Technology’s rate of acceleration is at a speed faster than ever before. Ranked high on the list of emerging technologies that will have a profound impact on the accounting profession is blockchain. But is blockchain on the radar of our clients and prospects? Are we prepared to address it in our firms and in our sales process? If you have not yet had to share how blockchain is impacting your firm’s service today and in the future, you soon will.
First, let’s make sure you know what blockchain is. Described as a third party ledger system, blockchain is the peer-to-peer network technology that decentralizes verifications through real-time links of encoded transaction data. The benefits of blockchain include eliminating inefficiencies, reducing fraud, and the greater protection and tracking of data. Mike Borcherding, a business development executive with Moss Adams, prefers to describe blockchain as “true trust automation.”
Blockchain and other rapidly advancing technologies such as artificial intelligence, big data analytics, virtualization etc. will have disruptive and transformative powers on the accounting and finance industries, as well as the clients they serve. The AICPA, CPA Canada and the University of Waterloo came together to explore this intersection with a whitepaper titled, “Blockchain Technology and its Potential Impact on the Audit and Assurance Profession.”
To further demonstrate the impact of blockchain on our buyers, Forbes Insights in association with KPMG looked at How Blockchain Can Drive Finance and Audit Performance and found: “…of 250 finance executives, almost 41% say their firm uses blockchain in some manner, and another 50% expect their organization to start using blockchain within two years. For those currently using blockchain, they’re doing so in a number of ways, including application in smart contracts (cited by 60%), operations (52%) and fraud prevention (47%). Cryptocurrency transactions were cited by only 13%.”
With such a wide application, how are those we encounter using it? Borcherding knows a law firm that turned to blockchain technology to track its mountains of legal documents and access a real-time digital ledger of who was using what and when. It’s also being used in the supply chain to track where our food comes from and the impact on tainted food products.
Industries that consistently strive to increase profit margins through efficiencies may see blockchain technology as a way to improve those processes. Perhaps for some, it’s not necessarily reinventing the wheel, but doing what they’ve been doing better.
Opportunities for business developers
“Every finance and accounting professional needs to understand disruptive technologies and how they can use them to elevate and accelerate,” said Bill Sheridan of the MACPA on a recent AAM webinar.
But this is easier said than done. Both Gale Crosley, a leading growth consultant with Crosley+Company, and Borcherding agree that deep diving into blockchain can be intimidating. Awareness of it is still limited. When Accounting Today asked the question, “How well would you say you understand blockchain?” more than 50% surveyed responded, “What’s blockchain?”
Borcherding admits that the discussion can get very technical, but you don’t have to focus on the details. “Most people don’t necessarily know how wifi works. We just trust that it does,” he said.
Ultimately, the goal should be to gain a solid understanding of what’s impacting a client’s or prospect’s industry and the marketplace. Crosley contends that business developers should be initiating the conversation or, as she says, “business development should be doing the driving.” Borcherding emphasizes that most “CFOs and financial professionals are looking to their accounting firms to provide the solutions.” In his experience, the discussion tends to lead into, “what sort of use-case scenarios are out there.” Often, clients or prospects may already be familiar with use-cases of AI machine learning or cyber security applications. In the case of blockchain, he’s most frequently asked for use-case assessments. Would a blockchain solution work for my business model, can you assess that?
If the sales cycle moves to the proposal phase, a response that goes beyond the standard boiler plate language has long been considered best practice. Crosley recommends that firms research how emerging technologies may be impacting the prospect’s industry and weave those insights into the proposal response. In a recent example, Crosley describes a firm that outlined the impact of technologies “from highest priority to earliest to market” in an executive summary. Not only does this approach remove price from the conversation, but it moves a firm’s response from transactional sales to the solutions selling.
In Borcherding’s experience, he cites Moss Adams’ commitment to a one-firm model. Whether a client is seeking to reduce redundancy or decrease labor or cost, blockchain is most likely part of the overall solution. Above all else, Borcherding says, “Have an open conversation with your clients.”
Answering a prospect’s questions on blockchain
Is blockchain a perceived threat or opportunity to the industry? Is blockchain the financial statements of tomorrow? Will audit be replaced?
Borcherding says these questions do bubble up in general conversation because, “the belief is that blockchain will be able to reduce the labor and cost associated with traditional tax and audit work. People want to know if we are looking ahead to the future. It’s usually phrased as, ‘Do you think blockchain can replace auditors?’ or ‘How are accounting firms looking at using blockchain?” He responds with, “maybe blockchain can reduce the time and labor associated with traditional tax and audit work, that’s why we are researching blockchain and machine learning solutions for various scenarios.”
Crosley says that it’s important to note who is asking the question? If a CFO is asking a firm about blockchain (or AI, cybersecurity etc.), it’s likely because they already know the transformative nature of the technology or worse yet, they have a perception that a firm is or isn’t prepared for such. Her recommendation is that the real power and insight lies with being proactive. A business development or accounting professional should be leading a conversation with, “Tell me about the technologies that are hitting your industry?” or “Which technology do you think will be most impactful on your business?”
Listen for market cues when innovating
Accounting firms looking to future-ready solutions are embracing early adoption with the commercialization of services lines and practices. Armanino recently announced a new blockchain practice and, as early as 2017, Garbelman Winslow, a small firm in Maryland, adopted MindBridge AI Auditor™.
While the instinct to jump aboard a train rapidly leaving the station may be great, Crosley cautions that it is critical to listen to the market even at the most granular level. The process of bringing a new service or practice to the market (blockchain or otherwise) should be well researched. Begin with constant interviews and listen closely for hotspots, which she defines as a “place were the service capability and the industry create a cross-section.” The results may vary according to the market.
Also, be sure to determine what direction a firm may focus on for use-case scenarios. If professionals are taking a consultative proactive approach, they will be more in tune with what is resonating in the marketplace. For example, discussing blockchain technology when a client is greatly impacted by cybersecurity may not resonate, and that should have been identified during the research phase.
Focus on providing value
It’s frequently reported that the number one reason clients leave their accounting firm is because their CPA provided reactive, not proactive advice. Leading the discussions, not following, can be a wise move, especially in an environment where prospects and clients are looking to accounting firm providers for solutions.
As a business developer, you have to think about the value your firm can provide today and tomorrow. Or Borcherding says, “We look to the future and ask how we can make your efficiencies better two, three, or five years down the road. Our job is to seek that out.”
When it comes to discussing blockchain or other technologies with prospects, make sure you:
- Do your research. Be a student of industry and never stop learning.
- Are proactive, not reactive.
- Be prepared to present key findings. Remain customer-centric in either proposed solutions or firm innovations.
Regardless of what technology is part of the overall solution, it’s important to remember that you are providing real value to real people.
AAM Minute: Business Development
By: Caren Rodriguez, DMJ & Co., PLLC
About Caren Rodriguez
With more than fifteen years’ experience in strategic marketing and communications, Caren is an experienced Marketing Director with a history of leading marketing and growth strategies in professional service firms and among their professionals.
As Director of Marketing at DMJ & Co., PLLC for more than ten years, Caren manages firm-wide marketing and business development initiatives that span three office locations across North Carolina. Her responsibilities include communications, public relations, brand development, strategic partnerships, marketing strategy, and digital media efforts. In 2014, Caren was elected to the Association for Accounting Marketing’s Board of Directors where she is currently serving on the executive committee in the role of Secretary. She has been awarded the Triad Business Journal’s 40 Under 40 Award and is a graduate of Leadership North Carolina. Caren earned her degree in Communications from North Carolina State University.