The Accounting Technology Lab

Brian F. Tankersley, CPA.CITP, CGMA: Welcome
to the Accounting Technology

Lab, sponsored by CPA Practice
Advisor, with your hosts Randy

Johnston and Brian Tankersley.

Randy Johnston: Welcome to the
Accounting Technology Lab

podcast. This is Randy Johnston
with my co-host Brian

Tankersley, and we got to hang
out in New York City together,

you know, you've heard the New

Brian F. Tankersley, CPA.CITP, CGMA: York
City,

Randy Johnston: yeah. Well, it's
not New Jersey, they make Pace

Baconte event, whatever. But on
May 20-first of 2020-six Black

Orr did the release event for
the tax autopilot, and Brian and

I had the privilege of attending
and presenting there, but more

important, most of the
influential people that you

would know in the profession
were also present, in addition

to a fairly significant number
of guests. Now, this was held in

the Nasdaq Tower, and again,
there were 130 to 150 of us

there, I didn't ever see or
count a final number, I just

know the room was jammed, it was
a first class event that was

run, and what Brian and I wanted
to do is give you a bit of an

update, because we believe that
this AI powered tax preparation

market, fully automated tax
prep, is coming of age, and of

course, you've got Black Ores,
Tax Autopilot, but you have the

competitors of Filed and
Magnetic and Solomon, and you

have the k1 products like
Additive and Abacus, and so

forth, and it turns out this
thing is breaking wide open, but

Black or is installed in a fair
number of my client base, so

we're quite familiar with the
platform and how it works, so

you know, as it turns out, the
event was emceed, if you will,

by Kelly Phillips Erb, better
known by some of you as Tax

Girl, who writes for Forbes. She
did a nice job of running the

event throughout the day, but
the first presentation was done

by El Shiner, which I have
worked with off and on since

inception of Black Orb. Now,
there's lots of interesting

background on Eyal, but you
know, he basically did kind of a

tone-setting opening remark,
talking about how, you know,

they'd kind of got their start
2023 at AI CPA engage, and that

they believe that the tax
profession is currently

suffering from about 25 million
hours of annual shortfall of

labor, and they had pretty good
statistics to back this up, and

they thought by 2030 there could
be as much as a 600 million hour

shortfall, and of course we have
been talking in other accounting

technology labs about the
shortage of talent in the

profession and people entering
the profession, and so forth,

but another couple of claims
that Eyol made that I thought

were pretty interesting that he
thought by the end of 2027 we

would have fully autonomous tax
prep, and by the end of 2028 we

would have fully autonomous
entity tax rent, so you know

those are all big deals, and he
also went on to state that tax

has an ontology problem, and you
know, Brian and I actually just

looked at an AI extraction tool
that did a wonderful job of

ontology, we'll talk about that
in another accounting technology

lab, but E all then said, look,
they went through two plus quiet

years working with a lot of
design partners, many of which

were my CPA firm clients, and
they wanted to produce a 100%

optimal AI with 99% accuracy, a
98% autonomy, 98% time savings,

and 80% cost savings that
allowed two times faster review,

that was what they basically
said. Now, as it turns out, they

quoted a firm in Austin, Maxwell
Lock and Ritter, that Brian and

I have both known for a long
time. They're a member of CPA

America, a fine firm in the
Austin area that had prepped tax

returns on black or in anywhere
from zero time to five minutes,

and that's a pretty big claim.
And again, we know the people

there, and I know that to be a
valid claim. So El closed up his

time talking about how you know,
if we spent less time in prep,

we could move more of our labor
into advisory, and that black

ore could allow your firm to
have better margins on tax

returns, and you would be able
to use your talent in different

ways. So now that's a bit of a
rant on the opening keynote,

Brian. So you know, you were
sitting in the room trying to

experience it, if you will, and
it was an experience, for no

doubt. What have I missed on
Els' presentation that you might

call out?

Brian F. Tankersley, CPA.CITP, CGMA: I
think you pretty much got it

all. I think it was a very
interesting presentation that

kind of just to kind of get
everything oriented here, you

know, the 600 million hour
number just absolutely blows my

mind, because if I'm doing the
math right here, that's 30,000

FTEs, and you know that's a lot,
and so when we're thinking about

these things now, I think it's
a, I think it almost shows us

that shows us the inevitability
of AI tools in this prep space,

and I think it's, you know, I
was said I was very impressed

with that. I was also very
impressed with how well Kelly

ran the event. I think she did a
very good job. She's an

outstanding writer and was also
an outstanding emcee.

