November 15, 2019
How to thrive in a changing world
Dan Arrowsmith, product director at Tolley, explains how professional firms can take advantage of the revolution in data and AI.
There is little doubt that major change is on the horizon. The good news is that there is a way for professional firms to thrive in the AI economy – but to do so they will need to focus even more closely on their clients’ changing needs and embrace experimentation. Firms of all sizes can leverage their knowhow and networks to strengthen their position by focusing on four critical areas.
1. People first, tech second
We believe that successful firms don’t start with the technology itself: people-centred product and service development is essential. And this begins with understanding the real challenges your clients face.
Frequent, open and honest conversations with your clients are essential. These will allow you to map out how your systems and processes currently work, so that you can understand which parts are unnecessary or should be improved. Building upon your tax expertise by incorporating service design techniques, knowledge engineering and data science will help you to identify exciting new opportunities for the growth of your business. Technology can help you to receive rapid and accurate feedback from your clients as they use your services – and this will ensure that you only invest in the best ideas and that your solutions aren’t over-engineered and unnecessarily complicated. We have been following this approach at Tolley for some time and find it has greatly improved our ability to deliver value.
If you put your clients at the centre of your business innovations, this will help to demystify potentially intimidating concepts like AI and encourage them to support you as you develop. Crucially, it will also highlight areas where the most sophisticated automation cannot compete with the human touch, and where training is needed to improve the services your staff provide.
2. Hype is fine, but don’t underestimate the ‘hard yards’
It’s not hard to find praise for new AI solutions. Many of these are genuinely exciting, but it is easy to overlook the work that goes into data clean-up and structure. Nevertheless, such practical activities power most of the success stories. Winning industry praise for a new solution is great, but the ‘hard yards’ on the underlying data strategy and implementation is where the real, long-term advantages are built.
The ‘buy versus build’ discussion is key here. How do you get this balance right? As a rule of thumb, organisations should focus their efforts on their core strengths and build out from there. For example, if a solution requires underlying decision logic, then rather than choosing to build this capability from scratch, firms could leverage a third-party technology to get started quickly, and then focus their investment on the breadth and technical accuracy of the data.
One other key point, which is especially important for this industry, is the need for solutions to be auditable, rather than ‘black-boxed’. In other words, it is a desirable that AI solutions in the tax space provide the means for their logic to be interrogated, so that in exceptional circumstances the users of a service can completely understand how a decision was arrived at.
3. Get ready for hyper-connectivity
One trend that looks very likely to accelerate is increasing integration and networking between parties. If you don’t already have a strategy to consider data sharing and application programming interfaces (APIs), it’s something to think about as soon as possible.
Making Tax Digital and open banking will be key drivers in the accounting space. More broadly, the Bank of England’s report on the Future of Finance highlighted the ‘platform economy’ as a major force shaping the entire economy. We agree with this assessment and have been running experiments to understand how our Tolley products, such as our new answer engine Tolley.Ai, could serve our customers better in the future through technology integrations.
Most importantly, a platform strategy needs to define business rules for sharing and data protocols. If well constructed, these rules of engagement can stimulate innovation. It’s worth bearing in mind that just as banking services are not necessarily provided by traditional banks, digital tax services might soon be offered by adjacent players, rather than remaining within the traditional tax industry.
4. Will our future ever resemble ‘Minority Report’?
Looking further into the future, it is possible to visualise the emergence of some very different and disruptive solutions.
Along with increased automation, this will likely mean that tax professionals will have access to better support with decision making in real time, as algorithms model possible outcomes and predict the best courses of action for their clients at lighting speed. These solutions will likely also increasingly take psychology into account, tailoring their decision support to an individual’s particular needs.
The real answer, though, is that it’s hard for anyone to predict the future more than three years away with high confidence. So, the final requirement for preparation is to have a flexible mindset and be willing to adapt to new ways of operating. This also requires an element of creativity, as successful professionals in the future will need to learn from many adjacent industries and disciplines to remain truly relevant when offering their clients brilliant accounting services.
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