The world changed the way it did business when the concept of customer focus was introduced by management gurus and adopted immediately by leading companies. Products and services were soon being tuned to the needs of the customers, instead of satisfying the goals and objectives of the companies or managers.
Professional service providers have to do better than that. They have to focus on their clients’ customers. While the companies have a one-level deep view, professional service providers, such as Chartered Accountant firms have to get a view which is two-level deep. The company will focus on their clients, but the professional service providers will focus on the clients of their clients. This is like a zoom feature on your digital camera. This is the point of inflection where the service providers and professionals become consultants. If the philosophy is embraced in the right spirit, Chartered Accountants will soon be seen as ‘Chartered Consultants.’ But, where do we start?
More than 70% of the accounting firms in India are sole proprietorship firms, while 26% are partnership firms having 2-10 partners and only 1% are partnerships having more than 10 members. The sole proprietorship firms not only suffer from a lot of limitations but also lose potential opportunities by lack of networking. Networking allows optimum utilization of time and best available resources in the market. While in sole proprietorship firms, 80% of the time spent on work contributes to only 20% of the revenues, in case of partnerships, 20% of the time spent may account for 80% of the revenues. As the number of clients increase, managing them and catering to their ever-increasing demands becomes almost impossible, leading to poor client services, which, in turn, may gradually lead to decrease in the number of clients.
There are several challenges before an organization today – creating sustainable business, reducing costs, managing assets and people, handling risks, leveraging business performance, developing global operations and clinching deals. Not every organization can hope to survive and thrive in this competitive environment without the help of external consultants. The world has now become a global village. Collaboration, networking, mergers, consolidation, and partnerships – these are the latest buzzwords in today’s business environment.
Sleeping with the enemy
Collaboration and partnerships are prevalent in virtually every industry – telecommunications, technology, manufacturing, aviation, defense, banking, insurance, financial services, education, entertainment and media, transportation, pharmaceuticals, healthcare, government, non-profit, energy, engineering and construction, etc. Such collaboration is the need of the hour not only to survive in a competitive and dynamic market but also to flourish and grow in future.
In this era of consolidations and mergers, the importance of partnerships cannot be over-emphasized. Some of the modest accounting and auditing firms became big because of their knowledge and networking abilities. Collaboration ensures sharing of latest research material and emerging industrial trends and benchmarking performance with the globally best firms. Sharing of methodologies and approaches in complex areas such as tax provisioning and financial instruments builds expertise and enhances credibility of the firm. Partnerships also enhance in diversification of the business by providing a range of services and subject experts in various domain fields.
To enjoy the advantages of size, a wide network is necessary. A wide network of associates will facilitate sharing of professional services, state-of-the-art knowledge tools and methods that will leverage the organizational capabilities and enable to achieve growth and business objectives rapidly. Collaborations also allow delivering of quality service to clients aimed at serving their best interests and retaining their trust. When people are drawn from diverse backgrounds, and bound by a set of common values, an ideal environment is set up for learning which elicits the best from everyone. This unique approach gives unbeatable depth and breadth, and provides a wide range of perspective, experiences, ideas and cross-cultural and cross-functional capabilities. Collaboration also enables to be constantly informed about the latest developments in new regulations in various fields, thereby providing market intelligence for better analysis and decision support.
Chartered Accountant firms will now go beyond the traditional demarcations of offering the core functions such as audit, accounting, or tax planning, and tax compliance services. The focus will be more on providing support services such as actuarial services, assistance in capital market transactions, business advisory, financial engineering, decision support, analysis and strategy, risk management, expansion planning, profit maximization, wealth creation, innovation and Intellectual Property Rights (IPR) support. Some of the other services that can be offered would include advice on fundraising, accounting valuations, valuation consulting, commercial and market due diligence, mergers and acquisitions advisory, business planning, private equity advisory, and project financing.
Support services in risk management related to operational risk, credit risk, market risk, treasury risk, liquidity services, and economic capital should also be offered to clients. In addition, Chartered Accountant firms’ key performance indicators have to be aligned with business objectives of the clients to achieve the performance benchmarks. In order to achieve this, a broad framework should be created which allows identification, monitoring, measuring, and reporting of business deviators, and a corrective mechanism that leads to better strategic decision making.
Another important aspect to be considered is the industry-driven approach. Chartered Accountant firms can specialize in a certain industry. Developing deep knowledge of the clients’ industry and providing them with an analytical perspective on the various issues confronted by them, will showcase their specialized knowledge and enable the clients to meet the demanding future challenges. Focus on global industries and global sectors will enable to develop insights, skills and resources required to overcome industry challenges.
C1 and B1
The new practice will bring new opportunities, new learning and new consulting situations. Presently, most Chartered Accountant firms have excellent grip on Accounting, Auditing, Tax and related areas of work. However, with the paradigm shift, the game will move to a new playing field. Chartered Accountant firms will have to acquire new skills. They will have to learn management consulting, project management, risk management, software implementation, patent valuation, Intellectual Property Right (IPR) matters, Mergers & Acquisition (M&A) business plans, etc. To serve their clients better, they may have to bring in the required expertise. Chartered Accountants may have to develop strategies and find a workable equation which solves the puzzle, expands the horizons, and wins the game, but yet does not break the rules. It does present a scenario where, to become a consultant, a Chartered Accountant might first have to see a consultant. See one, be one.
1. Regional CPE Seminar Souvenir, August 21, 2004.