Accounting technologists Randy Johnston and Brian Tankersley, CPA, discuss the state of technology in the accounting space, including advancements in AI for firm management and client services. The Accounting Tech Lab is an ongoing series that explores the intersection of public accounting and technology.
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Transcript (Note: There may be typos due to automated transcription errors.)
SPEAKERS: Randy Johnston, Brian F. Tankersley, CPA.CITP, CGMA, Mary Delaney.
Brian F. Tankersley, CPA.CITP, CGMA 00:00
Welcome to the accounting Technology Lab brought to you by CPA practice advisor, with your host, Randy Johnston and Brian Tankersley, hi, it’s Brian. Welcome back to the podcast. This is episode two of the wide ranging conversation Randy and I had with Mary Delaney, CEO of carbon on October the third. Mary is. Mary is going to talk in this episode quite a bit about artificial intelligence, its role, how its adoption, and again, how she affects it’s going to change the accounting profession, and she wraps up with an interesting prediction about something that that she expects to disappear in the future in the accounting profession that I didn’t see coming. So anyway, anyway. Hope you have you enjoy this one. Thanks for joining us again. And with that, here’s part two of our episode.
Randy Johnston 00:55
Well, I think if it’s fine with you, I’d like to turn attention here to the AI pieces. Now I want you to tell me I’m wrong, because I’m going to lay out the way I’m thinking about this right now, and I’m trying to provide guidance to our listeners, because there’s a lot of FOMO on AI right now. A lot of firms think that they’re way behind, and in many cases, they might be a little bit but they’re not that far behind. And my general strategy has been we have the large language models, the clods, the co pilot 365, the chat GPT is all those large language models that really are the basis of productivity. Then we have AI that is getting built into products.
So we’re going to naturally inherit some AI by our providers as they make progress in their platforms. And then the third piece is, I believe that there will be either new agents created or new products that are written using agents that become a third vector and a fourth vector that’s a form of agents, is the MRCs that are evolving so but it’s really a three layer model productivity built into your products and agents.
Now tell me how I’m wrong in thinking about AI that way. And the last setup I’m going to do for you, Mary, is I tend to be a little more protective of client data. One of the things that I’m quite worried about is that we have a an environment where our professionals are actually not following the ethics guidelines of the profession for the AICPA, not disclosing where the data is being used.
You know, obviously we hear about it from 7216 with offshoring and whatnot. But you know, if you’re using an AI engine and the data is being passed to a sub processor and so you’re actually violating the ethics, straightforward regulation. So that’s a kind of a long rant to set you up to say, tell me where I’m wrong because I’m I’m trying to be factual with the client base that I work with and with our listeners too. So you’re way more experienced than I am probably on it. So help me understand what you think is going on.
Mary Delaney 03:27
First of all, I do think proceed with caution is something that everyone has to do. It’s new technology. It’s highly imperfect. We’re still learning and growing. You started with everyone’s feeling a bit behind, and we’re still on step one. So if you start tomorrow, you can catch up, I think, really quickly. So I encourage everyone to, even in your personal life, just start to use it and understand but get a committee together and get started on on your three areas. I think agentic can still be embedded within your technology. I’ll share with you a little bit on how how we view it, and one is we view that. There’s many different use cases for AI, and all of them have to do with having our customers being able to, you know, house and protect the their data and use it for their insights, to add value for their clients. But one is agentic. We think that is a significant part and the way that carbon built our workflow for the last 11 years on, there is workflows that are your main workflows for each of your services, but we understand that every client is create is not created equal, and each one has unique needs. And so you can put you know, kind of sub workflow. Um components in each of those clients workflows. And then in our workflows, you can set up roles and assign roles to do various steps. And so one of those roles could be so and so agent who does a step and what we believe right now and and I think for a long time into the future, is that transparency is key, because AI is imperfect, so you have to know, and it has to show I am the agent, and I am doing these steps, and this is what I learned, and this is the recommendation or the action or decision I’m about to take, and then a human looks and they advance it. And that, to me, is the hybrid model, and that’s the right model for our industry, because it’s a compliance based industry where you have to be right, and they’re trusting on the account recommendations and decisions. So that’s an example on how we’re treating agentic. I think there’s also AI grow, which is being able to, when you think about what we have. We do the engagement, we then get that back, we start the work. We know what they said they were going to do, and then we do the work, and we track the time, and we know what they did, and we have all the communication so we can start to understand wait they said they were doing, you know, month end, close. But there’s a lot of emails and chats back and forth that have nothing to do with that. There’s a lot of out of scope. And so one of the hardest things to do for a human being, I believe, is to look and say, client, I need to raise your price. And so if a high can take utilization rates and can take the conversations, and can be able to say, hey, you offer this service to 40 different clients. The utilization for this one is here. The price is here. We recommend you changing the price to this. And