By Dr. Kristy Short.
Firms that have embraced connected accounting technology, that are leveraging data to make informed decisions, and that are generally more technology-mature are outperforming their slower-to-adopt counterparts by up to 39% revenue per employee. This is a big deal that equates to big bucks over the long term.
In the Rightworks 2024 Accounting Firm Technology Survey, nearly 500 accounting/tax/bookkeeping firm leaders and decision-makers provided insights and attitudes on the role of technology in their practices. One big takeaway: No matter firm size, technology adoption helps significantly elevate revenue per employee.
One might ask, understanding that technology adoption has a major, positive impact on revenue, why are so many firms still hesitant to adopt and implement new tech? It’s a good question to ponder as we dig deeper into how adoption fuels revenue—while also identifying key blockers to achieving double-digit profit gains.
Technology maturity fuels revenue
As part of the survey, respondents were asked to plot themselves on what Rightworks has termed The Modern Firm® Maturity Continuum (see sidebar). The continuum serves as a rubric for grading a firm’s technology maturity—enabling leaders to evaluate where they fall on the continuum…and by default, the steps required to advance.
Firms that fall within the top three levels—Contender, Collaborator and Leader—are the ones reaping the rewards of elevated revenue per employee.
To break it down a bit further:
- Firms that identified as Contenders (mid-continuum) realize at least 29% more revenue per employee than Initiators and Followers.
- Firms that identified as Collaborators or Leaders realize up to 39% higher revenue per employee than Initiators and Followers.
The survey results indicate that adoption of advanced cloud-based, connected and collaborative technologies supports increased revenue per employee. Score!
The Modern Firm® Maturity Continuum
To enable survey participants to properly define and assess their current standings in technology and business model effectiveness, The Modern Firm Maturity Continuum was provided. Firms selected the definition that best defined the state of their maturity:
Follower
• Disconnected software solutions
• Blend of paper and digital documents with clients and/or firm
• Inconsistent business processes
• Mostly compliance work reacting to client requests
Initiator
• Mostly connected software solutions leveraging a secure cloud environment
• Standardized workflows
• Clarity around who you want to serve, what you want to sell those clients and a standard delivery system Contender
• Well-defined, connected technology stack leveraging a secure cloud environment
• Standardized workflows leveraging digital documents and consistent end-to-end processes
• Clarity around who you want to serve, what you want to sell those clients and a standard delivery system
Collaborator
• Standardized client technology stack utilizing a secure cloud environment with seamless access to all business client general ledgers
• Standardized workflows leveraging digital documents and consistent end-to-end processes
• Clarity around who you want to serve, what you want to sell those clients and a standard delivery system
Leader
• Standardized client technology stack utilizing a secure cloud environment with seamless access to all business client general ledgers
• Standardized workflows leveraging digital documents and consistent end-to-end processes
• A centralized data strategy leveraging technology and AI to drive insights to identify client advisory opportunities, enabling the firm to drive efficiencies to proactively serve their clients holistically and increase service levels.
Blockers to earning more
Long-held beliefs about technology adoption prove to be blockers for many firms, per survey respondents. Those who assessed themselves to be near the bottom of the continuum are earning considerably less than their tech-adopting counterparts.
The core issues faced by those firms near the bottom of the continuum appear to be cost and resources. Survey data also indicates that mindset plays a role in lack of adoption—with 28% of respondents citing internal resistance. Top responses included:
- Lack of technology expertise: 44%
- Cost/budget: 43%
- Lack of understanding of choices: 29%
- Internal resistance to new technology: 28%
- Lack of time: 27%
- Current tech hampers moving to the cloud: 12%
Survey results show that technology maturity elevates revenue per employee.
Firms that rank themselves high on the continuum appear to be harnessing the power of connected, collaborative and cloud-based technologies (see sidebar) to significantly earn more—on average, 39% more per employee.
Download the full 2024 Accounting Firm Technology Survey to view detailed data.
Survey details:
A 10-minute online survey was fielded in September 2023 among 493 decision makers/influencers at accounting/tax/bookkeeping firms nationwide to measure usage and attitudes around technology at their firms. The percentage of total respondents by firm size includes:
- •51% identifying as being part of small firms (1-5 people)
- 24% as mid-sized firms (6-20 people)
- 25% as large firms (21+ people)
Significance was tested at the 95% confidence level.
Definitions
For the purposes of this study and report, the following terms are defined:
• Cloud-based environment: The secure cloud-based environment where an accounting firm launches all its applications and does its work.
• Connected technologies: Applications that connect and synchronize with each other and share information.
• Collaborative technology: A digital environment for firms and their clients to collaborate—with access to and the ability to work in shared files.
Dr. Kristy Short is the Senior Director of Content Strategy at Rightworks.
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Tags: Automation, Firm Management, Technology
