Earlier this year Gary Turner, managing director of the cloud accounting software company Xero, wrote an open letter to the adjudicators of the Oxford English Dictionary, arguing that its current definition of accountant – ‘a person whose job is to keep or inspect financial accounts’ – was archaic and should be updated to reflect the changing nature of the role.
‘The role of an accountant is far removed from what it once was,’ wrote Turner. ‘Today, an accountant doesn’t just crunch the numbers and observe financial operations, but so much more. They advise business owners and aid and fuel business objectives such as business growth, improving efficiency, cost and productivity. Insight from well-respected bodies finds that time and time again, accountants are a business owner’s most trusted adviser.’ Turner went on to suggest a new definition: ‘a person whose job is to keep or inspect and advise on financial accounts’.
If the low-paid manual tasks are taken care of by technology, firms can deliver a different kind of service to their clients
Of course, the suggestion was a useful PR springboard for Xero, one of the fastest growing providers of cloud software to SMEs. The letter also pointed out that the number of accountancy practices embracing cloud technology means that accountants are able to ‘offer useful insights by analysing operational and financial data stored in the cloud’. But Turner’s proposal also gained the support of ACCA. The proposed addition of ‘advise’, says Claire Bennison, head of ACCA UK, ‘is a positive development we fully support as it reflects the changing role of a professionally qualified accountant as a trusted adviser to business’.
At the root of the issue is the fact that accounting software – whether cloud based or otherwise – has in recent years taken over much of the traditional grunt work of accountancy, freeing up professional accountants to focus on value-added advisory services. According to Xero’s own research, 42% of SMEs say that they ask their accountants for advice that goes beyond accountancy, and while 34% of SMEs say that they value their accountant’s number-crunching skills, far more (41%) say that they value good business advice as an important quality in their accountant.
Gary Turner is the co-founder and managing director at Xero UK and leads the company’s operations across Europe, the Middle East and Africa. He was born in Glasgow and has had a lifelong fascination with IT. After leaving school he worked as a sales manager for Select Computing, later joining Pegasus Software as marketing director, becoming the company’s managing director in 2003. In 2007 he joined Microsoft Dynamics as product group director, before taking the leap to join Xero in 2009. During his tenure the company has grown from a start-up with revenues of £50,000 to a global business with annual revenues of £40m in 2018. Gary also sits on the board of Enterprise Nation, which supports new and growing businesses in the UK
The power of cloud
Turner is a lifelong and passionate advocate of technology and in particular its power to help SMEs achieve their ambitions. Given that he grew up surrounded by the paraphernalia and stresses of running a small business – his parents ran a garage in Glasgow – he says it was inevitable that his career would eventually lead him to the SME software sector. In Xero he saw the power of cloud technology to help both SMEs but also the accountancy practices and sole practitioners who advise them.
Automated software is transforming business finance across the spectrum, from the largest companies to the smallest. The same is true of accountancy firms, and Turner argues that small firms have at least as much to gain from automation and automated software as their larger counterparts: ‘If the low-paid manual tasks are taken care of by technology, firms can deliver a different kind of service to their clients.’ But he stresses that finance professionals must move with the times to stay relevant: ‘We’ve been on the road to automation for 30 or 40 years now. If all you are doing as an accountant is number-crunching then you’re going to have a problem.’
According to Xero’s Digital or Die survey, 45% of advisers believe practices have to move to digital skills in order to survive. ‘Accounting businesses need to go digital,’ says Kevin Fitzgerald, Xero’s regional director for Asia. ‘Our focus is on teaching accountants how to use technology to understand their clients’ needs and capture the opportunity that they’re leaving on the table.’
He stresses that Xero wants to work in partnership with finance professionals around the world, rather than compete with them – one of Xero’s main sales channels is through accounting partners who recommend its platform to their clients: ‘Our strategy has always been to win over accountants and bookkeepers, with our teams set up to support, train and educate them.’
