While the accounting profession managed to pivot to virtual operations at the onset of the pandemic, for many firms, it was merely a short-term survival tactic until they could return to brick-and-mortar offices. Now three years in, firm owners and staff are finding that remote work is, well, working for them.
The transition in mindset from technology-as-a-band-aid-to-survive to digital-transformation-to-thrive represents a monumental change. And one that requires intentional planning in order to:
- Leverage technologies to deliver automation firm-wide—reducing the volume of hours required to complete work. (And with more staff looking for remote or hybrid work, this is a must to combat the ongoing staffing shortage.)
- Increase efficiencies for immense time savings that allow for higher-value service offerings and elevated profits.
- Adopt client collaboration apps to streamline communications and information exchange with ease and convenience.
- Elevate employee engagement and enhance work culture to a level that keeps your best employees with you.
- Support e-marketing efforts to automate information sharing and elevate brand awareness.
Whether you take a “phoenix” or “evolutionary” approach to your digital transformation, simply making progress is the key to creating a sustainable and successful business.
Industry influencer and guest expert on our Driving Digital Transformation series, Donny Shimamoto, CPA, CITP, CGMA, and Managing Director at Intraprise TechKnowlogies, understands what it takes to make the digital transformation leap. And he shares his insights and expertise with you here.
What is digital transformation?
The first thing to understand, according to Shimamoto, is that digital transformation is about so much more than just the technology itself. It’s how you use technology to both impact firm operations and society as a whole.
When you think about social media giants like Facebook and Twitter, this concept becomes clearer. These platforms have infiltrated the broad culture and become part of people’s daily lives. For firms, this means looking past internal operations to the impact digital technologies have on owners, staff, clients, and the community as a whole.
“Digital transformation encompasses more than just the technology solutions within your firm. It’s about how technology impacts all aspects of your business and society.” - Donny Shimamoto, Managing Director, Intraprise TechKnowlogies
Think about how people work and live these days. Most are accessing information and apps on their mobile devices while on the go. They’re actively performing work on smartphones and tablets from anywhere, anytime—collaborating and communicating while in and out of the office. So when you think about digital transformation, the key is to think beyond your firm. To think about how to operate in a modern, pervasive, and digitally mature way.
Shimamoto outlines what true digital transformation looks like:
- Accelerating client empowerment: Clients have high expectations around access to data and apps—and they want it all at a reasonable cost. True digital transformation empowers clients to work the way they want to work.
- Moving away from physical spaces: The e-commerce business model (think Amazon) has forever changed the retail landscape, causing major (and longstanding) onsite stores like Sears and JCPenney to close their doors. The accounting profession has slowly been making the same move—away from the traditional approach and toward a digital model that supports modernization of operations across the board.
- Embracing emerging technologies (beyond just apps): This includes AI (artificial intelligence), big data analytics, and the Internet of things (IoT)—all helping drive organizations forward to become true digital enterprises.
While the basics of accounting firms remain the same—that is, transactions associated with accounting, tax, and internal controls—the goal is to automate these processes to meet the expectations of a digitally mature client base (and society as a whole).
Shimamoto explained:
“You have to think about how to apply what you already know— accounts payable and receivable, purchases, sales receipts, invoices—into the digital world. It’s about how you digitize and automate controls around these standard tasks.”
When this happens, the outcomes can be exceptionally positive, including:
- Increased efficiencies that bolster revenue generation and reduce waste and operational costs.
- The ability to offer higher-value advisory services as you experience greater time savings via automations and heighten firm-wide productivity.
- An enriched client experience via technology that supports collaboration and interactive exchange of information and data.
- Improved client and staff satisfaction, which leads to client stickiness and the ability to maintain and recruit top talent.
What is your digital maturity?
Digital transformation expands beyond just IT; it’s about working at the application level and selecting apps that support a digital business model. It’s also about looking at big data to inform decision-making. This is why accountants are well-positioned to achieve digital transformation—because you understand the underlying controls required at the process level as well as have access to valuable data that support informed decisions.
So, how digitally mature is your firm today?
Shimamoto shares the Digital Maturity Model, which serves as a guide for firm owners to assess where they are in terms of digital transformation readiness.
Consider each element of this model as you assess your digital readiness:
- Digital transformation strategy: Do you have a vision and/or roadmap to execute on digital transformation? If the answer is yes, how far have you gotten on executing your vision? If the answer is no, you’ll want to start by developing a clear vision and strategy.
