Does predictive analytics allow tax and accounting organizations to innovate faster? How does it shape the future of customer collaboration? In conversation with Nancy McKinstry and Jason Marx.
By 2023, the global predictive analytics market will have grown to $14.95 billion, a four-fold increase from 2018. From Netflix to Walmart, organizations across many sectors are adopting predictive analytics in every way imaginable. More than a decade ago, the advanced technology was predicted to become the new panacea of data, but more recent developments in storage space and cloud computing have allowed businesses to truly reap its rewards. According to NYU Professor and author of Predictive Analytics for Dummies, Anasse Bari, business success in today’s competitive environment can be boiled down to a matter of data science and relies on deploying predictive models into the business’s operations.
Predictive analytics empowers organizations to understand why people behave the way they do. This opens the door to predictions about future events through big data mining, statistics, artificial intelligence, and other data science techniques. In the tax and accounting field, the foresight afforded by predictive analytics can help professionals shift their mindset to become more proactive than reactive.
We sat down with Nancy McKinstry, CEO and Chairman of Wolters Kluwer, and Jason Marx, President and CEO of Tax & Accounting North America at Wolters Kluwer, to discuss predictive analytics, product development, and the customer experience in general and specifically in the tax and accounting industry.
You both work very closely with our customers on a day-to-day basis, what challenges do you observe among professionals and how do you think technology can help?
Jason: There is an ongoing increase in regulatory intensity. What I’ve observed among tax and accounting professionals is very much this speculation and concern around changing US tax laws. It’s very complicated, and our customers want to know what it will mean for the strategies they’ve used over the last several years. They’re also anticipating the kind of solutions that will help them navigate the changes happening in tax regulation. For us, this intersection of complex regulation and technology allows us to explore how we can drive efficiencies and productivity.
Nancy: I agree, and I think we see similar changes with CFOs. For many years the CFO has done the lion’s share of the accounting because many CFOs are historically trained accountants, but now we all expect the CFO to provide analytics and insights into the business, both on revenue and cost drivers, and – increasingly – to present them in an easy to understand dashboard. I think the role of the CFO is shifting from what I would call basic reporting, monitoring, and risk management to being a trusted business partner that provides insights and advice through predictive analytics. To do this, the CFO needs expert solutions and software that make it easy to analyze and interpret figures. For example, CCH Tagetik enables finance professionals to spend less time managing and controlling processes and more time focused on driving business results.
When Wolters Kluwer first started creating workflow tools for professionals they were defined as productivity tools. Today, these tools have transformed into expert solutions services – combining deep domain knowledge with advanced technology. How has this changed the way we work with professionals?
Nancy: Right now, we’re experiencing an evolution from static information to dynamic information, we’ve gone from working on the professionals’ workflow to working in their workflow, using advanced technologies such as predictive analytics. We’re now operating beyond the customers’ productivity, demonstrating measurable impact on outcomes and productivity.
Our expert solutions are a combination of our vast expert knowledge and advanced technology. We’ve seen that our products that use predictive analytics have led to very high renewal rates, which speaks to the value professionals see in them.
Jason: We also find that we are able to drive innovation faster when we work with expert solutions that incorporate predictive analytics. CCH Axcess iQ, for instance, takes regulatory and legislative events and matches them with specific client portfolios in accounting firms, so that accountants can proactively advise their clients, which is something that hasn’t been done this way before.
How does your team develop a product like CCH Axcess iQ?
Jason: I think CCH Axcess iQ is a great example of how we went from ideation to getting the first betas of this complex concept to customers in a nine or ten-month period. We took elements of predictive analytics and AI and were able to apply them against CCH Axcess, looking at tax regulations and matching them through millions of records to highlight for our customers, where their clients would be impacted by these new regulations. We then took these insights and provided answers and supporting materials to the firms to use in client conversations. In the past this might have taken customers weeks or months to get to on their own. This technology allows them to get to what they need immediately. This is consistent with the kinds of efficiencies our customers have told us they’ve seen, upwards of 30% efficiency measured through productivity.
We often hear that millennials are a generation of disruptors interested in products that integrate advanced technologies, how have you experienced generational differences in the professionals you meet on a day to day basis?
Nancy: With the new generation, we’ve seen a real shift in our customers acting more as advisers. They’re not just creating documents or doing regular work. They’re starting to wear a new hat altogether which I think presents a unique opportunity to serve those needs.
I also think we’re really at a crossroads because of this generational shift and how technology is advancing. The way I see it, we’ll have to make sure our products address not only current needs but also where businesses are headed. One of the observations I’ve made is, professionals want to understand what’s inside the black box. How do you identify tax returns that need to be looked at? How do you identify aspects of predictive notion around a clause? I see our role as supporting them in that. I also think this represents a unique opportunity for us to understand how we can become more of a platform company to serve these professional needs.
What can we expect from Wolters Kluwer in the next three years?
Nancy: Within the short time frame that artificial intelligence, blockchain, and RPA (Robotic Process Automation) have been around in our vernacular, each of our divisions has brought products to market that work with these advanced technologies, including predictive analytics. Our strategy will focus on creating differential interfaces to enhance the customer experience, and we’re also expanding our digital knowledge in our customer UX design group to do this. The fact that our customers expect our products to be highly intuitive and predictive creates new opportunities for innovation.
Predictive analytics applications are evolving every day and, in 2018, interest in predictive technology superseded the rate at which it’s currently adopted. While the interest in leveraging the organizational data is essential, implementing predictive analytics also requires a shift in the organizational paradigm to revolve around collaborative processes. At Wolters Kluwer, we guide our customers to optimize their operations through strategic, operational and analytical expert solutions, and we employ predictive analytics to shape the future of their organizations. Our customers constitute 90 percent of US banks, 40 of the top global banks in the world, and over 1.000.000 accountants and 250.000 lawyers across the globe.