Collaboration in Tax Technology: Insights to Drive Business Growth

Stop Budgeting Like It’s 2019: Why Accounting Firms Must Invest in Technology for Sustained Growth

Update Why Technology Investment is Key for Accounting FirmsAs we delve into the evolving landscape of accounting, it’s clear that traditional budgeting is no longer sufficient. A shift is occurring where accounting firms are recognizing the necessity of reallocating their resources from staffing to technology—an insight supported by recent survey findings. Technology investment is increasingly seen as the cornerstone for sustainable growth, especially in a climate beleaguered by staffing shortages and ever-rising client expectations.The Shift in Accounting Firm BudgetsHistorically, accounting firms allocated the bulk of their budgets towards human capital, often disregarding technology's integral role in operational efficiency and client satisfaction. However, according to Thomson Reuters, technology now represents 21% of firm budgets, reflecting a growing trend. The increasing proportion reveals an acknowledgment that robust technological infrastructure significantly enhances productivity and reduces operational costs. In the coming years, more than 60% of firms are planning to ramp up their IT budgets.Why Larger Firms are Leading the ChargeInterestingly, larger firms are at the forefront of this technological transition. Based on the findings from the Accounting Today report, larger accounting practices spend an average of 30 times more on technology than smaller firms. This disparity is alarming and showcases how smaller firms may be missing opportunities as large practices aggressively invest in innovations like artificial intelligence.The Pressure of Labor ShortagesThe ongoing issue of labor shortages has propelled many practices to re-evaluate their operational costs. According to survey results presented by Thomson Reuters, 2025's top priorities for tax firms now center around increasing efficiency and technology. A report from the AICPA illustrates that in 2024, the number of U.S. accounting graduates hit a low point, signaling a looming crisis in talent acquisition. As firms adapt to this reality, technology becomes not only a productivity enhancer but also a critical tool for survival.The Benefits of Embracing AutomationAs technology permeates the tax workflow, processes that once seemed overly manual are now becoming automated, giving professionals the freedom to focus on higher-value advisory roles. This represents a decisive shift from repetitive tasks towards a more strategic approach, emphasizing the necessity for modern firms to embrace automation at all levels. From the allocation of time towards more productive areas to delivering enhanced services to clients, the benefits are multi-faceted.Forecast for Accounting TechnologiesWhat can we predict for the future of accounting technologies? Trends indicate a pronounced shift toward cybersecurity, cloud adoption, and compliance. According to data compiled by Omega Systems, 2026 will see significant investments in advanced infrastructure and automation tools focused on risk mitigation and operational resilience. As accountants brace for an uncertain financial landscape, those who invest cautiously yet strategically in technology will likely see considerable returns.To succeed in this rapidly changing environment, firms must move from viewing tech expenses as mere costs to recognizing them as essential investments that foster growth, trust, and competitive advantage. The mantra of budgeting like it’s 2016 no longer holds value. Instead, firms should leverage technology to enhance firm capacity and client services, paving the way for future success.