By Roman Kepczyk, CPA.CITP, CGMA.
During this brief remaining period before the holiday seasons begin, we accountants set our sights on preparing for 2025 and those things we need to think about incorporating into next year’s strategic plans. While much of the focus will be on staffing and preparing for year-end/busy season, I feel it imperative to consider the underlying technologies that can be fine-tuned for a tax season.
In that light, I present my Top 10 Technology Predictions for your consideration while you fire up your 2025 planning.
- Generative AI/Copilot Adoption Surges: It’s no surprise that generative AI solutions are our number one technology prediction (and accounting process disrupter). We are seeing multiple variations of GenAI tools being implemented within our existing applications as well as highlighted by new startups specifically serving the accounting profession (i.e. CPA.com’s incubator). Firms should review the IA capabilities being touted within their tax, accounting, and practice applications before the upcoming season.
- Cybersecurity Response Elevated: AI’s dark side is that it is being used by cybercriminals to develop uber-sophisticated phishing schemes, create unique malware at scale, and take advantage of zero-day vulnerabilities (300% more attacks this year!). Increased breaches will push firms to managed security providers that can deliver enterprise class solutions for monitoring, protection, and remediation, as the skillsets required to secure a firm in today’s environment require 7/24 coverage by enterprise level providers.
- Cloud Surpasses On-Prem Across the Board: While recent surveys point to most medium and large firms already having the majority of their applications in the cloud, most small firms have continued to run slightly more applications and data locally on their own equipment. We believe 2025 will be the year this changes, as these firms cannot keep up with local maintenance and security requirements and the vendors change their pricing structures to push them into the cloud. This prediction is also being bolstered by the surge in M&A activity where growing firms (particularly those driven by private equity) are trying to fast-track a standardized platform, which is much more effectively enforced and managed in a cloud environment.
- Everyone, Everywhere Collaboration: Firms will need to utilize remote, hybrid AND outsourced employees to stay competitive, which by default means every firm must have a reliable and secure “everyone, everywhere” platform. This platform must also integrate client and firm personnel collaboration, which again is driving firms to enterprise-managed cloud solutions.
- Firm Client Datafication Approaches 100%: Paper is dead, long live datafication. Accountants that still accept paper are at a distinct competitive disadvantage in tax and accounting production and the adoption of portals, secure email delivery, digital signatures, digital invoicing/payment methods, etc. have all been proven and can quickly be standardized. We predict that interactions and document sharing within the firm and with clients will be above the 95th percentile in digital datafication across all firms in 2025, so get onboard!
- Tax Research Startups Challenge Big Three: When we review accounting firm IT budgets, we regularly see tax research costs being one of the most significant costs (particularly for those that support three or four products!). We anticipate this will be one of the first areas where firms break away from the Big Three and utilize tax research tools built atop the “generative AI” solutions (driven around our prediction #1), so watch out for these tools in 2025.
- Engagement Binder Transition Stagnates: Ok, we’re disappointed to say this again, but we believe firms will stay with the “status quo” for their engagement binder applications at least for ANOTHER YEAR. There is lots of talk out there, but we are not seeing any real movement to a next generation binder that can meet all the firm’s engagement binder needs (both assurance and TAX).
- CAAS Notices Copilot for Finance: Client accounting and advisory services (CAAS) have expanded within accounting firms, particularly as they have adopted integrated “tech stacks” of applications that allow them to service clients more effectively. I believe CAAS practices will also be impacted by generative AI solutions in 2025 as accounting firms take note of “FinTech” adoption of products such a Microsoft Copilot for Finance within the Fortune 1000 and success stories abound.
- Skill Transformation a Priority: I’m pretty sure that all of us will agree that the rate of change is accelerating in all aspects of information technology within accounting firms. The ability to identify, standardize and implement more effective tools will increasingly be a competitive differentiator. We feel that adoption of learning organization concepts that facilitate change and learning new methods (and unlearning old ways) will increasingly become a priority in 2025.
