Exiting Old Habits

There are powerful forces at play in the accounting software sector; they will affect all accounting and bookkeeping professionals. Old work practices and traditional ‘tools’ of the trade are being relegated to the dustbins. Readers of the financial pages of newspapers offline and online will note the massive corporate activity being played out on the stock exchange with takeover plays for MYOB and turbo-charged valuations for Xero. The deeply unexciting corner of the tech sector that is accounting software has all of a sudden become exciting and that has deep implications for the bookkeeping practitioner.

There is little doubt that there is money to be made by investors in the accounting software sector – companies are building an artificial intelligence (‘AI’) capability to automate aspects of bookkeeping and minimise user mistakes. This is a game-changer for the sector and will accelerate from here. There is upside for bookkeepers as the game for market share heats up. But there will be losers too.

The prize for winners

The transformative factors are undeniable disruptive and ongoing. The stock market activity demonstrates that private equity funds, who typically take positons in companies with a view to supercharging their growth, are well aware of the once boring accounting software sector’s growth potential. The transformative factors will be boosted by massive investment in AI and driving further into the white space of small business which is yet to migrate its accounting methods to the cloud.

Investors in MYOB and Xero have been winners and may well continue to win but the battle in the accounting and bookkeeping space has yet to fire up. Paradoxically, owners of accounting and bookkeeping practices have far more to lose than investors who, invariably, allocate their funds across a number of sectors. Accounting and bookkeeping firms have no such flexibility. They need to change internally.