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The Future of Data-Driven Accounting Firms

David Toth is the Director of Growth for Winding River Consulting.

All of the data contained in your firm’s ecosystem tells a story, not just of how you operate today, but also the trends that will impact your firm’s future. What does being a data-driven accounting firm truly mean, and how can you leverage that story to make proactive decisions? 

Why isn’t every firm a data-driven accounting firm?

What’s holding you, your team, or your firm as a whole back from seeing and acting on the story data tells? 

The nature of things has changed. Historically, “data” wasn’t nearly as accessible, aggregated, or standardized as it is now. Firms had client tracking, task tracking, financial tracking, and other data recorded manually on paper. The digital revolution changed everything, and regardless of your firm’s level of digital adoption, you have some tech-based systems in place that are generating data.

The trick is, if you simply swapped manual processes for tech-based ones, you aren’t maximizing the potential of technology and all of the information it is generating. You simply did a 1:1 exchange and haven’t created a strategy that is pushing your firm toward digital maturity. If this is true, you are missing vital details, gleaned from data, including the following:

  • Market trends, anomalies, persistent patterns, disruptions, etc.
  • Internal performance, including team habits, communication norms/gaps, productivity, revenue drivers, product performance, departmental performance, etc.

How does using technology to be data-driven help?

All this juicy data can be gathered in various ways, but technology adds a layer of sophistication. When machine learning and artificial intelligence is applied to data, it can be observed and extrapolated differently: aggregated, charted, graphed, grouped, parsed, and more. Data visualization is game-changing, because you immediately uncover things you wouldn’t have otherwise seen, which is reason enough to prioritize these practices. 

Why doesn’t everyone use smart tech with their data?

If it’s essential, and fairly easy, why don’t more firms operate this way?

Because of the model of accounting, tech has always been delayed or deprioritized. The industry felt recession-proof. But now, competition is coming into the space. If you want to stay independent, you have to be tech-first. 

The imperative has been issued, but change doesn’t have to happen overnight. The goal is to move, with confidence and consistency, into a more progressive model that derives value from data. 

What does a data-driven firm looks like?

Despite the fact that accounting has been slow to fully adopt technology, it is a field uniquely suited to benefit from it. Firms typically experience little churn (client turnover), which yields a solid and comprehensive body of data about buying habits and client/business behaviors. 

Let’s look at two firms that approach data differently:

Firm A has completed integration of billing, marketing, and CRM systems into a business intelligence platform. 
In real time, partners and leadership team members can access information around the sales funnel and net new engagements ad-hoc on their phone. 
The system is dynamic, and any changes are immediately visible.
The firm is positioned to be proactive versus reactive.
Firm B has every tech platform in place to facilitate a data-driven approach, from client experience to inbound marketing and upselling/cross selling. 
The data is collected but remains untouched. There is no clarity among leadership on how to use data.
The partner group grapples with a lack of vision and consistent barriers to going to market with new services.

Most firms are collecting data, which is a beginner approach. Once you progress into more advanced levels, you will bring structure to your data. When fully optimized, all of your data processes yield actionable insights. 

Is your tech preparing you to find, win, and grow clients?

If we asked any leader in your firm right now, could you tell us:

  • How many clients do you have?
  • What clients do you expect next month?
  • How many clients are in specific industries?
  • How to communicate with all of the CTOs in your database?

If you can’t answer these questions within two years, you’ll be behind the curve. 

This is relevant for the survival of your firm today, because the decisions you make now will impact your growth trajectory. It’s also relevant to the survival of your firm in the future: incoming talent wants to know that you are using data intelligently. They expect it. 

Data offers a strategic advantage in 4 key areas

There are four key areas in which data offers a strategic advantage:

  1. Diversification: upselling and cross selling
  2. Client experiences
  3. Fostering a growth culture
  4. Succession planning

Diversification + Upselling and Cross Selling

Increasingly, accounting firms are diversifying services. Business development practices are full of innovation, and firms are entering new markets left and right. This very exercise, and capitalizing on all of that potential, relies on data. 

  • Which of your services are currently most successful? 
  • What does the client lifecycle show you? 
  • What are your areas of current impact and potential impact?
  • What else do your clients need now/what else are they likely to need in the future?

You can diversify offerings to meet needs that data tells you exist. You can also upsell and cross-sell clients based on relative needs and related services. After all, if your firm has spent decades building a relationship, your team should benefit from those revenue-generating services, not competitors or other providers.

Elite Client Experiences

Client experience is a throughline when it comes to everything else. There is no substitute for providing a great client experience, and your firm will never grow beyond the need to provide it.

Customer intelligence (CI) and customer success (CS) are two areas that provide value through skillful data analysis and interpretation. Learning from customer experience data enables your firm to deliver better customer service at every point. This mitigates the churn risk by providing early indicators of customer dissatisfaction. It also alerts your team to opportunities to give customers what they want, because the data will tell you what that is. 

Fostering a Growth Culture

High-growth firms have shared traits that include leadership and team alignment, a shared vision and goals, collaboration, and a growth mindset. To foster a growth culture, you need to think “team.” Individualism and rigid hierarchies are outdated approaches, and the data can back up that these tactics are best left in the past. 

Technology is the catalyst for the future, as well as the way to achieve a culture where everyone is hungry for growth. By having a tech-driven approach to business, you’ll break down silos, enhance visibility, support communication, and achieve unity. If you can build an infrastructure like this, seasoned individuals relay their wisdom, and rising talent can gain experience. 

Succession Planning

Firms of the future are actively engaged in succession planning, investing in the next generation of leaders. Is your firm ready? Are you taking active strides to build a firm of the future, one that the best and brightest talent will be a part of? Technology is an integral part of this.

If 50% of your partner group is heading toward retirement, you are in a precarious position. Building tech-first processes, streamlining operations, having a plan for using data-derived insights to architect new lines of business: all of this is key to the value of what you leave to successors. 

Don’t miss an opportunity to secure growth for today and growth for tomorrow.

Your firm’s future depends upon data

Every firm has different areas of focus. Your firm is not alone in the market, but in direct competition for a limited amount of business. Even though there are numerous opportunities, where you choose to focus will drive outcomes. From M&A to your digital strategy, every opportunity you pursue should be informed by data.

You can account for all of the right variables, gauge market dynamics and interest, and calculate the prime moment to forge into new territories. All of these possibilities are unlocked by technology, and making this your point of focus in the coming years will make all of the difference.

Discover more with Introhive’s guide to Becoming the Accounting Firm of the Future.

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