Randy Johnston: Yep, super well.
Then the next one up, and I

always say your name wrong,
Teddy. I'm sorry, Teddy

Nawanchu, who's the VP of
operations, and I talked to

Teddy pretty frequently, and he
knows I have trouble with his

name. So, again, sorry, Teddy,
but Teddy actually had

experience at RAMP, and they
pulled in the Director of

applied sciences, Ryan Stevens
from RAMP, also, and today RAMP

claims to have 34% market share
of AP and expense processing.

They're growing very quickly. In
fact, there were some pretty

significant announcements the
week that Brian and I record

this, the day, well, the week
before in this window, but you

know, he basically then went on
to explain some background on

that. Now it turns out that, you
know, Teddy has a background at

Goldman Sachs and Advent
International, and Ryan talked

about the teams of AI people
that they had, and he was a data

scientist at Meta Facebook to
most of you before joining

there, and he has a PhD in
economics, and so forth. I mean,

the boy was really fun to listen
to, but basically he was trying

in the presentation to separate
Ramp the company from Ramp the

product, which has been AI since
the beginning of it, and in the

early days he pointed out that a
lot of the expense tracking

products, some of which you,
Brian, and I helped on, like

Concur, which is now owned by
SAP, was an OCR product, and

then they took maybe AI and
machine learning steps to try to

improve things over the time.
Well, what Ramp became obsessed

with was eliminating low-value
work, and they started asking

questions about the data and the
metrics and travel, and their

Ramp research agent, how they
really tried to provide context,

and Ramp became early to Gen AI,
and they acquired a company by

the name of Cohere, which had
50% of their code written by AI.

And in other accounting
technology labs, we've talked to

you about how companies like
Digits have rewritten their code

with AI, and how much code can
be done with five coding, and so

forth. You might want to check
those episodes out well, as

well, but what I think I learned
that was such a head shaker for

me from Ryan Stevens was his
statement that ROI should not

matter at first. It doesn't
matter, you should be observed,

obsessed with measuring every
project, and sorry, if you're

obsessed with managing every
project, you're going to wind up

making people scared, and you
have to give AI room to fail

again. It was one of those
things, I'm sorry, I didn't say

that as clearly, so, but you
know, the bottom line is they

went in, then to quote Andy
Grove of Intel fame, you know,

you have to let chaos reign, and
then rein in the chaos, another

catchphrase that I remembered
from the past but had forgotten,

and you have to find then the
high ROI, so if you're thinking

about AI in your firm, that's a
great thing. Let it go, keep it

chaos, but then rein in the
chaos. But you have to control

the data, that's one little
twist we'll put on that. But

find the high ROI, and you have
to seed your company with the

right people and hire the right
talent, and you can easily with

AI get two to three fold
revenue, so today Ramp, by the

way, at least Ryan's claim on
the day of launch was that Ramp

is processing 100 million in
50,000 companies, and they've

turned AI into an. Economically
transformative item, anywhere

from micro SMBs up to
enterprises, and that AI

spenders grow at six times the
revenue of high spenders. I

thought that was another
interesting stat. So, Brian, you

know, I've kind of summarized
the AI rewriting the services

economy session? What might you
observe again? You were the

cautious, careful observer, and
I was kind of the note taker.

Brian F. Tankersley, CPA.CITP, CGMA: I
think the, you know, the thing

that I would just kind of
generally say is that I think

he's spot on with respect to
those points, especially about

letting the chaos reign and then
raining the chaos, raining in

the chaos, I I was.. I will say
that I think their approach is

working quite well, simply
because I'm hearing more and

more about ramp in the
accounting profession. You know,

it's really.. it really seems to
be a product, you know, that

product, and then the automation
surrounding it seems to be

something whose time has finally
come.

