Technology is critical for the future survival of the accounting industry!

What does technology maturity have to do with increased revenue?

Enhancing business revenue: A comprehensive survey delves into the role of technology. How can technology escalation amplify an accounting firm’s profitability? Discover how tech integration can elevate your profit margin.

During the previous fall, nearly 500 companies from the accounting, taxation and bookkeeping sectors participated in an unprecedented technology survey. This 2024 Accounting Firm Technology Survey was curated to specifically target the profitability of modern accounting companies based on their technological sophistication.

Most intriguing finding? The more tech-savvy the firm, the more revenue was generated — regardless of the scale of the firm. These tech-advanced firms showed, on average, a 39% hike in revenue per employee.

While conventional wisdom suggests larger firms generate more revenue due to the size of their client base and higher billing rates, this notion was debunked. Over half of the firms in the top two tech tiers had 20 or fewer employees, hinting at “technology maturity” playing a crucial role in generating firm revenue.

Technology Maturity: The survey respondents were given a scale to assess their firm’s technology adoption, known as The Modern Firm® Maturity Continuum. The five levels are outlined below.

• Follower. Companies that adopt a combination of manual and digital methods with disconnected applications and inconsistent processes.
• Initiator. Companies with mostly interconnected software solutions and standardized workflows in a secure cloud environment.
• Contender. Companies with clearly defined, secure technology stacks in the cloud, standardized digital workflows and consistent end-to-end production processes.
• Collaborator. Companies with all Contender capabilities but with “seamless” access to client accounting applications for optimized collaboration.
• Leader. The most technologically advanced companies, which leverage seamless access to client data, standardized workflows and a centralized data strategy utilizing technology and AI adoption.

Greater IT Maturity = Enhanced Revenue The survey revealed that Leader and Collaborator companies had 39% higher revenue per employee than the bottom three tiers. When Contenders were added to Collaborators and Leaders, the average revenue per person still remained 29% higher than the least technologically sophisticated groups, solidifying the fact that the more technologically mature a firm was, the more revenue it generated.

Silver Bullet – Technology. The survey identified that 88% of respondents see technology as a prime driver of workplace efficiency and improved client service. However, more than half of the firms were categorized into the Initiator or Follower tiers.

Obstacles to Overcome Smaller to medium-sized firms cited lack of IT knowledge and cost of new technology as hindrances to adopting proven technologies. Larger firms underlined resistance to change and implementation time as their main reasons for not adopting more technology.

The common thread of resistance is the belief that these technologies are too expensive or have no ROI. However, numerous industry analysts and Leader and Collaborator firms that participated in this survey have laid these notions to rest.

Technology Drivers. When examining what technologies set Leaders and Collaborators apart, the dominant themes were apparent: cloud, collaboration and adoption of emerging but credible technology. These themes should be the initial focus for firms looking to enhance their practices.

No. 1: Cloud Managing and securing an accounting firm’s IT infrastructure has never been more intricate. To be fair, it surpasses the skills and resources of most firms that persist in managing IT independently.

Persistently doing the “bare minimum” has caused these firms to fall behind. This has also reduced their adoption of technologies, most of which have proven themselves effective, especially when managed by an enterprise-class cloud provider focusing on the accounting profession.

No. 2: Collaboration When asked about client collaboration, many owners presume clients physically delivering documents and the internal team working to produce a tax return. This perception blinds many of them to the realization that everything can be executed digitally today through integrated technology that is boundaryless in the cloud.

No. 3: Emerging Accounting Technologies Many firm owners have been burned by a series of failed emerging accounting technologies. This has thrust many of them into a wait-and-see mindset, prohibiting them from exploring new technologies.

AI, encompassing artificial and “augmented” intelligence is different. The phrase “you won’t be replaced by AI but by someone using AI” has never resonated more for accountants. Firms already use augmented intelligence tools such as application program interfaces (APIs), robotic process automation and machine learning.

Technology Adoption Reaps Revenue Technology has undeniably had a profound impact on the accounting profession and how firms operate. The results of this survey validate that effective tech adoption boosts revenue, regardless of firm size.

Understanding where your firm lies on The Modern Firm Maturity Continuum can help firms identify what steps to take next to grow their practices. Evaluate where your firm falls on The Modern Firm Maturity Continuum by viewing our Accounting Technology Survey results webinar or downloading the whitepaper today.