Yes, the assurance people reading this article immediately noticed that there are only nine technology predictions listed, when 10 were promised. This year, I felt the above nine items were distinct enough in my mind, so for the 10th item, I asked ChatGPT, Gemini, and Copilot what “their” top ten technology predictions impacting accounting firms in 2025 would be.
All three incorporated variations of the nine items listed above, but three “unique” items outside of the above purview popped up. Accordingly, I will leave it up to you to choose from those items to pick your own prediction #10:
- 10a: Blockchain: All three predicted that blockchain would make significant inroads in the year ahead stating that blockchain would “revolutionize record keeping and data integrity.”
- 10b: Regulation/Sustainability Reporting: Copilot and ChatGPT predicted that increased demand for RegTech (regulatory technology) for reporting and providing sustainability metrics (ESG/BOI) would be a significant trend in 2025.
- 10c: Augmented/Virtual Reality: And finally, Google Gemini predicted that accountants would utilize AR/VR to visualize complex financial data and conduct “virtual” audits, which from a technology perspective would be the #10 we hope happens as we could be flying drones or playing “Minority Report” from your home offices!
So, there you have it, our IT predictions for the year ahead. We hope this listing helps elevate your thinking about accounting technology and improve your strategic planning for 2025.
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Grading Roman’s Predictions for 2024:
Now that we’ve shared our expectations for what we think 2025 will bring, let’s take a look at how last year’s IT predictions fared. Please note these are SELF graded according to my interactions with the firms I worked with; your firm’s experience may be different based on the sophistication of your IT initiatives.
So, for this year, I’m counting 6 WINS, 3 DRAWS and a LOSS which means we pushed the envelope a bit but were mostly on track:
- Boon for Microsoft Copilot (WIN) Easy, we saw a noticeable increase in survey data pointing to firms utilizing Microsoft Edge/Bing Copilot and lots of interest in the MS365 Copilots this year.
- Future Skilling Formalized (DRAW) While “Change Management” and “Innovation” were big discussion topics in many firms, I could not tie them directly to the learning prediction, so I had to rate this predication a draw.
- Digital Datification (WIN) It was clear that the firms I consulted with adopted multiple digital solutions and promoted them to clients as well (think SafeSend, SuraLink, Ignition, etc.) reducing the amount of paper received and rating this a win.
- QBD Upheaval (DRAW) I can’t rate this as a win or a loss as I did not find statistics saying that the amount of legacy QuickBooks Desktop users decreased by adopting cloud apps or remained the same and planning to use the legacy version until it no longer works.
- CAAS AI Adoption Democratized (WIN) We saw multiple examples at conferences and training where API, ML and RPA automation and generative AI tools were adopted in firms of all sizes.
- MSP-Security Seriousness (WIN) Another straightforward win as we saw good growth in firms adopting managed security solutions.
- Cloud by Design (WIN) We continue to see firms transition to an increasing number of cloud applications and reduce the number of programs that they are still supporting in-house.
- Digital “Experience Evolves (WIN) The 2024 CPAFMA survey saw continued growth of firms moving to accounting focused cloud platforms as well as being evidenced by the growth we saw in our on Rightworks OneSpace platform.
- Forensics Analytics Arrive (LOSS) While we believe some firms experimented with different forensics tools, we clearly did not see firm adoption as we had predicted so this was our one loss.
- Administrative Expansion (DRAW) This was another area where we could not find definitive confirmation of firms increasing the percentage of administrative staffing over traditional staffing, so we rated it a draw.
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Roman H. Kepczyk, CPA.CITP, CGMA is director of Firm Technology Strategy for Rightworks and partners exclusively with accounting firms on production automation, application optimization and practice transformation. He has been consistently listed as one of INSIDE Public Accounting’s Most Recommended Consultants, Accounting Today’s Top 100 Most Influential People, and CPA Practice Advisor’s Top Thought Leaders.
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