Tim Brackney - Overcoming tech deficits in financial services

Tim Brackney: No, nothing to add. I'm just excited to be here and spend some time chatting with you, Tim. 

Tim Butara: Awesome. Awesome. Glad to have you, Tim, as I said, and yeah, to kind of set the stage for the conversation today. So why does this sector, so why do accounting and advisory firm often lag behind in their adoption of new cutting edge technology innovations?

Tim Brackney: I, you know, I think there's a couple of reasons, you know, I, I always, I would say that there's, you know it's a, both a question of mindset and mechanics when you're thinking about embracing technology or going through anything transformative especially in the accounting industry. And that's my background.

I started in I started in accounting and then and I've worked in accounting and consulting my entire career, but firms, especially with, on the accounting side. They're, they're formed with the idea of professional skepticism, right? So there's a, there's an underpinning of caution and making sure to track down all of the foundational points of the things that you're taking on.

And so that analysis can sometimes lead to just slower adoption through caution. And if you're some half of those firms are auditors and half of them are tax and both of them use this concept of professional skepticism, which is to say, you know, trust, but verify and verify deeply. And so those types of things usually don't allow for fast technological adoption on the mechanic side.

I say the large firms especially are the large. All the firms are really formed as partnerships. The larger firms through scale have the ability to invest in technology faster, but the idea of, but they're so large that the impetus to actually implement it just takes longer. That motion just takes longer.

For smaller firms, the partnerships run to a point and then they distribute their profits to the partnership. And as a collective, you have to make a decision to reinvest in technology. And sometimes that becomes a difficult choice. So I think those are those kinds of structural and mindset issues generally lead to a slowness of adoption of technology.

Tim Butara: Is it also a case that, you know, because it's such an industry that needs to basically run frequently, it can't really afford any significant like downtime or, or, you know, like a drop in operations due to some kind of, some kind of replatforming or upgrade or something like that. 

Tim Brackney: Yeah, I think that's I do think that's part of it. I mean, I think it's linked to the fact that what you said, it's sort of a perpetual motion industry. And so there's, there's a bit of that where you where you worry about downtime. I think also, it's a very human centric business. And so the change management elements around adopting a new technology or even a new processor are the are the types of things that, yeah.

You know, getting that adoption and working through change can be a little bit more difficult as well. 

Tim Butara: What about when it comes to like people and talent in this sector, what's the situation like for that? How is that impacting what we just discussed? 

Tim Brackney: Oh, it's, I mean, it's a, I think that's, I think that's really the heart of the matter. I mean, there's a few things that are happening structurally in the industry, especially in the accounting side. If you look over the last decade, decade and a half, there just have been fewer and fewer people coming into the profession. And, and I think even those recently, they're, they're staying for a shorter period of time.

So that creates, that creates a talent deficit. Makes people think about how they can figure out their capacity issues. So I think when I, when you think about the, when you think about the industry writ large, you know, technology should be able to help with some of the capacity issues that come in. But, but because of some of the things that we talked about earlier, relative to the slowness of adoption and some of the professional motion of the industry itself becomes a little bit more of a difficult proposition.

I, in a human centric business, a business of the business that's based on rational judgment and advising clients, as there are less people coming into the industry, it does create this talent constriction that is impacted the entire industry. 

Tim Butara: And I guess that it's also like the first point that you made is also really connected with this, right?

Because if there are not that many new people coming in, that means that a lot of the people who are responsible for driving this sector, a lot of them probably have older mindsets, you know, they're more and more kind of their mindset is oriented around what they knew worked when they were succeeding.

So I guess that also this mindset part is really, really like the, the inability to really break through these outdated mindsets is also really closely connected to this talent deficit. 

Tim Brackney: I think that's a really prescient point. If you think about the way the the industry is structured, it's structured based on a pyramid and that pyramid is you sort of lockstep progression in your career, and it's celebrated long tenure has historically been a part of the has been a part of the employment model and been celebrated.

But as a result of that, as you move, as you move up in the pyramid and get into a place where you're making decisions, not only for your clients, but how the firm operates itself, if you're not close to technology and don't have that kind of growth mindset, it can also inhibit technological adoption, especially in an industry that's based on professional skepticism.

Tim Butara: So it's a bit paradoxical, right? You, you, you would need like a more, more modern, more innovative mindset to draw more people in. But you would also need to draw more people, people into kind of, to kind of transform this mindset. 

Tim Brackney: It is exactly paradoxical. And, and interestingly enough, when I, when we talked about earlier, where I said, there are less people coming in and they're leaving more quickly, that really hurts that generational change to try to get some of that different mindset sort of moving up through the pyramid. So yeah, it is a paradox. 

Tim Butara: So what are some strategies, some tactics for remedying this as well as, you know, other strategies that can help this sector catch up with the innovation? 

Tim Brackney: I find that the accounting advisory industry is a little bit of a closed loop, you know, so it's like what we talked about before people come in and then they stay for a long time.