Randy Johnston: Yeah, and so you
know, and Black Horror was

really trying to set this up to
be a managing partner strategic

type of event, and you can hear
with the CEO presentation for

me, all with Teddy's, you know,
VP of Operations presentation,

they're kind of setting the
framework, and fortunately,

Brian and I were able to go next
as the moderators of the next

panel on the evolution of tax
technology and how to scale at

the firm, and we were lucky to
have guests Belinda Pisana from

who's their deputy vice chair,
and Amit Ringsha from KPMG,

who's a principal in their
ignition unit, you've got Darryl

Shred, who's the head of tax at
PWC, and Lawrence Friedman,

who's the principal in tax
innovation of BDO, some

high-powered tax people, and so
Brian basically ran the panel,

you know, addressing all sorts
of different issues. Now, one

thing we're not going to do in
the rest of the podcast is

rehash every little detail of
every little session, but you

know, in each case I just want
to give the high overview, but

basically what we were doing is
talking about why AI let you

scale and what your impediments
were to being able to scale a

tax practice and where things
were headed, and so we asked

questions around that area and
listened to the responses of the

various attendees. So, Brian, is
there something that you would

recall, or say, you know, this
was really important. I know I

had some wonderful responses as
examples.

Brian F. Tankersley, CPA.CITP, CGMA: I
will say that the, you know, the

few things here. The first, and
I think the most important is

that when we're looking at, I
guess, when we're looking at all

this, I think that in general,
Belinda, and I think a lot of

other people, because I kind of
went off the script and asked

some questions about remote
work, and remote work is going

to work for some people, but
it's not going to work for

everybody, and I thought that
was a, I thought that was a very

factual thing that I think is
important that we look at, you

know, the more important thing
that I think I saw across the

entire panel was how everybody
said that getting the data

quality up was the main was the
most significant impediment to

their use of AI, because garbage
in, garbage out, and the problem

is getting the data consistent
in in depth and content, and

getting the data laid out where
it can be used to train all

these different events, and it
was really amazing to me, how

you know when you were asking
some follow-up questions toward

the end, how everybody 201
talked about this problem of

having the data consistent and
having the data in a usable

format for the, you know, for
training and for the other

purposes that you would need to
use AI.

Randy Johnston: Yeah, and that
makes to me perfect sense in

terms of just overview, Brian,
because again we're not trying

to rehash every little point
here for our listeners here

today, but let's go to the next
section, which was AI in

enterprise accounting, what's
real now, and again a panel that

Kelly was kind of the MC for,
but David for Geary, the Chief

AI Officer at Eisner Amper, Ivan
Makarov, who's a partner at

Anderson Horowitz, a 16 Z, if
you will, PE company, Jeff Wong,

a former global CIO for EY, and
I got to have lunch, actually,

or sorry, breakfast with Jeff, I
guess it was lunch, sorry, and

we chatted a little bit before
the event, Casey Johnson, who's

the executive director now at
the AI Not for Profit

Foundation, and Rob Owen, who's
the CIO at SACS, and. You know,

in this particular group they
were really talking about, you

know, how to manage these
enterprise accounting

environments, and in this
particular case, they were

talking about dealing with
agents and how to get some scale

that way, and why you wanted to
build. So, do you have any

particular key points that you
observe, Brian, in that section?

Brian F. Tankersley, CPA.CITP, CGMA: I
would just generally, you know,

I would just generally say that
I think you really need to watch

the AI Native Accounting
Foundation that Casey Johnson's

running. I think there's a.. I
think they're taking a very

leading space in this, and it's
a very exciting organization,

because I, you know, when you
look at when you look at the

impact of AI, and you look at,
you know, that data problem that

we just talked about in the
previous discussion, one of the

things that I think is so
interesting here is that I'm not

sure that I'm not sure that
we're not going to have to have

another level of revolution in
the accounting space to move to

these AI first accounting
platforms. I don't know that you

can put in, I don't know that
you can bolt on enough AI to

make them to make the legacy
products continue, you know.

