Dynamic Duos: The Future of Tax and Accounting

Almost half of Australian executives and a quarter of CEOs predict that their businesses will be significantly transformed in the next 3 years, either through adapting to new technologies or offering new products or services[1].

However, enterprise transformation is a challenging and iterative exercise. Acquisitions have been the preferred way to pivot into new markets, but are expensive and rely on successful integration. Substantial investment is needed for in-house product development, and whilst outsourcing can lower costs it doesn’t necessarily give a market edge. And then there are the permutations of the technology and policy and regulatory worlds to consider.

So within a congested marketplace, how can a business transform to continue to achieve organic growth?

The answer lies in partnering up.

Collaboration not competition

By entering into strategic alliances, companies can take advantage of complementary products, services and market access and provide greater outcomes for clients.

Partnerships in business have possibly been around forever, or as we recognise them at least since the emergence of guilds.  Skip ahead to recent times, a number of the top global leviathans – HP, Apple, Procter and Gamble, Intel to name a handful – all originated through partnerships between individuals.

The tradition has continued in the form of B2B partnerships, from Apple and IBM, Spotify and Uber, Apple pay and Mastercard to very recently with IBM/Stellar and Apple/GE announcing alliances.

Establishment meets the new economy

These alliances are not just exclusively for larger corporations. In Silicon Valley, start-ups are continuing to achieve high valuations – outstripping the flavour-of-the-month investor cycle.  The reason being is that most of the innovations developed through these partnerships are about improving work efficiency, something for which all industries have an appetite.

Whilst in Australia we haven’t fostered “new economy” titans of the likes of Apple, Amazon or Facebook, we are embracing the collaboration culture across business sectors, through venture capital investment or acquisition. In finance, banks such as NAB are partnering with emerging fintech companies, and in the real estate sector with companies like Charter Hall, there is an emergence of successful partnerships to “accelerate the accelerators” in property tech[2].

This pairing of a start-up with an established entity can bring about a formidable enterprise, one that harnesses the financial and market power of the larger company but has the start-up’s innovation and agility in product development and go to market speed. Think Lion meets Cheetah.

Power doubles in Tax and Accounting

In a lion-meets-cheetah duo, there are drawbacks. Larger companies can misjudge a new market and customer tastes while smaller organisations might struggle to get proof of concept sign off.

So imagine then, if Lion meets Lion.

In Australia this is taking shape as the Big4 accounting firms lead the divergence from an acquisition-model of growth and open up their gates to external firms to implement new technology.

On the back of the recent Thomson Reuters and Deloitte alliance, I spoke to Accountants Daily about this significant development and why it is indicative of how companies will pursue success in the future.

For instance, the alliance business model between a large corporation and a large tax technology vendor offers a two-fold benefit: growth through market expansion and cost saving on product development or acquisitions. Both partners know what customers want, have the power to deliver this and the ability to create sustainable success from the venture.

Returning to the recent survey of Australian companies, the top priority for CEOs is implementing disruptive technology. The biggest headache is compliance with regulatory changes. [3] If we look at these in the context of the slew of global tax and financial reforms underway, the tax and accounting function is very much in the spotlight.

Again, the partnership or co-sourcing business model has much to offer here – through leveraging the right technology to improve tax, accounting, audit functions, companies can save money, avoid penalties, and claw back valuable time for planning the future.

The opportunity is here, the question is – will the tax and accounting industry be quick enough off the mark to embrace the market rewards offered by alliances?

 

[1] Future now series: AFR KPMG Innovation Report, http://reports.afr.com/kpmg/innovation/

[2] http://anthillonline.com/charter-hall-partners-collective-campus-accelerate-property-technology-startups/

[3] Future now series: AFR KPMG Innovation Report, http://reports.afr.com/kpmg/innovation/

 

About the Contributor

Hydar Al Ammar

Hydar is the Strategic Alliances Director, APAC at Thomson Reuters. He is a chartered accountant and tax professional by trade, with a lifelong passion for technology.

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