we recommend you communicating, here’s all the value you did, and also here’s out of scope work you did. So think about a recurring subscription in, you know, X, Y and Z. And so we think there’s a real opportunity not for it to do it, but to really give it the clear mirror on what did you do? What should you charge? And how do you communicate that we think that’ll be material. It’ll it’ll help accounting firms thrive. And you know, when they thrive, they’re able to add more services and help businesses thrive. So that’s another area that I think will will be big. And the third area is you get, you know, new young junior associates coming up, and they all need to get to the partner and ask for their advice and counsel on X, Y or Z. Carbon was built with tremendous contacts. We’re the only one that’s really been able to have all the communication that happens, all the mentions, all the back and forth, and the client portal, all the emails attached to the work. So we know that when a junior associate sent this chat to their partner about, you know, tax from last year, we know what the answer was. And so we believe we’ll be able to with that firm’s you know content will be able to give some advice and really be that first line, so the partner doesn’t have to repeat and answer everything 20 times. So those are some of the ways we’re thinking about it. Randy, is that helpful?
Randy Johnston 09:18
It is very helpful, as I think back Mary in terms of trying to get to value billing types of strategies. We’ve often used ABC methodologies, you know, to try to price. And I’ve asked firms for decades to adjust the pricing, but it looked like to me that the actual tracking that was getting done in carbon actually gave you facts and would surface situations where you needed to have a conversation with a client on making some of those pricing adjustments and out of scope adjustments and so forth. And I see that as being very promising. Agreed on that, uh. Of wholeheartedly and then secondarily, your comment about trying to take novice or less experienced accountants and bring them up to speed, a misconception, but it might have been right in those days, is that I thought for people to be able to do advisory services. They needed 10 or 20 years experience and some gray hair or no hair. You know, they had to get further along in their career, but it is clear to me that new generation accountants want to be involved with clients sooner, and if you have tools to help them deliver advisory services, they, in fact, can do that. And you know this ability to step back and say, Hey, I need some help. But if the AIS can help us initially, that’s pretty impressive. I know Brian and I have looked at multiple platforms that are enabling some of this on on an advisory perspective, and I know that you know, Brandon and his team was trying to do that with the Aiders. So I expect that to continue to evolve as well. So I do appreciate, then third, your comment about the agents being built in the products and evolving very rapidly as kind of a role based assistant to me, that absolutely does make sense. And you know, we know agents can go afoul, and we still have to have this hybrid using your word intervention occur, because we’ve been strong proponents that you can use AI, but you need to really be cautious. So it’s an exciting time on the AI piece. So now, are there other examples that you might want to advance where AI can help with culture and resilience? And the reason I asked that question is, you know, we’ve, we’ve been in a hybrid work mode. A lot of CPA firms never really quit going to the office. But, you know, we still have a lot of remote workers, and I think it is hard to maintain culture at scale. So is there a way that AI can actually strengthen culture or the resilience inside the firms? What do you see there?
Mary Delaney 12:20
I would say a couple of things there. One is, you know, we have over 300 people all virtual. So I I think about this every day, Randy and all, all around the globe. How do we build that community and that engagement? And there’s some things we do with with AI that I’m happy to share on the firm’s basis, think a couple things. AI, we find that in our recent AI survey we did, and we’ve done it two years in a row, but over 70% of the young students or graduates are looking for an AI forward firm. So if you want to attract the right you know the right caliber of talent going forward, you really need to have aI training, AI tool set, and also a guide post on how to use it. We found in our own firm when we did a survey to our software team earlier this year on utilizations, the ones that weren’t using it as prevalently is at the time, we didn’t have enough clarity in what they could and could not use it for, so we quickly cleared that up and really have a policy that allows people know where the fence post is. It’s far enough that they can run fast, but there’s a clear place where it stops. So I would say that there are ways that AI can help to share with the team where they stand and how they’re performing. And I think young folks especially want that constant feedback on how am I doing and what will it take for me to get to that next level? Because the the days of potentially the three of us saying, Oh, I can, you know, be in this role for three years, it’s about what’s next, and it has to be in months, not years. And so that that feedback loop is important,
Randy Johnston 14:30
makes sense. And you know, I’ve, I’ve been watching and trying to interpret studies on drops of productivity and creativity from using AI. I think the three studies that I’ve read all are actually pretty well founded in science. And I’m also very concerned about what has now been termed AI slop, work slop, you know, where there’s a bunch of digital drivel being created, right? So there’s that. Type of thing going on. But I think this whole idea of using AI as a talent strategy and not just an efficiency thing, to me, it feels like when you were talking about the programmers, you were talking about trying to make them more effective, I think is what I heard you not say. I think that’s why that came through. But is there other forward facing things that you believe that an AI forward firm can can be effective at?
