Innovation in Action:

An Analysis of
Industry Trends

John Barnes

January 09, 2024

 Arizent is pleased to be able to offer CPE for this web session. It is imperative that you adhere to the
following instructions to obtain CPE credit:

1. To receive credit, you must be in attendance for a minimum of 50 minutes. No credit will be awarded from watching the
Replay. AccountingToday is not responsible for late arrivals or connections issues.

2. There will be required polling questions asked periodically throughout the session, all of which you must answer. Please
remember to click “Submit” after choosing your answer.

3. If you have completed the above, please allow up to three business days from date of today’s session, to receive an
email from SimpleCert.net. This email will contain instructions on how you can download and print your CPE Certificate.
To ensure email receipt, please add simplecert.net to your safe sender list.
Please note CPE Certificates will ONLY be sent to those attendees who have registered and stayed for at least 50 minutes
and answered all required polling questions. If you are watching in a small group, the person logged into the program is the
small group facilitator. He or she must respond to the polling on behalf of the group and must monitor, document and verify the
active participation of the individuals in the small group. Please have the small group facilitator email
support@virtualvenues.com within three business days a list of Names, Emails and Company of those registered in the small
group for them to receive credit.
Arizent is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE
Sponsors. State Boards of Accountancy have the final authority on the acceptance of individual course for CPE credit. Complaints regarding registered sponsors may be
submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.
Speaker

John Barnes
Vice President, Firm Management
Wolters Kluwer Tax and Accounting North America

3 Innovation in Action: An Analysis of Industry Trends

Agenda
• What are the top challenges and goals firms
identified for 2024?
• How are firms maximizing their tech stack ROI?
• What’s driving firm growth?
• How are firms keeping up with industry
advancements and changes?

4 Innovation in Action: An Analysis of Industry Trends

Polling Question What type of work do you focus on?

• Tax compliance

• Tax advisory and planning/consulting

• Audit

• Operations/administrative

• All of the above

5 Innovation in Action: An Analysis of Industry Trends

Commonly Used Phrases
High Growth Firm (year-over-year revenue growth)
27% 19% 13% 28% 4% 3% 6%

>10% 5%-9% <5% <5% 5%-9% >10%

Growth Decline

High-Growth Firm (greater than 5% revenue growth)

Innovator/Early Adopter

Late Adopter
12%
Mainstream
Firm Size 49%

Innovator
5%

Small Firm Midsize Firm Large Firm

1-19 FTE 20-49 FTE 50+ FTE
Eary Adopter
28%

6 Innovation in Action: An Analysis of Industry Trends

Survey Results 2023 Revenue
75% 74%

at a Glance 59% 57%

28% 29%
22%
14% 16%
13%
10%
Top Firm Goals 3%

Overall Small Firms Mid Firms Large Firms

Growth Stayed the Same Decline

Revenue Improving
Growth Client Service Innovative firms
Cloud-based firms
outperformed
saw higher growth
late adopters

Higher revenue High-growth firms

Small Firms: Large Firms: growth correlates with have higher tech
Cost Reduction Attracting & tech integration adoption rates
Retaining Talent

7 Innovation in Action: An Analysis of Industry Trends

Top Challenges and Goals

What issues do firms expect to face in the

next 1-3 years, and what are their top goals?

8 Innovation in Action: An Analysis of Industry Trends

Polling Question What is the top issue currently facing your firm?

• Attracting and retaining top talent

• Completing work accurately and on time
• Keeping current with and learning new technology
• Keeping track of changing legislation
• Pricing/competitive fee pressures
• Servicing clients effectively/ meeting client
expectations
• Upskilling current staff to perform higher
value work

9 Innovation in Action: An Analysis of Industry Trends

Top Challenges

Pricing / Keeping current Servicing clients

competitive with and learning effectively/ meeting
fee pressures new technology client expectations

1 2 3 4 4 4

Completing Keeping track of Working with

work accurately changing legislation the IRS
and on time

10 Innovation in Action: An Analysis of Industry Trends

Top Firm Challenges in Detail
Pressures related to pricing and/or competitive fees and completing work accurately on time pose a challenge for firms regardless of size.
While small firms struggle to keep current with technology and track of changing legislation, mid-sized and large firms are more
challenged with attracting and retaining talent and upskilling staff.

