This article is an overview of a recent panel discussion at Winning Ways 2022, the accounting profession’s only conference on practice management.
Every accounting firm, large and small, sits on a treasure trove of data. The problem is that, for the most part, the value of this data is untapped. Firms are unsure of how to best organize their data, don’t know where to look for insights, and are resistant to change a business model that’s worked well for years.
But the world is changing. Data is the new currency of growth, and it’s becoming increasingly important for firms to leverage their data to strengthen their business development function, automate time-consuming processes, and build new competitive advantages.
New technologies are coming to the fore that enable firms to do exactly that. Platforms like IntroHive and Aiwyn are changing the way accounting firms do business, for the better. But the biggest challenge remains in changing the behavior of firms: from managing partners down.
The discussion, chaired by Winding River Consulting’s David Toth, explored exactly how accounting firms can use data and technology to advance their firm. Read on to discover the key insights.
What is the Value of Using Data to Advance Your Firm?
Firms can no longer afford to stick their head in the sand when it comes to embracing new, data-driven technologies to streamline their businesses. With waves of private equity investments and a sharp increase in M&A activity, the accounting industry is only becoming more competitive.
In recent decades, many firms have become accustomed to a predictable business cycle. Large portions of an accounting firm’s revenues are recurring: annual audits, tax season, and so on. That might have delivered incremental growth in years gone by, but now, many firms are targeting aggressive annual revenue growth of 40 or 50% or more. Growth like that demands a new approach.
To survive, never mind to thrive, firms need to invest in building the capabilities that allow them to compete, and mastering data and technology is the foundation of this. Every firm has data: the challenge lies in making it actionable. That can be done in three key ways: driving growth, enabling better storytelling, and removing friction.
Driving Growth with Data
One area that’s top of mind for many firms is driving sustainable growth. And there are innumerable ways that firms can use data to drive growth: not least through using a platform like Introhive. But for many firms, the first step to success lies in uniting all your data into one platform.
Consolidating data from various silos into one centralized hub makes the data itself much more malleable. All kinds of new possibilities open up, creating efficiencies between marketing, business development, and more. A platform like Introhive pulls data from your employees’ email inboxes, calendars, and more to create a holistic picture of business development opportunities.
Exploring your firm’s data also unlocks opportunities to pursue more margin-efficient growth. One firm Introhive worked with compiled a spreadsheet of their entire roster of clients, analyzing profitability by client and engagement type.
The data gave the firm conviction to cull several clients, reorganizing their business around a more profitable revenue base. To many firms, this might feel like a risky leap of faith, but with the right approach to data analysis, building the conviction to make major decisions is much more straightforward.
Encouraging people to change their behavior – whether that’s clients or internal team members – demands strong storytelling. But without accurate, impactful data, it’s extremely challenging for firms to create compelling narratives that people will coalesce around.
Today, effective storytelling is done visually and is backed by data-driven insights. Data often shows a linear path to the most likely outcome of any major decision, enabling firms to become comfortable with change that might otherwise have scared them.
Keep in mind that the value of using data is limited if the data resides in a centralized system used by just a few team members. To be valuable and actionable, firms need to put data, and the narratives that data drives, in front of team members who are actively talking to clients.
Removing friction from everyday tasks is key to enabling your team to unlock more billable time and generate increased value for your firm and your clients.
Aiwyn’s entire business model is built around the inefficiencies that characterize the client billing process at many firms. By using data to automate time-consuming, low-value client billing tasks that are done by partners every month, Aiwyn removes significant amounts of friction from an accounting firm’s day-to-day activities.
The benefits of this aren’t just limited to freeing up more billable hours: your people will be happier, more proactive, and will have increased time to think strategically about how they can add value to your firm.
What Challenges Must Firms Overcome to Successfully Leverage Their Data?
Of course, transitioning from a traditional accounting firm into a modern, data-driven accounting firm is no easy task. Many firms can attest to that. There’s no denying that there will be bumps along the way as a firm tries to build out new capabilities.
An awareness of the challenges that lie ahead – and knowledge of the best ways to address them – is key to building enduring success.
Too many firms aim to do too much at once and quickly become overwhelmed by a deluge of data. Alone, embracing data or technology is not a strategic aim. To be successful, firms should begin with a clear end goal in mind and work to determine how data and technology can act as the foundation for this goal.
Adoption can be a major challenge too. Changing behavior at scale is extremely difficult, and as an industry, accounting is known for being more resistant to change than most.
Start small, seeking out incremental wins that clearly demonstrate the value of technology to the firm. If you can find a way for technology to address something that pains your people (such as the monthly client billing process), do so. Over time, you’ll begin to see a ripple effect.
How Can Managing Partners Measure The Success of Adopting Data?
As with any new major initiative, firms should take steps to measure the success of new technologies and processes. To do so effectively, take a layered approach that blends quantitative metrics with qualitative feedback from your people.
Aiwyn’s goal is to have a direct, month-over-month impact on an accounting firm’s cash flow. Anchoring success on one quantitative measure and then supplementing it with feedback from leaders, clients, and other stakeholders is a robust way to measure the success of any data-driven project. A new technology may move the needle in some measurable way, but if it’s a nightmare for your partners to use, it won’t stick.
If you’ve been tasked with leading an initiative to revitalize your firm’s data literacy and use of technology, it’s vital you choose a North Star metric that everyone is aligned on. Accountants are professional problem finders. If your business case hinges on a questionable ROI number, rather than something more concrete, you’ll struggle to garner support.
The key is to invest in new processes and technologies that make your firm measurably better. Many firms are already ahead of the curve on this and find themselves well-positioned to execute winning growth strategies in 2023 and beyond. If your firm is falling behind, the time to start is now.
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Introhive is an award-winning platform that helps firms develop greater levels of customer intelligence. Their platform provides a 360-degree view into B2B customer relationships that helps firms nurture leads, identify selling opportunities, and strengthen customer relationships.
Aiwyn enables professional firms to automate back-office tasks including billing, collection management, and payment processing into their all-in-one accounts receivable platform, making it easier for firms to get paid.