Again, we'll find out whether or
not we can or not, obviously,

but I thought it was very
interesting. It was interesting

to hear the hear David and Rob
and Jeff all talk about their

experiences at Eisner Amper and
Saks and Ey in here, because I

think you know the, you know, we
have to remember here that the

sales of most of the big four
firms is almost more than this,

the revenues of every accounting
firm from five to 100 combined,

and so their dev budgets are
also a lot in here. So they're

allowed, they're keeping up with
the financial services industry,

and a lot of other places,
because they're having to audit

them, they're having to work
with the financial services

industry, which is really kind
of leading this, and so it's, it

was very interesting panel to
kind of hear what their take is,

simply because you know they
really said that we're all

tinkering with it, but the data
problem is still the data

problem, and and we're having a
hard time turning it into things

until we can get, but we're
working really hard on the data

problem, and I think we're going
to get it fixed. My take on

Randy Johnston: your point on
Casey is actually good. I have

been a guest on the AI Native
podcast, obviously. I recorded

that when I was in your office,
as it turns out. And you know,

maybe a bit of a point of
disclosure, they are going to

provide scholarships to
accounting students from the AI

Native Foundation, and they're
going to do as much as they can

to promote AI initiatives across
the accounting profession, so

you know those, the launch of
that occurs at scaling new

heights, and you know that's
kind of a big deal, so in any

case, but back to Black Orb,
then the next session up was the

AI native firm, where they were
unifying tax advisory and

assurance, and you know, here
you had Blake Oliver as the host

of the accounting podcast,
moderating this, but you had

Becky Munson, who we've talked
to in the past, who is a CPA

practice leader at Eisner
Hamper, Ryan Hitner, who's the

AI partner at Deloitte, Jim
Burke, who's a managing director

over at Witham, who's on this
panel, along with Sean McLean,

the chief digital officer of
Elevate the CPA, and our

long-term friend and cohort,
Jeannie Whitehouse, who's

president of ITA, but you know,
has come up as a CPA through

what used to be the division
company accounting software, and

many other things. So, you know,
again, we've got a long

relationship with Jeannie, but
here this idea of advisory work,

and you know, Jeannie has
probably led the profession on

advisory services with her
specialty in the wine industry,

in particular, but the
discussion here was, you know,

if we have a less mundane work,
the compliance work done for us

automatically, can we use our
talent to turn it over to

advisory, and you know, in this
particular case, the suggestion

was to pivot relatively quickly,
and that many organizations have

too many high-level C-level
people, and that the AI is

crossing all functions, and that
it's probably wise to have

managers and below help rebuild
processes, and I've been talking

about how AI is helping rebuild
processes, and if you haven't

listened to our podcast on Tax
GPT and their agents that you

know are helping with processes,
cash at least basically said,

look, I'm not sure you even need
processes anymore, because the

agents might do that for you,
and I'm still not. Mentally

processing on that one, but you
know, bottom line here is

advisory services surfacing, and
you've heard us talk about

advisory services in prior
accounting technology lab.

There's a lot of fake advisory
out there. I want you to do real

advisory, and you know these
people, as they were talking

about it, I think have a pretty
good handle on the advisory

deliverable. I believe advisory
can be delivered by all size

firms if they are client first
and proactive instead of

consultative and reactive.

Brian F. Tankersley, CPA.CITP, CGMA: Yeah,
and I think that is a, that's a

big culture change, you know. I
often talk about the role of the

traditional role of the
accountant as being the

equivalent of the person that's
sitting in the limo going to

prom facing backwards, and so
they can't see what's coming

ahead of them always, because
they are facing backwards,

they're looking at the stuff
that has already happened, and I

think it means that we're going
to have to broaden our horizon

to horizons to include things
like, like CRM, CRM data, and

data on the sales funnel, data
industry data, and we're going

to have to take on things where
there isn't a right answer, and

there's just probabilities, and
we have to adjust to those

probabilities, you know, it's a,
I think the thing that's hard

for the cultures inside
accounting firms is that in tax

and audit you always have to be
right. Okay, an advisory is

really much more in my mind,
like, like baseball, where you

know Ted Williams, when he
backed 400 you know, so he was,

he had winners two out of five
times, you know, just the other

60% of the time he was out, that
where that was a win, so I think

again it's it requires a crows
people to become more

comfortable with managing risk
and not eliminating it. So we're

going to have to again become,
you know, get a little bit

better at gambling if we're
going to really step up and be

the advisors that people need us
to be.

