9 Big Ideas for Turbulent Times
Practice consultants brace firms for looming trends.
by Rick Telberg
Over the past few years, we’ve seen a torrent of change in the accounting profession. First there’s consolidation. The number of big firms has dwindled while the size of each firm has increased. Simultaneously, the number of small firms has increased, and they’ve done reasonably well under a lot of pressure. Meanwhile, regional firms have been scarfing up the smaller clients that have trickled down from the big firms as Sarbanes-Oxley tightens up the time supply.
But guess what? You ain’t seen nothin’ yet. The changes are going to keep coming at us. If you’re smart, you’ll ride this tidal wave of change.
We’ve been reminded of the speed and scale of change by Art Bowman, the veteran analyst and commentator on the profession and editor and publisher of the Bowman Accounting Report. No one has been reporting on the business of the profession longer or better than Art Bowman.
Bowman has compiled in a special issue of his accounting report the thinking of 18 leading pundits. All are household names in firms across America. They see some interesting, and often difficult, changes coming down the pike. We don’t have room today to cover all of the contributing consultants, but here are nine of the seers, with nine big ideas:
1. Mark Rosenberg sees the profession increasingly crunched between a greater demand for services and a decreasing supply of professionals who can provide them. The result is that firms raising rates and shedding less profitable clients. The question is: Which partners are going to give up clients?
2. Gerry Riskin sees an explosion of niches. Big firms outsourcing specialized services. New kinds of services being demanded and offered. New disciplines combining accountancy with, say, legal counsel, IT or engineering.
3. Gale Crosley sees niche-needs leading to more competition from non-CPA firms, such as Section 404 and valuation specialists.
4. Bob Martin notes that the new niches, plus a withering labor pool, plus a burgeoning demand for more comprehensive service will result in new ways of valuing firms. Mergers will be made less for the revenues and more for capabilities. Consequently, the industry will have to find a way of valuating those capabilities.
5. August Aquila says that if you aren’t going to be ready with whatever the world wants in a few years, don’t wait; merge now.
6. Roman Kepczyk follows that theme as he predicts the empowerment of personnel through better IT. He sees more integrated workflow management. Entrepreneurial CPA firms, he says, will lead in IT adaptability, while the big firms are trapped within the limitations of their existing applications.
7. Jeff Pawlow sees the profession redefined as fiber optics replaces bricks and mortar. The successful professionals may be the ones who can work with a team of people they have never met, knitting together their disparate expertise. This opportunity may tempt the most valuable and versatile professionals (the trifectas who have an MBA, good client relationship skills and good IT skills) out of even the best firms.
8. Bob Gallagher says tomorrow’s leaders will be those who can build solid relationships rather than those who are merely task-oriented. He sees opportunities in training these leaders. Firms that don’t invest in professional development will not be able to continue as independent shops.
9. Allan Koltin agrees that the shrinking personnel pool will stress audit firms. Whereas they once engaged in guerrilla marketing, they will soon move to engage in guerrilla recruiting and retention. A big source of talent is the over-60 bunch who don’t mind keeping busy between cruises and fishing trips.
You could accuse me of oversimplifying their ideas or extrapolating a little too far. I guess I’d have to plead guilty to both. But maybe this rapid-fire presentation of ideas provides something to think about because, to paraphrase Alvin Toffler, in our business, change is the only constant.
[First published by the AICPA. Copyright 2007-2012 Bay Street Group]
