By Dr.
Companies that have adopted connected accounting technology, are leveraging data to make informed decisions, and are generally more technologically mature are outperforming their slower-adopting counterparts by up to 39% of revenue per employee. This is a big deal that equals a lot of money in the long run.
In the Rightworks 2024 Accounting Firm Technology Survey, nearly 500 accounting/tax/bookkeeping firm leaders and decision makers provided insights and attitudes about the role of technology in their practices. A big lesson: No matter the size of the company, adopting technology helps significantly increase revenue per employee.
One might ask, understanding that the adoption of technology has an important and positive impact on revenue, why are so many companies still hesitant to adopt and implement new technologies? It’s a good question to ponder as we delve deeper into how adoption fuels revenue – while also identifying the key blockers to achieving double-digit profit gains.
Technological maturity fuels revenue
As part of the survey, respondents were asked to chart themselves on what Rightworks called The Modern Firm® Maturity Continuum (see sidebar). The continuum serves as a rubric for assessing a company’s technological maturity – allowing leaders to assess where they fall on the continuum…and, by default, the steps needed to move forward.
Companies that fall into the three main levels – Competitor, Collaborator and Leader – are the ones that reap the rewards of high revenue per employee.
To summarize a little more:
- Companies that identified themselves as competitors (intermediate) earn at least 29% more revenue per employee than Initiators and Followers.
- Companies that identified themselves as Collaborators or Leaders get up to 39% more revenue per employee than Starters and Followers.
Survey results indicate that adopting advanced cloud-based, connected and collaborative technologies supports increased revenue per employee. Punctuation!
Blockers to earn more
Long-held beliefs about technology adoption prove blocking for many companies, according to respondents. Those who rate themselves as being near the bottom of the continuum are earning considerably less than their technology-adopting counterparts.
The main issues facing companies near the bottom of the continuum appear to be costs 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 knowledge: 44%
- Cost/budget: 43%
- Lack of understanding of choices: 29%
- Internal resistance to new technologies: 28%
- Lack of time: 27%
- Current technology makes it difficult to move to the cloud: 12%
Survey results show that technological maturity increases revenue per employee.
Companies that rank at the top of the continuum appear to be leveraging the power of connected, collaborative, and cloud-based technologies (see sidebar) to earn significantly more—on average, 39% more per employee.
Download the full 2024 Accounting Firm Technology Survey to view detailed data.
Search details:
A 10-minute online survey was conducted in September 2023 among 493 decision makers/influencers at accounting/tax/bookkeeping firms across the country to measure use of and attitudes toward technology in their companies. The percentage of total respondents by company size includes:
• 51% identify as part of small businesses (1-5 people)
• 24% as medium-sized companies (6 to 20 people)
• 25% as large companies (21+ people)
Significance was tested at the 95% confidence level.
Sidebars:
The Modern Firm® Maturity Continuum
To enable survey participants to properly define and assess their current position in technology and business model effectiveness, The Modern Firm Maturity Continuum was provided. Companies selected the definition that best defined their maturity status.
Follower
• Disconnected software solutions
• Combination of paper and digital documents with customers and/or company
• Inconsistent business processes
• Mainly compliance work reacting to customer requests
Launcher
• Primarily connected software solutions leveraging a secure cloud environment
• Standardized workflows
• Clarity about who you want to serve, what you want to sell to those customers, and a Contender standard delivery system
• Well-defined, connected technology stack leveraging a secure cloud environment
• Standardized workflows that leverage digital documents and consistent end-to-end processes
• Clarity about who you want to serve, what you want to sell to those customers, and a standard delivery system
collaborator
• Standardized client technology stack utilizing a secure cloud environment with seamless access to all enterprise client ledgers
• Standardized workflows that leverage digital documents and consistent end-to-end processes
• Clarity about who you want to serve, what you want to sell to those customers, and a standard delivery system
Leader
• Standardized client technology stack utilizing a secure cloud environment with seamless access to all enterprise client ledgers
• Standardized workflows that leverage digital documents and consistent end-to-end processes
• A centralized data strategy that leverages technology and AI to generate insights to identify customer advisory opportunities, enabling the company to drive efficiencies to proactively serve its customers holistically and increase service levels 23% 36% 25 % 14% 2% rightworks.com |
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 businesses and their customers to collaborate – with access and ability to work on shared files.
Kristy Short is Senior Director of Content Strategy at Rightworks.