Mary Delaney 15:34
I think the biggest one is people crave people, and they crave making an impact. And I think AI, one frees them up, and two gives them tools to do more advisory and I want to share with you two stories that that really hit at the heart of the impact I realized accountants can make. And I have a neighbor in my previous home who I gravitated to a lot. Most of my female friends didn’t work, and the guys did. And so I talked to the guys about business, and he was making a change. I didn’t understand it quite then, but it was quite stressful. And fast forward, he went from, you know, one or two employees to 20 plus, and it’s company called core tech, and he employs his two sons. And I met up with him because his son was getting married, and my son was his good friend. And I asked him about the business, and said, Joe, I remember when, you know, it was really challenging, and now you’re thriving. What happened? He said, Oh, I went from selling other people’s molds to like furniture to mental health facilities and and detention and prison facilities to actually creating my own and they’re beautiful pieces of furniture, and in the darkest days of people’s lives when they find themselves in these 25,000 places that I serve, they I hope to brighten it up. And I said, Joe, what made you change from being a manufacturer’s rep to building this thriving business that’s impacting so many lives. He goes, Oh, my accountant. He did not know I was in the accounting business. And he told the story and how the accountant sat him down and said, Joe, your business ends the day you retire. Is that what you want? Or do you want something where your boys can join you, and it can be bigger, and it can last long, beyond when you retire? And that hit me so much like if we free them up, if we give them the time to look at the data, seeing the forest through the trees, if we give them advisory reports, pre built, what the power of what they can do. I’ve started to ask people those stories, and one at a booth said, Oh, I know what it is. It’s six words. It was. My father had a customer who was in construction, and they always had too little cash. They just squeaked by, and he looked at all the data. He’s like, You need to hire a driver. And the guy looked at him like he had three eyes. I’m just squeaking by. What do you mean? Hire a driver? But he looked at all the expenses and realized he was at Home Depot and other places for four hours a day, not doing the work, but doing something someone else could do. And that business now is millions and thriving. And I think that is the trajectory of the before and after, when you insert yourself and do advisory work, and that’s what I’m inspired to help. And I think what AI can bring, yeah,
Randy Johnston 19:04
I do love those times when you can look at a number or just provide an insight. Because, as my friend Dr Bob Spencer used to say, when the sob from out of town sweet old Bob looks at things and finds something you wouldn’t otherwise see, it’s like aha moments and changing business owners and their customers lives, is what I think good advisory work by wise accountants can do. It’s I’m very, very thrilled about that. Well, your insights here both on we’ll call it client experience on the front side with the workflows and the document managements and the portals and all the things that are happening in carbon for that, and the advisory acquisitions, the you know, the aider piece, and the integration with Stanford, with Dan and his team, all very exciting. And then. Flip it over. How can we practically leverage all this AI stuff? Wonderful insights. Do you have some final parting thoughts for our listeners today that you you say, you know, I’m talking to, you know, hundreds, if not 1000s of people around the country that are running these firms or working in these firms, here’s something I’d want them to know
Mary Delaney 20:23
absolutely and thanks for the opportunity. It was just a joy to speak with both of you today. So thanks for the opportunity. I would say a couple of things. Lean into your vendors. Look at them as partners. They are looking at this every single day. It is their job to look at this they are evolving every single day. Meet with them every quarter. Ask them what new innovation they’ve done. Ask them to figure out how to maximize it. Ask them to connect you to their top customers who are leveraging it most effectively. Make sure they’re being your thought leader and partner. I’d also say, are they a closed ecosystem or an open if they’re closed and they’re hoarding your data and you I would really consider moving right now, we just did 1000 person survey in the accounting industry in the US, and 55% said they’re looking and I think one of the key impetus is, you know, are you looking out for me? Are you looking out for you? So partner with a firm who’s trying to connect you to all the best solutions. The third would be that there’s a lot of new entrants, and we’re super excited about the innovation, as we love to partner with them, we’re also cautious. We had someone call me and say, Hey, are you partnering with so and so we want to, we want to use them. And then they called back two days later, oh, they don’t have really security figured out. They’re not sock to they’re not any of that you know disregard. And so we really vet our partners. Look at the partners we’ve chosen. We vet our partners. When you look at only one half to 3% of all software get to 30 million, only 15 to 17% get to 10. There’s a lot to do in change management for your clients and your employees, really make sure they can look like a shiny tool, but make sure they’ve thought through security and and they’re funded in a way that they’re going to be around next year and the year after
Randy Johnston 22:37
beautiful advice that’s vetting that Brian and I try to do carefully, but sometimes we can’t see through all the pieces. Now, Brian’s let you off pretty easy. Today. He hasn’t asked any, you know, probing questions, and he’s usually, you know, right on top of these. So So Brian closing questions.
