The Value Gap
This article discusses the importance of adopting the latest technology and software and how to minimize the value gap. Most accountants have struggled to keep up with this new wave of technology and a growing value gap is arising in firms of all sizes. This value gap represents all the lost opportunities by not having the right technology solutions in place. These lost opportunities include a loss of revenue, the inability to attract new clients, realization struggles, and difficulties in hiring and retaining staff.
Has your firm utilized technology to its fullest capacity to provide the highest quality service to your clients? Is your firm able to successfully attract, retain, and engage top talent due to your strength with technology? If so, you can stop reading now, but for every firm in the country that is being honest with themselves, letâ€™s keep reading to understand why the way we view technology inside our firms is part of the problem and how your millennials and people really feel about the technology inside your firm.
Before we go any further, we need to understand that technology significantly impacts all aspects of todayâ€™s firms regardless of their size or client focus. We also need to understand, just how much technology has changed in the accounting profession in the recent future. In the past, the technology we used was limited to tax software, Excel, and accounting software. They were useful to us, but the technology behind them was limited. Suddenly now, technology has exploded beyond just these core services and now includes machine learning, artificial intelligence, blockchain, and an endless growing set of software all designed to allow accountants to get the work done faster and provide additional services to clients.
Unfortunately, most accountants have struggled to keep up with this new wave of technology and a growing value gap is arising in firms of all sizes. This value gap represents all the lost opportunities by not having the right technology solutions in place. These lost opportunities include a loss of revenue, the inability to attract new clients, realization struggles, and difficulties in hiring and retaining staff.
The value gap has been magnified in recent years due to the generational differences with how technology is viewed and the rapid rate of technological advancements. To make matters worse, most firms do not realize they have this problem since perception is in the eye of the beholder.
In the value gap, the firm and partnerâ€™s view are at the top of the pyramid and the millennial/staff view is at the bottom. The gap represents the differences in the views on technology between those two groups. Successful firms have a razor thin gap between these two different views, but unfortunately for most firms today, the gap is rather large.
If you remember high school psychology, this pyramid can be viewed akin to Maslow’s hierarchy of needs where the basic needs, food and shelter, are on the bottom and self-actualization is at the top. Partners feel that technology should be at the top of the pyramid, which is a bonus, because during most of their life, technology was not mandatory and only a minor role in their professional workplace. Technology overall and our industry has seen tremendous growth in the past five years, and firms have struggled to keep up as the rate of change has drastically accelerated.
Contrast this view to millennials who view technology at the bottom because for them, technology is a necessity like food or water. They grew up with technology and a rapid rate of advancement. Millennials are naturally comfortable with technology and expect it in their personal and professional lives. Consider this, how often do you see a millennial question their GPS? They know and accept that while the GPS is not perfect, it will get them to their destination easier than if they were trying to read a map while driving.
For millennials, before they ever set foot into a firm as a first-year staff accountant, they are exposed to technology at a level far above what exists in most CPA firms today. They expect technology to be present in all aspects of their lives, and this is often a sharp awakening when they set foot inside a CPA firm. For todayâ€™s firms, that means todayâ€™s staff have a higher expectation of technology than ever before. Unlike in the past, many of the technology solutions and processes that have been in place for years and were once considered cutting edge, are no longer viewed as a luxury, but as a standard.
The second thing we see in the value gap is that the current partners, when asked, will rate their technology as outstanding and at the top of the pyramid, while millennials will rate it at the bottom or inadequate. In the same firm, people will have drastically different views on the strength of the technology currently in place.
Depending on which side of the pyramid you are on, you probably feel that you are right. But which side is correct?Â
When looking at firms across the country, partners constantly rate their technology solutions in place as much stronger than they actually are, because that is their perception based on their experiences. As a leader at your firm, you need to view your technology not through your own eyes, but through the eyes of your team. And if you do, you will be surprised by the results and the gap.
This can be done quickly by just asking your staff to rate your firmâ€™s technology on a scale of 1 (not existence) to 10 (cutting edge) and ask them for their honest input. Â
Firms need to take an honest look at the technology they have in place; as weak technology is a major factor impacting the firm’s ability to attract talent and service their clients.
Here is what the pyramid should look like for a 10-person firm with a small value gap. Firms have both the technology in place to accomplish the work and are utilizing that technology. No longer are firms only using 10% of the technology they have in place; they are using 100% of the technology, which is radically changing their firm and their clients, and people love it. Here is an example of top technology in place today.
Zero IT footprintâ€”people can work anywhere, anytime
Three monitors or one 50-inch monitorâ€”more screen space is a must
Travel monitorsâ€”you always need that screen space
Document management programâ€”the whole paperless trend, you cannot use what you cannot find
Workflow softwareâ€”you need to be able to track your projects and due dates
Scan and autoflowâ€”who really wants to manually enter data
Advisory softwareâ€”from budgeting, dashboards, valuation, family law, and more
Video conferencingâ€”communication in the 21st century
Firms today need technology, not just to have technology or just be efficient, but they need technology to evolve and move past being technicians. Stop letting the value gap hold your firm back. Take a hard look at how you use technology, if you are a firm of one or a large firm, the same principles applies. Do you have the correct tools and technology in place to be successful or are you increasing the value gap inside your firm each day? Do not keep letting the gap grow; start taking an honest look at your technology today.
Garrett Wagner, CPA, CITP, CEO and Founder of C3 Evolution Group, is an industry thought leader and on a mission to fuel the entrepreneurial spirit and passion within the industry. With his ability to break free from the traditional CPA box, he has embraced the entrepreneurial mindset and is on a mission to help others embrace the entrepreneurial skills and knowledge needed to evolve into entrepreneurial CPAs. Mr. Wagner focuses on monitoring the evolving technologies and best practices in the industry to achieve the highest degree of success without being afraid to break free from traditional methods. His background includes working inside successful CPA firms, speaking at conferences and events, and consulting for CPA firms across the country helping them to ignite lasting change by understanding the unique needs of each firmâ€™s organization.
Mr. Wagner can be contacted at (585) 385-1790 or by e-mail to email@example.com.