- Applications: To what extent are you utilizing the technology you have in place now? Are you using current apps effectively and harnessing their full power?
- Information: Are you using the data you have on hand to make informed decisions? For example, can you identify where your workflow bottlenecks are? Shimamoto recommends that owners dig deep into data to identify process areas in need of improvement.
- Risk: This encompasses how you view and manage security risks. You can adopt the most advanced technologies, but without sound cybersecurity protocols in place, your digital model is weakened.
- Platforms: This element looks at the broader platform … the full ecosystem of technologies, processes, and controls. Are you set up to deliver services in a modern digital environment? Are you positioned to create new, higher-value services and deliver them with the same level of convenience and efficiency?
- Processes: Have you mapped out your existing processes to better evaluate where you have bottlenecks? Are the necessary internal control points in place? This is about honestly assessing workflows end-to-end and not just automating manual work.
- People: This has you evaluating your current digital culture. Are staff ingrained in a full digital environment? For example, are employees engaged during video meetings? Are they confident working remotely? This element also requires you to look at leadership. What have leaders done to get buy-in from staff and make the digital work environment as “real” as possible?
“Leading in the age of digital requires leaders to communicate more and really think about how to create a culture where everyone is comfortable and engaged.” - Donny Shimamoto
To accurately grade your digital maturity, it’s important to assess each area of the Digital Maturity Model. This shows you where you are currently. From there, it’s much easier to visualize the future steps required to achieve true digital transformation.
Developing your enterprise architecture
As stated earlier, it’s important that as you move forward with your digital transformation you look beyond just the technology. You must also consider how you process transactions, measure execution, and use data to make accurate and informed decisions.
That said, Shimamoto focuses on three areas within the Digital Maturity Model: processes, information, and applications. For your firm, the digital transformation model may look something like the graphic below, which includes standard operational processes (rectangles) within an accounting firm, supporting apps (cylinders), and data flows (arrows).
For example, explained Shimamoto, “The Timekeeping process is supported by a time and attendance app (T&A) that is feeding data over into the payroll app so I can pay my people.”
Mapping out processes, apps, and data flow provide a roadmap of performance
and outcome measures.
Mapping out your entire ecosystem allows you to pinpoint where you have gaps or blocks that may stall processes, block data flow, and hinder service delivery.
It also offers a holistic view of your firm’s overall performance management. Based on actual outcomes, are you meeting budget goals? Are you meeting contract, program, and other quantitative goals? The main objective is to use the data on hand to measure bigger goals and ensure you stay on track with your vision.
“We use this model to analyze both the current state of an organization and to also visualize the future state.” - Donny Shimamoto
For example, stated Shimamoto, “An existing process for bill payment may be that clients bring in a stack of paper invoices to be manually entered and processed by staff. The future process [with a solution like Bill.com] involves clients scanning invoices and uploading to the Inbox. Review happens digitally, and Bill.com sends checks to vendors rather than the client manually printing, signing, and mailing checks.”
Further, with your ecosystem architecture in place, you can easily identify the functional needs of your firm and the systems required to support those needs. You can also uncover process areas that are not fully optimized or have unnecessary complexity. And finally, use the diagram to assess the impact that new changes may have on your business processes and information flow.
“As you consider introducing new technology into your ecosystem, you can refer to your diagram to see what arrows (data flows) are connected to it, how the new app might hinder data flow, and what integrations may be needed,” said Shimamoto.
What’s your next step?
The first step in any major business model change is planning—and planning often begins with an honest assessment of where your firm is now. That said, start by evaluating your firm on all seven areas of the Digital Maturity Model: strategy, applications, information, risk, platforms, processes, and people. From there, map out your current ecosystem using a similar diagram to the one presented above.
Once you have a solid visual representation of firm operations, it’s much easier to implement changes—big changes—like improving operational efficiencies firm-wide, improving collaboration among clients and staff, keeping staff engaged and motivated, enhancing the work culture, building awareness within your community, and growing your firm with higher-value services.
“As you move forward with your digital transformation, it’s best to go back to the beginning and look at your core mission and business strategy to ensure that you’re meeting the needs of all your constituents—including clients, staff, and yourself … the business owner. Creating balance will help you support everyone’s needs … and that’s central to success.”
Consider all the tips and guidance presented in this article to move forward successfully with your firm’s digital transformation. The time is now.
Ready to drive digital transformation in your firm? Bookmark our Driving Digital Transformation series to hear from today’s industry thought leaders who have been there, done that, and are sharing what they've learned along the way.
