By the numbers: How Canadian accountants are dealing with changing technology
Sole practitioners, small firms say pace of change a challenge
TORONTO, December 4, 2019 – Canadian accountants in public practice, whether working as sole practitioners or in SME firms, are struggling to keep pace with technological change in the digital age. This comes at a time when, according to a Sage Practice of Now report, a majority of accountants believe that practice is more competitive than ever. How sole practitioners and accounting firms are dealing with the change is revealed in the 2019 Accounting and Bookkeeping Operations and Technology Survey conducted by Alan Salmon and K2E Canada.
Looking to keep abreast of digital transformation — let alone looking to gain an edge on competitors — Canadian practitioners are investing more in technology. More than half of all sole practitioners spend between $1,000 and $5,000. More surprising, perhaps, is that 14.5% of sole practitioners have an annual technology budget of more than $5,000. Almost half (46.7%) of all small firms (2-5 partners) will exceed an annual $5,000 spend.
The survey finds a growing shift overall to higher annual technology budgets. Seven per cent more firms (including sole practitioners) have increased their budget in the past year (2018: 16.9%, 2017: 23.7%) to the $2,500 to $5,000 range. A whopping 26 per cent more of the survey’s respondents report raising their budget above $5,000.
Keeping up with change
How can you run a busy practice, serve your clients and keep up with the pace of technological change? Perhaps you can’t. When asked what are the biggest technology issues or annoyances you face, the pace of change and keeping up with new software is by far the largest concern. The challenge is particularly acute for sole practitioners, who cannot divide the workload between partners. Security concerns are the second challenge most often cited but they pale in comparison to keeping pace.
How are most practitioners handling technological challenge? They’re outsourcing support. In 2018, four out of 10 accountants overall still handled IT support themselves. By the 2019 survey, that figure had fallen to three out of 10. Forty-five per cent of sole practitioners still handle technology issues themselves, whereas 34 per cent outsource IT to third-party vendors.
Not surprisingly, as the number of partners in a firm increase, the more likely the firm has hired a full-time IT employee or has an IT department. Six out of 10 accounting firms with 10 or more partners say they have one or the other. With the pace of change accelerating in the digital world, and the challenge of cloud computing, machine learning and artificial intelligence programs, one would expect that number to increase as the cost of doing business in today’s public practice profession.
Sticking with trusted resources
Canadian accountants cite workflow and efficiency as their biggest technology challenge they will face in the short term of one to three years. Firms with 10 partners or more tend to emphasize this challenge more but the challenge is largely uniform across all groups. Firms also tend to cite security and going paperless as challenges as well; the more mundane tasks of application updates, training, and document management are of much less concern.
Perhaps that’s why Canadian accountants appear to be sticking with trusted resources. Across the board, from sole practitioners to SME firms, public practitioners appreciate the comfort of the familiar. Almost three-quarters of accountants have not changed their tax software in the last five years. For larger firms of 10 partners or more, that figure increases to almost 93 per cent. (The tax software sector may be a competitive industry but, according to the survey results, once you get a client, you’ve got them for life — or at least five years.)
Perhaps that’s why roughly 20 per cent of accountants said they were not looking to update any software or technology service this year. Time and billing/practice management software (17.2%) and workflow (16.5%) software rated highest among accountants looking to upgrade their technology tools.
Learning online to keep pace
Perhaps it comes as no surprise that, according to the survey, “vacationing, relaxing” is the number one activity accountants wished they had more time for. In the little spare time they have to learn more about technology, Canadian accountants are getting their technology information from a wide range of resources, including technology seminars, webinars, accounting industry websites like Canadian Accountant, and industry events.
And from peers. Because Canadian accountants trust Canadian accountants.
Colin Ellis is a contributing editor to Canadian Accountant. Alan Salmon’s annual survey is the best source of data on sole practitioners and small accounting firms and is shared exclusively prior to publication with Canadian Accountant. Download the 2019 Accounting and Bookkeeping Operations and Technology Survey.