And even with sort of the labor force changes that have been happening recently, where you have new people coming in and maybe staying for a shorter period of time and leaving. There hasn't been a lot of adjustment. If you think about what, what some other industries do. I mean, I lived in Silicon Valley for 10 years.

So some of the old world industries would open up R&D shops in Silicon Valley just to be close to the things that are happening and understanding what, what the use cases might be for their industry. And I, you know, I think maybe some of the larger firms are starting to do that. 

The, the ideas around R&D and research mostly relate to the things that they're trying to bring to their clients, as opposed to how they're running the business themselves. And to me, that's also sort of ironic in that I think accounting consulting firms are, have become very good at advising their clients, but they're in some ways not applying some of that same learning to themselves.

And so I think a big, I, you know, we talked, I talked to early about mindset and mechanics. A way to hit both of those things is to kind of force yourself out of your comfort zone and put yourself. In the heart of where change is happening from a technological standpoint, there are places around the world where that change is happening more quickly.

If you wanted to be an actor, you would go to Los Angeles or New York or London. If you wanted, you know, if you wanted to be in fashion, you'd end up in Paris or New York. If you want to have, be on the cutting edge of technology and sort of understand what's coming and understand trends, you would have, you would have a close tie in, and then you would have those, you would have a close tie in to where technology is being formed and where, where the, where the new horizons and frontiers are being built, and you would have your tentacles in that, but that's not enough. 

The next step also then is to say, how do you actually apply those things and then actually apply them? It's sort of a, you know, a three step process. And I think maybe they're starting to get the larger firms are starting to get their tentacles into that sort of new horizon, but going two links down the chain, even by doing test cases and, and, and sort of, sort of putting things out there as pilots. I find that that part of it is still very slow in the industry.

Tim Butara: That's a super interesting point. Cause I guess that we tend to think just because technology is just inherently digital, that would make location matter even less than before, but you just made a strong point for, you know, it actually mattering a lot for successful technology adoption. So really interesting.

Tim Brackney: Yeah. You know, you know, what's interesting for me is that just on a personal level, when I lived in Silicon Valley, I felt like I was sort of in the heart of this. neural network of new things that was happening and I moved, I don't know, you know, 600 miles to the north and I feel like I'm one season out.

You know what I mean? Like it takes just a little while for that to radiate out and by that time you're sort of chasing and I think that there's a I think, well, I think even in a digital world, proximity matters. If you want to be, if you want to be on the sort of cutting edge and especially if it's going to take a long time for you to apply it to your industry, you have to have as much runway as possible.

Tim Butara: So this is definitely one of the major benefits of this. So staying on the cutting edge, staying in the loop of this innovation, I guess also, it's also the case that. If you're close to other firms that are successfully adopting this technology, then you also see more of their success and it makes it more compelling for you to also, oh, you, you can be like, oh, you know, these guys are seeing, you know, X growth based on these new technologies. And you know, why don't, why shouldn't we tap into that as well? 

Tim Brackney: It's exactly what you're saying is there's an application outside of your industry and it forces you to think how you might use that application inside your own industry. And I think the idea with accounting and advisory firms being, I think, somewhat cloistered, open but somewhat cloistered and also slow to adopt by not sort of shortening that chain, it causes, it just, it sort of exacerbates this issue of latent technological adoption.

Tim Butara: So, maybe if we get a little bit more specific here, what would be some technologies that this sector could really benefit from adopting and why these particular technologies? 

Tim Brackney: I think it's like today's a really sort of prescient day because you know, when I woke up this morning early, one of the first things I saw is that PwC, which is my old firm, has become the largest enterprise client for ChatGPT, right?

They're the first and largest enterprise client, definitely the first in the accounting and advisory space. They're, they're going to use it internally to run their business and they're going to be a licensed reseller for chat. So this was a big deal for both companies. And we're in the age of AI. We're in the age of hyper automation.

I think there, there are deep applications for many industries. And I think there are certainly applications for large learning models and hyper automation inside of accounting advisory firms. And I think of it as duality, right? Like there's, there's an opportunity to use that to, to help with the talent shortage that they're facing.

There's an opportunity to use that to make themselves more efficient. But I also think that there's authors, and this is hugely important with respect to what we talked about earlier around talent constriction, if you are not utilizing the latest technology. And you're not giving people access to that, they won't stay inside your environment that with people being more mobile these days, if you're and this is an exaggeration, if you bring them in, and you're forcing them to use green screen, and they don't have access to things that they might use in their own personal life.

And they can see what that application might be. You're actually then also making that problem worse. But AI in and of itself, because of the usage of pattern recognition thinking about how, how, how a lot of what you do in accounting and advisory is being able to, is being able to you know, identify patterns and then, and then have insight and then provide insights for your clients.

I could see how AI and hyper automation would help with that. You're, you're working with, with large data sets. And so being able to consume those data sets and then get them into a place where they are sort of bite sized chunks that allow you to be able to make the decisions you need to make. I mean, if PwC just started this, that means others are going to follow.

And I think this is going to be a massive change for the, for the industry. And I think that's a positive, I actually actually didn't think that a firm that large would make a bet that big, and it still remains to be seen if you say you're going to spend a billion dollars and you're going to make this accessible, you still have to implement it.