Randy Johnston: You know, it's
interesting, you bring up the

baseball analogy. Of course, I
know you're a big baseball fan,

but I use baseball earlier this
week, and I said, you know, when

it comes to calling shots, you
know, I'm not as good at it as I

used to be, because the things
are changing so quickly, but I'm

only batting about 400 nowadays,
which in baseball is pretty good

number, obviously, but I used to
believe I was batting closer to

800 on making the right shot
calls, and I think I was pretty

close to that number, by the
way, but I did have the

privilege also of speaking with
John Thompson, who I think is

one of the best advisory
thinkers in the world out of the

UK, two days before recording
this, you know, podcast, and you

know, he has several different
analogies, like you're talking

about what advisory really is,
and you know, so much of the

time people are doing
consulting, or they're doing CAS

financial analysis, they're not
really doing advisory, and you

know, so it's kind of a big deal
to get advisory right, but that

gets us then to the closing
session of the day. Alan Colton

did a bit of a presentation,
which was quite well done on

private equity. Of course, he's
been in the thick of that. He's

the CEO of Colton Group, but it
also brought along Brian Colton,

who's the chief development
officer there now, as well as

Steve Ronan, from who is the CSO
of Citron Cooperman, and Joseph

Dimano, who's the CEO at Saks,
and they want to just talk about

the private equity merger
acquisition and firm ownership

pieces, so P is in so many
conversations today, and Alan

was trying to lay out the
economics behind it, and why it

was good, and why you should do
that, and so forth. And there

was also conversation about why
staying independent was good,

which I thought was healthy, but
in the big picture, Brian, I

know you were kind of absorbing
that as well, so any other

observations from the PE
section?

Brian F. Tankersley, CPA.CITP, CGMA: I
thought it was interesting. I

thought it was interesting, the
different architectures and the

different kinds of
transformations that Alan talked

about, you know, including the
mothership, the roll up, wealth

management, ownership
transition, mega mergers, carve

out, public company ownership,
and non-PE ownership, you know,

it was, and then he actually had
logos in the, in his

presentation of some of those
mergers that met the

classification of that
archetype. It was also

interesting to me where he
talked about the largest private

equity roll-ups that were out
there, including Ascend, which

he said had revenues in 25 of
591 million, and the Creek

Professionals Alliance, that
ended up with 420 8 million,

Platform Accounting Group at 216
million, Soren, that used to be

Harris, at 192 million, Richie
May at 175 million, and then a

host of others. I found it, I
found it very interesting. To to

actually go through and and see
that list, because you know the

effect of PE is very real in in
this, and you know in some, in

some cases when PE is coming in
they are they are sending more

things offshore, in other cases
they're simply automating

processes and coming up with
standardized processes and

sharing staff, it, and so it's,
it was interesting to hear those

observations in his
presentation. It's also

interesting to, it was also
interesting to hear his take on

how the traditional partner
compensation model changes when

you move to this PE-backed
partner compensation model, and

it was interesting to hear, with
his, you know, with some of the

guests that he ended up bringing
in there. It was interesting to

also hear how they were seeing
this, and how people were having

things like, you know, they had
a piece of equity, but as soon

as they left, that piece of
equity was gone, and so it's a..

it was a very interesting, you
know, it was very interesting

presentation that he did, and
kind of a nice peek inside a

notoriously private and
secretive industry of private

equity.

Randy Johnston: So, thank you
for all of those things, Brian,

because there's so much going on
that, you know, it's just hard

to believe when you get the
chance to listen to so many

experts, and of course, the day
was wrapped up by Kelly and

Teddy. They had a nice reception
and dinner afterwards, but the

key for all of you, and the
reason we wanted to recount

this, it was a first-rate event
with really high-quality

presenters and thinkers present
a lot of very high profile high

power managing partners in the
room. The discussions I had were

really rewarding, and I hope
that most of the attendees were

rewarded. I think they were, as
it turns out, so yeah, I

Brian F. Tankersley, CPA.CITP, CGMA: mean,
I think it was probably the best

event that I've been to,
probably in 10 or 15 years, from

the perspective of everybody was
there. I mean, you had most of

the most of the senior editorial
staff at Accounting Today, you

had CPA practice advisor folks,
you had you had the earmark

people, you had all kinds of
folks in the room, and it seemed

like, you know, it was, it was
kind of like the, I don't know,

the accounting and tax
equivalent of the Met Gala,

where everybody that's anybody
is there.

Randy Johnston: Yeah, you're
right. If that's exactly what I

was going to say, if you were
somebody, you were there, and if

you weren't able to attend, I'm
sorry, you know, it was

absolutely worth the time, and a
lot of people had trouble

getting there, you know, flights
and so forth were delayed for

many of the attendees, so there
were a lot of what I'd call

travel horror stories, but Brian
and I unfortunately got a little

bit used to that. Well, that
said, friends, we will be

talking to you in other events
about new products that are

hitting the market and key
events where we think we can

share something we've learned
with you, and we want you with

us in every accounting
technology lab every week. If

you've got something you want to
hear about, please email us, and

we'll, if we have the ability to
cover it, Brian and I will do

our best until then. When you
listen in again, thanks for

being here today.

Brian F. Tankersley, CPA.CITP, CGMA: You,
Dave, you.