Generation gap poses risk to accounting firms yet to make the move to the cloud
Sydney, 18 April, 2013 – A majority of small- to medium-sized enterprise (SME) owners in Australia will consider replacing their accountant if they fail to make the transition to cloud-based computing software, according to new research into accounting firms servicing small business.
The research found that only 23% of accountants servicing SMEs have moved to cloud-based software to manage their client’s accounts, with these early adopters skewed toward younger accountants.
In a finding that will concern accountants yet to make the shift, the research also found that more than half of SMEs (52%) would consider replacing their accountant if he or she did not move to a cloud-based system, with this proportion rising to 72% among younger SME owners (aged 18 to 34).
Commissioned by accounting software provider CCH, a unit of global information services group Wolters Kluwer, the research was based on separate surveys of more than 1,000 Australian SME owners and 212 accountants and principals of accounting firms servicing SMEs, canvassing attitudes to cloud-based accounting software.
The CCH surveys revealed almost two thirds of SME owners (64%) would consider replacing some of the roles their accountant currently performs with their own cloud-based software, a view even more prevalent (86%) amongst younger SME owners. Despite the risks, only 52% of accountants expressed concern about losing services to the cloud.
CEO of Wolters Kluwer Asia Pacific, Russell Evans, said the survey was a wake-up call for accountants putting off a shift to a cloud software platform.
“It suggests a business-as-usual approach is not really an option for accounting firms. Their SME clients are saying they want to move down the cloud path and many will do so without their existing accountants if need be,” Mr Evans said.
“And the impulse toward the cloud among younger business owners is even stronger, suggesting accounting firms risk losing a whole new generation of SME clients if they fail to act,” he said.
“The business case for making the shift is clear. By taking the initiative and moving to a cloud-based platform before their SME clients do, accountants can secure their central role in managing their client’s accounts, while freeing up time and resources to provide strategic advisory services, an activity highly valued by their clients.”
The CCH research does suggest momentum toward the cloud in the accounting profession is building and will shortly reach critical mass. Of the 77% of accountants surveyed who are yet to make the move, 60% expect to do so within three years.
When asked to specify the reasons for moving to a cloud-based system, a majority of accountants cited the ability to access accounts from multiple locations. Other reasons given were: no need to maintain or buy hardware maintenance; ability to scale up as clients grow; no need to manually update tax tables and other content; lower overall costs and up-front investment.
CCH survey: Reasons accountants gave for adopting a cloud-based software package
Gain access from multiple locations 62%
Don't need to worry about maintenance or hardware system up 32%No need to purchase hardware or accounting software 32%
Easily scalable as my clients grow / needs change 30%
Requires no updates, tax table updates or version upgrades 28%
Reduced overall costs 27%
Lower up-front investment required by my clients 25%
Access to improved reporting 21%
Better security of data 18%
Advanced/specialist features available 12%
Don't know 17%
Note: Respondents able to cite more than one reason
Conversely, key reasons given by accountants for not having adopted cloud-based systems were the lack of time to learn about/familiarity with cloud systems (42%) or the existence of a working system (37%). Only 31% of accountants surveyed cited security as a concern, confirming growing confidence in cloud-based systems as their use becomes more prevalent.
“Clearly, the early barriers to adopting cloud software solutions for accounting are evaporating as they prove their robustness and worth in business applications,” Mr Evans said.
“In weighing up cloud solutions the cost-benefit analysis is shifting rapidly in favour of the cloud, and that has not been lost among the accounting profession or their SME clients. The end result will be a more efficient interface between accountants and their clients, with less time spent on administration services and more on strategic business planning.”
The CCH research revealed the average accountant currently spends 63% of his or her time handling transactional or administrative functions for their SME clients, and only 37% providing strategic business advice.
The survey of SME owners showed that while 70% backed their own instincts over any professional advice, the vast majority of owners overwhelmingly rank accountants as their most trusted external adviser, ahead of their financial planner, business partner and lawyer.
Click here to read the research report: 'Cloud computing - a matter of survival for the accounting industry?'
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Wolters Kluwer Asia Pacific
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About CCH, a Wolters Kluwer business
CCH (www.cch.com.au) is part of Wolters Kluwer, a market-leading global information services company focused on professionals with annual revenues of (2012) $4.7 billion and approximately 19,000 employees worldwide.
CCH’s cloud solution CCH iFirm takes all the tools essential for any accounting firm and puts them together in one, integrated cloud suite. It is all online, so there are no software updates to install, no hardware to maintain, and accounting firm staff can access it from anywhere. iFirm includes a central contacts console, practice management, tax, client accounting, intranet and powerful website management modules - everything a firm needs to run a modern practice. Please visit our website or follow us on Twitter, LinkedIn or Facebook for more information.
About the survey
The small and medium enterprise (SME) study was conducted among 1,018 business owners or business decision makers of organisations with 200 employees or less. The accountant study was conducted among 212 accountants or principals of accounting firms servicing small and medium enterprises. Fieldwork commenced on Friday, 8 March and was completed on Thursday, 21 March, 2013. Both studies were conducted online amongst members of a permission-based panel. After interviewing, SME data was weighted to the latest business count estimates sourced from the Australian Bureau of Statistics.