And you know, I've seen these things before and they haven't, they haven't stuck. I feel like this will, because there is such a, there's such a broad intersection between the application of AI and hyper automation and this industry itself. 

Tim Butara: Yeah, definitely. It's, as you said, it, you know, as you, as you mentioned, it has this, this double aspect of, of benefits.

One is just the, the experience, the tech benefit. And the other is, It's basically because it's a cutting edge technology because it's the thing right now. It will make it easier for firms to draw more people in and it will kind of take, take care of both the people aspect and the tech aspect. 

Tim Brackney: It becomes a virtuous cycle, right?

I mean, in the, in professional services, they used to say like data is the new gold, new oil or the new gold, but talent has always been the oil or the gold inside professional services. So to the extent that you can empower that talent, you can attract and retain and empower that talent. And technology is both a draw and a tool, right? Like, and that's the duality that, you know, that we just talked about. I, I think it's going to be, it will be incredibly powerful. 

Tim Butara: Yeah, it's, it's referring back to, to the paradox of mindset and talent deficit that we were talking about before. And it basically, it's a solution to that paradox. 

Tim Brackney: It is a solution to that paradox, or it's a, it's a big part of the weight of the solution to the paradox. You know, the, the other thing I would say, like some of this, like the, like the ability to deploy technology and the mindset around technological adoption at the senior levels of the firm, it needs to trickle down. And like most firms, large firms, especially are run in the middle. And, and so that that middle layer is channeling what the, the strategy from the top and the execution from the people that they, that are beneath them in this sort of pyramid structure.

And if they're, if they're caught in a tug of war, of, of people who want to use technology and people who don't, it becomes sort of a, a, a difficult battle. But if you have, if you have people at the top who recognize. Both the direct and the, and the sort of halo effect benefits of implementing technology.

You can really, I think, get forward motion on that link chain we talked about from, from understanding a use case to actually implementing it. 

Tim Butara: So besides this, what would be some other key like considerations and challenges that these firms should kind of be mindful of and take into account for successful technology transformation?

Tim Brackney: Listen, and I've, I've lived through some of these, right? So there's the idea of technology, and then there's the actual practical application of technology, right? And so, you know, I would go back to that most technology, and especially in this way, will help enhance an existing process. The first thing you have to do is understand if your process itself is sufficient, right?

And so I think doing the work and saying, here's what our as is state is, and kind of here's, here's what we're trying to get to in the future is incredibly important. And then, and then sort of mapping out what that bridge looks like. And technology is a part of that bridge. What I would say is that a lot of times people implement technology with the idea that, hey, it's sort of a panacea for all that ills them and they don't kind of get into root cause.

So I would say root cause, and that might, that may seem like a fairly basic concept, but I've seen many times both in both in projects where I've been helping clients, but also in projects that we've tried to implement ourselves at other companies where you sort of move ahead and and you sort of brush past that.

I think the other thing is. There's change management. Think, think about what we talked about earlier, where we said that you've got sort of a, you've got a changing, a changing workforce paradigm generally, but inside professional accounting, you've got a pyramid with a lot of people who are long tenure, and then you have sort of an oscillating population at the lower half.

The change journey for those two groups is completely different. And managing that change is incredibly important. I know change management is viewed as. Change management and strategic communications are sometimes viewed as soft in technological adoption, particularly something that's going to be intentionally disruptive or transformative that that journey and that connection and getting bringing everybody along and speaking to those sort of disparate groups of stakeholders.

And getting them on the same journey is, is incredibly important. And the last thing I would say is this, I remember at one point where we implemented a CRM technology at an old firm and I, and the first, and people ask me like, how are you going to measure success for that? And like what you, what people want to hear is, oh, ROI.

And, you know, and I said, the first, the first measure of success for me is logins. I just want to know that people are actually using a tool that they'd said that they needed and now, and we've invested in, and now we're going to use it. You have to get people in the tool and experimenting and playing before you can, before you can force anything else.

So like, to me, the first step in implementation and adoption is. Is just attendance, right? And so, you know, you can get to ROI and other things later, but you've got to bring them through the big journey. And then you got to put them, you got to, you actually have to put them in the tool itself. 

Tim Butara: Some great points and tips here, Tim, and a really great conversation all around. Thank you so much for, for your time, for your great insight. Just before we wrap things up, if anybody listening right now would like to connect with you, learn more about you, what's the best way to do that? 

Tim Brackney: I think you know, a couple of ways. I'm on LinkedIn at Tim Brackney and then if somebody wants to reach out to me directly, they can reach out to me at [email protected].

I really enjoyed this conversation as well, Tim. 

Tim Butara: Yeah, it was a really great one. I really enjoyed the back and forth discussion. I think that we provided some great insights to listeners, maybe even to those who aren't working in this sector and just because I think a lot of it also applied to, to just, just technology adoption in general.

So again, thanks so much, Tim. Great to have you here. And to our listeners, that's all for this episode. Have a great day, everyone, and stay safe. 

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