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AI is expected to hit profitability in 2019

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Sometimes it seems that the accounting profession is at the center of the whirlwind that is sweeping the world. Change is everywhere, and it’s changing faster and faster. In that economics reaches into virtually every aspect of human existence, the changes inevitably circle in on accounting firms, says Rick Telberg at CPA Trendlines.

The new Rosenberg MAP Survey touches on the many manifestations of change, among them:

technology, especially

artificial intelligence, as it

expands the potentials of accountancy, which

changes client expectations, which in turn

requires new services from accounting firms, which

calls for a reorganization of staff collaboration strategies and

more training and

more kinds of training in the midst of

shortages of qualified professionals, some of whom might be replaced by

technology, especially

artificial intelligence.

So far, the survey finds, profitability is way up. At the large (over $20 million in billings) firms, income per partner averages out to a comfortable $635,000. The average compensation among the highest earners is a staggering $1,175,000. Even the lowest-paid partners make an average of $282,000.

But how long can that go on? Allan Koltin, of Koltin Consulting, whose thoughts and observations were tapped for the survey, said that profitability may have to take a hit. With the advent of artificial intelligence, partners are going to have to invest in something besides themselves if they want their firms to survive.

Innovation costs money, and innovation in artificial intelligence costs big money. Nobody knows how much money. Firms are going to have to spend money just to find out how much they’re going to have to spend.

Innovation also requires leadership and collaboration. Toward that end, Koltin observes, CPA offices are rethinking space requirements and office configurations.

With more people working at remote locations, offices need less office space.

With the increasing need for collaboration, cubical walls are getting lower and there are more common spaces. Koltin likens the layout to something akin to Starbucks.

Managing the new collaboration requires more leadership, so partner offices are moving from the outside walls to interior positions among their people.

The need for more training necessitates more dedicated spaces.

The need for more collaboration and more training necessitates more conference rooms.

Koltin also believes that once the big firms have geared up for artificial intelligence, they will need fewer professionals. The Big 4 predict a 50 percent drop in campus recruiting. This will be an opportunity for local, regional, and national middle-market firms to hire recent graduates who can then be trained in specialties and new services.

These new recruits were weaned on not just Starbucks coffee but the common-space coffeehouse ambience. They will be glad to slip into semi-private open-office nooks where they can focus on their work while being within talking distance of their teams. They’re also perfectly willing to take their laptops home and not come in for a week, working entirely online. They don’t need an office, desk, and credenza to call their own.

The leaders of tomorrow’s office will need to learn how to herd these cats. That should be fun because these are smart cats. They’ve got something even better than artificial intelligence. It’s called human intelligence.