2 Aug 2016 03:15pm

The difference between automation and innovation

According to Richard and Daniel Susskind, we are living in a society that will soon neither need nor want doctors, teachers, accountants, architects, clergy, consultants, lawyers and many other professions to work as they did in the past century. While the book, The Future of the Professions, may be a dramatic take on our internet society, it does bring with it much food for thought - especially for those of us in the tax and accounting profession

Robots and automation have existed in the world of tax for some time now. Many of our customers make their living doing tax returns using computer software. Organisations often outsource this work because tax returns are inherently highly complex and the effort of learning how to complete them is disproportionate to the cost of getting someone else to do it.

In The Future of the Professions, Susskind and Susskind contend that machines are far better at coping with complexity than humans. They argue that at some point in the near future it will become more economical for rules-based software to complete tax returns instead of expensive (and error-prone) humans.

The authors then leap to the sobering theory that tax compliance is simply interpreting regulations looking backwards, and that tax advisory is using those same regulations to look forward. So, even the planning and advisory aspects of tax work are ripe to be automated.

This theory illustrates an interesting point: the difference between automation and innovation. Automation is the use of technology to support a traditional model, whereas innovation enables ways of delivering knowledge and services that are simply not possible - or even imaginable - without technology. At Thomson Reuters, we are very good at automating. Our challenge is how we can innovate to drive transformational change in the tax and accounting profession. 

Susskind and Susskind are not my only prompt for speculating on this topic. Recently, Brian Peccarelli, the president of Thomson Reuters’ tax and accounting business, penned a blog entitled, “Would you take tax advice from a robot?” Both Peccarelli and Susskind and Susskind point to a transformation in the way that tax professional and professionals in general are seeing their environments transformed by technological advances. To quote yet another source, the BBC estimates that someone in a tax advisor role has a 95% chance of being automated (as opposed to our near homonym, a taxi driver, a mere 57%).

All this certainly does not mean that tax professionals will be automated away, but it does mean that their roles and their relationships with technology will change dramatically. Peccarelli’s blog points to many ways in which this is already happening. While the “human touch” may be a cliché, it will become an increasingly valuable commodity, particularly (as Susskind and Susskind speculate) because expertise and empathy are rarely found in the same person.

While I am not sure we can build solutions to create empathy, we can certainly build user-friendly, integrated and intelligent solutions for this changing environment.

Laurence Kiddle, external blog


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