!
When buying a low cost option a business owner must either have the skills personally to analyse the information received or ensure that the business providing them with the information knows what they are doing.
This leads on to issue number two identified in the article. Technology alone is not a solution. This must be married with advisory services that can support a growing business.
Do the Big 4 really have the skillset, experience and charging structure that is appropriate to servicing an SME?
Technology will continue to automate processes but this must NOT compromise the quality of information that an SME needs.
New entrants into the market is always a good thing however let's hope that these entrants are able to provide quality work and that some of our business owners do not realise too late that you get what you pay for!
“What’s happening in the market is forcing firms to look at their technology and look at the platforms and services they’re providing their clients, and it’s forcing mid-tier firms to evolve as well. It’s bringing competition, but it’s also bringing improvements to service provision.” KPMG’s McDonald agrees there has been a reaction with mid-tier firms starting to look at similar solutions, and the Big Four doing similar things to varying degrees, but warns that advancement in cloud technology could open up the market to new competitors. “Eventually, what we might find is businesses that aren’t even in the accountancy profession will start to look at solutions. The more these become technology enabled, the less there’ll be the need for traditional accountancy skills. I think there’s the realisation the world is changing.”