There is an old business warning: ‘Never build your entire future on someone else’s platform.’ Yet every generation of entrepreneurs, professionals and business owners seems destined to relearn the lesson. It has not only played out across e-commerce providers (consider Amazon, Booking.com and Uber); it also seems particularly relevant in the accountancy profession, given practitioners’ use of cloud platforms today.
Here’s the regularly played-out scenario: a new platform emerges with an attractive proposition. It promises access to customers, greater efficiency, lower costs and faster growth. Inevitably, early adopters benefit and, slowly, entire industries (and professions) begin reorganising themselves around the platform.
Then come the celebrating investors, the customers who enjoy greater convenience, and the businesses in the ecosystem that experience growth that would have been difficult to achieve independently.
The profession became one of the software providers’ most effective distribution channels
At first, the relationship appears entirely symbiotic. The platform needs partners, and the partners need the platform. History suggests that this relationship often evolves in a predictable way.
Once a platform achieves sufficient scale, gains direct access to customers and accumulates market intelligence, the economics begin to change. The businesses that bought into the ecosystem can find themselves facing an uncomfortable reality: the platform’s incentives no longer align perfectly with their own.
A recurring pattern is observed across many platform businesses: recruit partners, scale through their participation, gain customer access and data, then seek to capture more of the value chain through automation, internalisation or direct customer relationships.
Accounting champions
Accounting software providers such as Sage, QuickBooks and Xero achieved significant scale partly because accountants and bookkeepers championed them. During the migration from desktop systems to cloud accounting, practitioners migrated data, redesigned processes, trained clients and became trusted advocates for digital record keeping. In many respects, the profession became one of the software providers’ most effective distribution channels.
Artificial intelligence is now beginning to change the relationship. Accounting platforms increasingly promote automated transaction coding, bank reconciliation, invoice extraction, reporting and AI-generated insight. Xero’s own marketing describes automated bank reconciliation and promotes claims of 97% reconciliation accuracy and more than 22 hours a month saved.
AI-powered tools increasingly promote insights that used to require accountant involvement
Independent research reported by Stanford Graduate School of Business found that accountants using AI-supported tools completed monthly reporting 7.5 days faster and spent 8.5% less time on routine back-office processing. The same research presented AI primarily as a means of augmenting accountants, increasing capacity and shifting attention towards communication, quality assurance and advisory work.
Software moves on
Most software providers continue to emphasise the value of professional oversight and judgment. Nevertheless, the scope of the platforms is expanding. Some providers now enable businesses to prepare and submit statutory accounts or tax filings directly, while AI-powered tools increasingly promote management information and business insight that historically required substantial accountant involvement.
Software is increasingly marketed as a platform enabling owners to perform more work themselves
On their own, these developments do not mean accountants are being replaced. They do demonstrate, however, that software is no longer marketed solely as a tool that helps accountants perform work more efficiently. Increasingly, it is marketed as a platform enabling business owners to perform more of that work themselves. The profession may still be in the early chapters of this story, but the plot is becoming recognisable.
Welcome to ‘coopetition’
It is tempting to view this evolution as betrayal. In reality, it is usually economics.
Research has long shown that successful platforms can move into adjacent parts of the value chain by leveraging network effects, switching costs, customer access and data advantages.
Other researchers describe the resulting relationship as ‘coopetition’: simultaneous cooperation and competition. Partners provide inventory, expertise, labour, trust, distribution and customers. The platform gains scale, market intelligence and influence.
Eventually, it begins exploring how much of the value chain it can internalise for itself. Digital cannibalisation is therefore not always a flaw in the system. Very often, it is the system responding exactly as economic incentives encourage it to.
Lessons for practitioners
The lesson is not to avoid platforms. Cloud accounting has fundamentally improved the accessibility and usefulness of financial information. The point is rather that platforms and their users rarely remain equal forever. Research examining platform ecosystems suggests that businesses become more resilient when they maintain direct customer relationships, diversify sources of demand and avoid becoming overly reliant on one platform.
In other words, accountants need to promote the expertise that cannot easily be automated. The businesses that endure are those that move up the value chain before the platform forces them to.
The day a platform says ‘We need you’ is often the beginning of a profitable relationship. The day it starts asking ‘How can we do this without you?’ is simply the next chapter. History suggests that that chapter is rarely far behind.
