Digital transformation sounds complex — and it can be — but it’s also exciting. In simple terms, digital transformation happens when companies swap old processes and legacy equipment for new strategies and modern technologies. Examples of digital transformation in accounting might include software implementation or a move to the cloud.

We’ll explain digital transformation in more detail at the beginning of this guide, and we’ll explore what it actually means in a practical context. 

  • What is digital transformation?
  • Digital transformation in accounting
  • How to create a digital transformation strategy

What is digital transformation?

When organisations — and freelancers — adopt digital technologies that enhance business processes, improve the customer experience and drive innovation, that’s digital transformation. Leading research and advisory company Gartner describes digital transformation as an S-curve: organisations begin their journeys at the bottom left of the curve, continue up the slope until they reach the apex, and exceed the horizon.

According to Gartner, there are four distinct company profiles on the S-curve: enablement class, optimisation class, transformation class and industry vision class. 

1) Enablement class

Enablement class companies are perfectly happy where they are. They either don’t know about — or can’t see the value in — adopting digital technologies, and consequently don’t have a digital transformation budget or a digital transformation strategy.

2) Optimisation class

Optimisation class companies recognise that some of their processes are outdated — but instead of adopting brand new technologies to replace them, they optimise the hardware and software products they currently use. Optimisation class companies don’t allocate many resources to whole scale transformation, which they feel lies beyond the planning horizon.

3) Transformation class 

Transformation class companies not only allocate resources to digital transformation, but also seek to adopt cutting-edge technologies they feel will improve productivity and profitability. These companies dedicate a portion of their budgets to digital transformation, and sometimes to future innovation. 

4) Industry vision class

Industry vision class companies are pioneers. They go beyond adoption of new technology; they actually create technological products and services. Industry vision class organisations deliberately create disruption to drive change within their industries.

Despite its name, digital transformation does include hardware modernisation. Without the right hardware in place, digital products simply can’t be applied. Take software, for instance: if your computer can’t support a sufficiently modern operating system, it might not be compatible with the latest desktop accounting software. 

Digital transformation in accounting

In practical accounting terms, digital transformation means new technology. If you’ve been working with the same depreciating technological asset — read ‘computer’ — for the past seven years, for instance, digital transformation for you might include upgrading to a newer machine.

Other accounting-centric examples of digital transformation could include:

  • Adopting brand new accounting software to improve your workflow
  • AI-guided analytics implementation to help clients plan for the future
  • Digital process automation to enhance accuracy and efficiency
  • Cloud-based data management to enable remote accounting 
  • Big data analysis to help predict client industry trends

It’s important to note that — despite earlier predictions of a ‘death by digital transformation’ future for accountancy — tech has been an enabling force for accountants and bookkeepers all over the world. AI-enhanced analytics programs can do the heavy lifting — but human beings are still much better at seeing long-term trends. Digital technology isn’t a replacement for people: it’s a helper.

How to create a digital transformation strategy

It’s important to get on board with digital transformation. If you don’t, your industry peers could overtake you, leaving you with a much smaller slice of the market. To transform successfully, you need a plan — a little bit like the business plan you probably wrote when you launched your venture. 

1) Get data

Before you begin, think about what your clients need from you. Perform a service audit to identify your company’s strengths and weaknesses. Are your customers currently satisfied with your service — and if not, why not? You can gather the data you need via surveys, via reviews and via face-to-face meetings.

2) Create objectives

Think about what you want your company to achieve one, five, ten years down the road. Do you plan to expand your business at some point, and if so, which technologies would help you do that? Are there groundbreaking AI-based accounting tools you can use right now to make your venture more efficient?

3) Draw a road map

Next, think about a realistic timescale for the digital changes you want to make. If you need to purchase new hardware, can you afford to do so without obtaining a loan? How quickly can you migrate your existing processes onto new systems, and will there be downtime as changes occur?

4) Test and go live

Many accountants take new hardware and software for a ‘test drive’ before they implement changes in full. Trialling SaaS products and new apps can help you decide if they’re right for your business. Once you’re certain, go live with your digital transformation.

5) Track your metrics

After you deploy your digital transformation strategy, use key performance indicators (KPIs) like client engagement, retention rate and net profits to gauge how well it’s working. If you keep your finger firmly on the pulse, you can change and optimise your digital tactics in real time.

Save time on small business clients

Tech experts believe that mobile technologies — including apps — are an integral part of digital transformation because they represent technological mobility. While portable, laptops aren’t always handy at the drop of a hat; mobile apps, on the other hand, are accessible no matter where you are.

You can work smarter and start saving your practice time on manual admin by helping your clients keep organised records with the Countingup app, built specifically to help you manage your self-employed and sole trader clients.

The Countingup app automates time consuming bookkeeping admin for your clients so they can focus on running their business – and send you accurate, structured data to work from. With instant invoicing, automatic expense categorisation and cash flow insights, your clients will be able to confidently keep accurate bookkeeping records everyday.

Built by accountants for accountants, Countingup’s desktop-based accounting software is MTD-compatible and full of features for you to review and manage client accounts efficiently, with direct access to their real-time organised data. Find out more here.

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