Turner argues that initiatives such as HMRC’s Making Tax Digital in the UK mean that digitally enabled practices, of all sizes, are the future of the profession. ‘I recently met a sole practitioner who has built up an entirely digital practice,’ he says. ‘I believe that approach will be the next generation of firms.’ Again, Xero has research to back this up: Digital or Die found that digital practices enjoy 12% year-on-year growth; four times the industry average of 3%. The advent of artificial intelligence (AI) and machine learning, says Turner, will change the game still further. (See 'Science reality'.) Turner argues that AI will be transformative in its ability to demystify accounting tasks and remove unnecessary complexity (high integrity accounting – where data is untouched by human hands, coding is fully automated and data entry becomes redundant – is a strong area of focus for Xero). ‘The smartest organisations over the next couple of decades will be those that harness AI and use it to build more efficient processes, and improve their customer service,’ he says. ‘AI could be transformational, but only if it’s deployed in the right way.’
He adds that when it comes to AI, we should not be constrained by the way we have used technology up until now. In other words, we should not just see digital technology in terms of improving the existing processes of business, but embrace its potential for a far more significant transformation. ‘Digital transformation has profound implications for the world of business that haven’t revealed themselves yet,’ he says. For example, powerful technology could allow an entrepreneur to run multiple companies at once: ‘It could profoundly change what it means to run a business.’
The same argument applies to the application of digital technology and machine learning to the responsibilities of a finance professional. ‘AI can have a significant impact on the world of finance,’ says Turner. ‘The role will change because of AI; it will allow an individual to cater for a wider range of services, or look after more clients, and be more efficient in the way they work. Digital technology brings the ability to get more work done, and it allows finance teams to be more agile. It enables the role of a finance professional; it doesn’t replace it.’
ACCA and Xero MoU
In recognition of the importance of the cloud-based economy to the accountancy profession, ACCA and Xero signed a global memorandum of understanding (MoU) at the World Congress of Accountants in Sydney last November. Maggie McGhee, executive director – governance at ACCA, said: ‘Our MoU is signed against a backdrop of an increasingly global and cloud-based economy, where small businesses need to be empowered with affordable, accessible technology that helps them grow their business and allows them to bring benefits for their clients.’ Rob Stone, national partner director, Xero Australia, commented: ‘Our Xero Small Business Insights data shows us there is a correlation between businesses on our platform that are embracing digital connectivity and increased revenue and employment. Therefore, driving increased uptake of digital technology creates a huge opportunity to really grow the global economy.’
The new normal
But this is not just a matter of learning to use new tools; digital technology is changing the way organisations work and organise themselves. The work of finance professionals is moving out of the back offices and is becoming integrated throughout the business. One of the biggest challenges for the finance function and for finance professionals, says Turner, is smoothing the transition to the new normal.
‘Cloud tools are fostering an environment where people are more collaborative and engaged across the organisation. Digital technology is changing the way the finance function is working but it also impacts other roles, the engineering of a company and how you do business. It’s the job of the finance function to align the business around that,’ he says.
On an individual level, professional accountants must also take responsibility for keeping abreast of a rapidly changing world. The changing role of the accountant – to trouble-shooter, financial controller and business developer – calls for a different skillset, with greater emphasis on collaborative working and strong communication. Changes to the ACCA Qualification are specifically designed to address this, but Turner stresses the importance of continual self-education and awareness of how the world is changing, and what that will mean for you.
‘We’re entering a challenging phase, much like the advent of the personal computer 30 or 40 years ago,’ he says. ‘It’s so important to get ahead of change, to understand it and how digital technology is changing the role of finance professionals. Don’t wait for changes to come down the line before you react.’
He speaks from experience – he was an early engager in the potential of the internet in the late 1990s and, convinced that it would be a game-changer, devoured any books or research he could find on the topic and began blogging on the topic so he could connect with other like-minded people. ‘Learning is really important,’ he says. ‘I would say that you should read everything you can about digital technology and where it might take us.’
Above all, he adds, professional accountants should not be daunted by what is ahead. ‘One of the common myths you hear about AI is that robots are coming to take over the world, and before long will be sitting at your desk doing jobs you would have done. That’s the Hollywood version. There will certainly be an increasing role for automation and AI in business, but we see it as something that augments the human element rather than replaces it completely. I don’t subscribe to the view that in five years’ time you won’t need people. We don’t disempower people at Xero – we are radically empowering accountants.’