Overall Small Firms Midsize Firms Large Firms

Pricing / competitive fee pressures Pricing / competitive fee pressures Attracting and retaining top talent Attracting and retaining top talent
—————————————————————————————————— —————————————————————————————————— —————————————————————————————————— —————————————— TIED WITH ——————————————

Completing work accurately and on-time Completing work accurately and on-time Upskilling current staff to perform higher Upskilling current staff to perform higher
value work value work
—————————————————————————————————— —————————————— TIED WITH —————————————— —————————————————————————————————— ——————————————————————————————————

Keeping current with technology/ Keeping current with technology/ Completing work accurately and on-time Completing work accurately and on-time
learning new technology learning new technology
—————————————————————————————————— —————————————————————————————————— —————————————— TIED WITH —————————————— —————————————— TIED WITH ——————————————

Keeping track of changing legislation Keeping track of changing legislation Planning for growth and expansion Pricing / competitive fee pressures
—————————————— TIED WITH —————————————— —————————————————————————————————— —————————————————————————————————— ——————————————————————————————————

Servicing clients effectively/ meeting Servicing clients effectively/ meeting Servicing clients effectively/ meeting Servicing clients effectively/ meeting
client expectations client expectations client expectations client expectations
—————————————— TIED WITH —————————————— —————————————— TIED WITH —————————————— —————————————— TIED WITH ——————————————

Working with the IRS Working with the IRS Onboarding and training new staff
—————————————— TIED WITH ——————————————

Onboarding and training new staff

—————————————————————————————————— —————————————————————————————————— —————————————————————————————————— ——————————————————————————————————

11 Innovation in Action: An Analysis of Industry Trends

Top Goals of Firms

Grow revenue Improve client Reduce Costs

and profit service and
engagement

12 Innovation in Action: An Analysis of Industry Trends

Top Goals for 2024 Small Firms
Grow revenue/profit
Midsize Firms Large Firms
Grow revenue/profit Grow revenue/profit
——————————————————— ———————————————————— ———————————————————

Improve client service Attract and retain Attract and retain

and engagement top talent top talent
——————————————————— ———————————————————— ———————————————————

Reduce costs Improve client service Improve client service

and engagement and engagement
61% ——————— TIED WITH ——————

Improve employee
54%
effectiveness
50%
46%
44%
38%
34% 34%
30% 31% 31%
25% 25%
20%
18%

2023
2022
2021

Grow Revenue and/ Improve Client Service Reduce Costs Improve Operational Improve Employee
or Profit and Engagement Workflows Effectiveness

13 Innovation in Action: An Analysis of Industry Trends

Maximizing the Value of Technology

How are firms getting the highest ROI from

their technology investments?

14 Innovation in Action: An Analysis of Industry Trends

 • Enable anywhere, anytime access, including using mobile
Top Functionality devices to remotely access data
/ Benefits Firms
• Features that support automatically populating tax returns,
Are Looking For reporting, and financial statements

• Include tools to facilitate requesting and collecting documents

from clients

• "Plain English" wording in checklist and forms

• Protect sensitive information/increased data security

• Reduce/eliminate manual, repeatable, and time-consuming

tasks

• Roll forward key data from year to year and the ability to
update to newer content
15 Innovation in Action: An Analysis of Industry Trends
Technologies Firms Have Currently Implemented
Small Firms Midsize Firms Large Firms
Tax compliance/calculation solution Client portal Tax return automation tool

————————————————————————————————————————————— ————————————————————————————————————————————— —————————————————————————————————————————————

Tax return automation tool Tax compliance/calculation solution Tax compliance/calculation solution

————————————————————————————————————————————— —————————————————————————————————————————————— —————————————————————————————————————————————

Payroll solution Workpaper management and trial balance solution Tax workflow solution

————————————————————————————————————————————— ———————————————————— TIED WITH ———————————————————— —————————————————————————————————————————————

Client portal Document management solution Tax law monitoring and/or research solution

————————————————————————————————————————————— ——————————————————————————————————————————————— —————————————————————————————————————————————

Tax workflow solution

———————————————————— TIED WITH ————————————————————

Payroll solution

————————————————————————————————————————————— ————————————————————————————————————————————— —————————————————————————————————————————————

16 Innovation in Action: An Analysis of Industry Trends

Where Firms Say Technology is Helping
Reduction in the hours worked per return

Average client response time

71%

71% 68%
Add new clients 70% reported technology
adds value to client
Reduction in the hours worked per client 69%

71%
interactions.
Retain more clients 64%

Add new services 63%

reported technology
Employee skillsets 63%
improves client response
Time spent on core business (vs admin) 62% time and reduces time
spent per return.

63%
Utilization of solutions implemented 62%

Chargeable hours per client 61%

Percentage realization per client 61%

reported technology
Increase in number of services per client 57% empowers staff to
Staff engagement / morale 54% perform the work
they enjoy.
17
Technology and Automation
Give Time Back
• 62% of firms are using technology to decrease
time spent on administrative tasks, increasing
time spent on core business.

• 61% of firms are using technology to reduce or

eliminate manual, repeatable tasks.

18 Innovation in Action: An Analysis of Industry Trends

Features in Current Technologies Aren’t Always Utilized

Hybrid or Integrated Client Staff

Cloud Technologies Experience Experience
Platforms

Automated Big Data Generative or

Workflows Predictive
Insights

49% of firms feel as though they are utilizing 50%

or less of their tech stack’s capabilities
19 Innovation in Action: An Analysis of Industry Trends
Polling Question Is your firm planning to add new technology
solutions and/or tools in the next year?