Brian F. Tankersley, CPA.CITP, CGMA 22:56
And so the first one, the first one, I guess, Mary, you know, you know, you mentioned you have a team of 300 that’s spread out literally all over the world. What you know, because a lot of our practitioners now, because of staff shortages, and, you know, people living where they live, have a lot of remote employees. So I would just, I guess I would just the first thing I would ask is, what are your top three things for maintaining culture and and leading a dispersed organization, what are your top three tips for that
Mary Delaney 23:27
clarity in your goals or your OKRs and how they attach to each employee? And I really try to be chief repeating officer all the time. And you know, you start to go, am I sounding like I’m always saying the same thing, but it’s super important for them to be clear on what are we running after, and how do they make an impact? And you can do that through your communication channels. We do a monthly call as an entire team. We also do onboarding, so every single person gets 10 calls from all the senior leaders, and they get to go through our values and their role and why we’re doing what we’re doing. We also use a just a central communication hub really closely with a lot of recognition for doing our core values and for delivering on those client driven outcomes, I would say. And then just make sure you have the technology that helps you communicate effectively. You’ve got your senior leaders. Pull them together. I meet with my senior leaders every week for several hours, and we talk about what needs to be cascaded and then we work to make sure that can be cascaded down and communicated to each team. We also do one last thing I’ll share, which I think are. Really fun. It’s a technology. It’s called a donut. We randomly connect to employees. It’s just once a month. I do my donuts too. You can’t talk about work when we do it for 3030, minutes. And then there’s also, you gotta have fun, right? We just did a carbon Scott talent. We had about 20 people. We had people who did songwriting, and people showed us how fast they can run a marathon, people who painted, people who did stand up, and we all were on there celebrating, and it was one of my most favorite hours together. So it’s a little bit of all of that
Brian F. Tankersley, CPA.CITP, CGMA 25:42
super Okay, last question, I guess, you know, if I think about the waves that I’ve seen in the 33 years I’ve been around the accounting profession, one of the things that I that I’ve noticed, you know, and those waves are, we had 10 keys And five, 714, column paper. And then we went to, we went to isolated use of technology, then integrated use of technology, then cloud based use of technology. And, you know, we’re still with lots of silos in all those things, a piece of the of the everyday life disappeared when we went to the next wave. Okay, so the question I would have for you, since you’re looking at all these other industries and all these other things, what’s the next wave and and what, what is going to be unrecognizable, or will cease to exist, in your opinion, in that wave, when it’s adopted
Mary Delaney 26:43
12 hour six or seven day a week, seasonality, that’s what’s going to go away, and that’s a good thing, right? Where people can balance their work, they can deliver consistent value. They never feel that overwhelmed sense of there’s there’s two or 3x what we can get done. And I think that will make accounting more attractive again. The other thing that’ll go away is the three, four years of number crunching before you get to start to really have that interface with the client and deliver value. I think that gets shortened to three, six months, and that is also something that makes it so much more appealing for our young folks to choose this profession.
Randy Johnston 27:42
Very good. Well, Mary, an absolute delight to spend time with you today, and your insights and guidance at carbon and you as a person just sound so delightful to be around. So thank you for spending time with us here at the accounting Technology Lab, we’ll be with you again in another episode. Good day.
Mary Delaney 28:04
Such a pleasure. Thank you. Thank you.
Brian F. Tankersley, CPA.CITP, CGMA 28:08
Thank you for sharing your time with us. We’ll be back next Saturday with a new episode of the technology lab from CPA practice advisor.
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