• Yes
• No
• Unsure

20 Innovation in Action: An Analysis of Industry Trends

The Driving Forces Behind
Firm Growth

What are high-growth firms doing differently?

21 Innovation in Action: An Analysis of Industry Trends

Revenue, Profitability, and Services: How was 2023?
Over 55% of the participating firms reported revenue and profitability growth,
nearly a third of the firms reported an increase in the number of services offered,
and over 40% of tax professionals filed more extensions than last year.

100%
92%

76%
72%
67% 66%
59% 57%
55%
51% 48% 49%
46%
41%
31%

Revenue Increased Profitability Increased Number of Services Increased Client Engagements Increased Extensions Increased
Overall High-Growth Innovators/Early Adopters

22 Innovation in Action: An Analysis of Industry Trends

Top 10 Service Offerings Added in the Last 1-3 Years
80%
Tax calculation / compliance
32%
60%
Client Accounting Services
31%
47%
Advisory and Consulting Services
27%
42%
High-growth firms are
Income tax provisioning

10%
20%
38%
Financial statement PCR
16%
33%
Property tax returns
14%
14%
Wealth management or financial planning
12%
more likely to provide
advisory, consulting,
25%
Proactive alerts of changing tax laws
11% and CAS services.
17%
Auditing
9%
14% Currently Offered
Fixed asset management
7% Added in the last 1-3 years

23 Innovation in Action: An Analysis of Industry Trends

Plans to Add New Technology

Adding New Tech in 2024? Technology Tools Firms Plan to or Are

Considering Implementing
Maybe, 9%
Tax return automation tool(s)
36% 26%
13%
Tax workflow solution(s)
26%
7%
Client portal
26%
11%
Document management solution
22%
No, 36%
Yes, 28% Tax law monitoring and/or 8%
research solution(s) 16%
27% Small Firm
Learning and professional 11%
35% Midsize Firm development solution(s) 15%

37% Large Firm 10%

Client data ingestion tools
15%

Considering it Planning to

24 Innovation in Action: An Analysis of Industry Trends

Keeping up With Industry Changes
and Advancements

25 Innovation in Action: An Analysis of Industry Trends

Changes Firms Made in the Last 1-3 Years
Improved client experience 40%

Implemented secure file exchange/ remote signature 27%

Started meeting clients virtually 27% Innovators & early

adopters were

2x
Eliminated inefficiencies 25%

Implemented document drop-offs 23%

Reassessed/disengaged clients 21%

Implemented new cloud-based solutions 18% more likely to change

pricing models and
Implemented remote/"no touch" tax prep 16% diversify/ expand service
offerings.
Filed for State or Federal Support 14%

Changed pricing model 14%

26 Innovation in Action: An Analysis of Industry Trends

Where Firms Plan to Increase Investments in 2024
Increase investment in cybersecurity and data privacy 43%

Train existing staff on emerging areas and technologies 38%

Increase efforts to differentiate from competitors 35%

50%
Increase sustainability and responsibility in business practices 34%

Outsource /co-source auditing staff 31%

Increase investment in professional development and training 31%

or more of large firms
Hire skilled versus entry-level staff 26%
plan to increase their
outsourcing investment.
Adopt an integrated audit solution/ audit methodology 23%

Increase the use of data analytics tools 21%

Increase the use of artificial intelligence tools 20%

High-Growth

27 Innovation in Action: An Analysis of Industry Trends

The Technologies High-Growth Firms are Interested In
Generative AI tools similar to ChatGPT and Bard 45%

AI and machine learning to automate routine actions 38%

Predictive intelligence to analyze legislative changes and
30%
their impact
Big data-driven dashboards and analytics with search
23%
functionality
Research support 72%
Integrations and RPA to reduce administrative burden 21%
Client communication 64%
Query language that's customer-centric 16%
Marketing content 40%
Blockchain-based security protections and data transfers 16% Meeting transcripts,
36%
summaries, etc.
Large language modeling to intelligently support research 12% Internal
30%
communication
Metaverse/mixed reality client and staff interactions 9% Visual content 24%

Data-lake enabled business intelligence 8% High-Growth Coding 21%

28 Innovation in Action: An Analysis of Industry Trends

Opportunities for Improvement and Innovation

Strategic decisions made by Client advisory service Firm-wide intelligence driving

empowered staff recommendations business activities

48% 47% 28%

feel technology is helping their offer some sort of CAS, are interested in predictive
firm gain valuable/ actionable accounting workflow, and/ intelligence tools to help
insights through data analysis. or strategic planning services. drive insights and analyze
legislative changes.

29 Innovation in Action: An Analysis of Industry Trends

Polling Question What technologies would you like to learn more
about? (select all the apply)

• Tax compliance solutions

• Workflow automation, client collaboration, or document

management solutions

• Audit and assurance solutions

• Research and learning solutions

• Thanks, I just attended for CPE today

30 Innovation in Action: An Analysis of Industry Trends

Thank you