Process optimisation by a tax adviser | with Raphael Kammer

The subject of process documentation still seems to be an abstract concept for many tax advisers and, in particular, their clients. Many companies neglect to document their own processes as they do not see any concrete benefits. Raphael Kammer is Managing Partner at dpk digital, a consultancy specialising in digital efficiency for businesses and organisations. In conversation with Paul Liese, Kammer provides a vivid insight into the world of digitalisation consultancy. Kammer is convinced that process documentation should not be sold by playing on people’s fears, but rather by highlighting the added value it brings.

The interview in full

Paul Liese: A warm welcome to another podcast episode, or Opti.Cast-Episode, as we call it here at hsp. My guest today is Raphael Kammer. Raphael, what we’re about to discuss is, of course, a follow-up to what we talked about together recently during the livestream. We’re both planning to write a specialist article, and we’ve received a few questions from the editorial team, which we’d now like to tackle together. And we thought some of our listeners might find this interesting too. Raphael, are you OK?  

Raphael Kammer: Brilliant, Paul! You too?

Paul Liese: Yes, everything’s fine. It’s been an exciting day today. It’s got off to a good start and is set to end on a high note. The first question we’ve received is: How do clients respond to the consultancy service? How is it received? How does it work for you?

Raphael Kammer: I’d like to answer that in two parts. The first is the traditional consultancy service, which involves optimising accounting and payroll processing. In other words, the areas that companies naturally associate with their tax adviser anyway. Our approach here is that bookkeeping starts with the client, and that simply exchanging documents isn’t the solution to the problem. We’ve noticed that this service is very well received and highly sought after. Because when it’s set up properly, it really does bring about changes in a company’s processes that lead to noticeable improvements very quickly. Here, digitalisation – which is, of course, a very big word and is sometimes viewed with some trepidation – can demonstrate that a great deal can be achieved with the right tools. In this area, we can also talk about „quick wins“. You can achieve quite a lot. Of course, this always depends to some extent on the company’s background and how far its own digital maturity has already progressed. Then there’s the topic of „digital HR management“, which we also work on. This depends somewhat on the size of the organisation. The larger the companies are, the more precisely they understand their own needs, and they’re therefore very grateful when you help them find their way through this jungle of solutions that have now emerged on the market, and also help them reach a decision more quickly through direct recommendations. And then there’s the topic that also unites us: documentation. This is a consultancy service that is, of course, partly driven by tax law. Certain things simply have to be documented. Our approach is to use documentation to identify potential for optimisation, so that we can then tackle it in a more holistic way. We also discuss modern forms of collaboration and ways of processing documents within workflows across the entire organisation. This is no longer solely for the accounts department; in fact, the entire administrative apparatus benefits from it, and to some extent the service delivery side as well. It depends on how the company is structured. I’d say these consultancy services are generally well received, though they can be somewhat more difficult to market from within the firm, as this isn’t exactly what people expect when the tax adviser says: „Listen, let’s have a chat about digitalisation.“

Paul Liese: Why is that? It’s not the question on the table right now, but I’m interested in it. Why does it act as such a barrier for clients when the consultant brings up precisely that topic?

Raphael Kammer: I wouldn’t go so far as to call it a barrier. The question is rather: what are the expectations? That’s what I was saying at the start. If you say, „Let’s optimise your accounts, dear client,“ then they’ll say, „Yes, of course – I’ve commissioned you to do my accounts anyway, so we know you’re an expert in this area and we’re happy to listen to you“. Surveys by DATEV have also shown that small and medium-sized enterprises do indeed expect their tax advisers to support them with digitalisation. But the question is: how do you define digitalisation consultancy as a service area for your own business? It really extends to the new leadership models that result from it. The whole concept of ‘New Work’, for example, isn’t one-to-one with digitalisation. But it all falls under the same umbrella nonetheless. And when we, as a firm, bring this up, it isn’t necessarily what companies expect from us at first glance.

How more ideas come about

Paul Liese: Right. I learnt yesterday from a comment that tax advisers are, in fact, embracing digitalisation. And it would be wrong to say that tax advisers aren’t capable of digitalisation. But this is actually reflected in the fact that clients expect digitalisation in the area of accounting processes – yes – but beyond that, no. How did you manage to build up this digitalisation consultancy and win clients’ trust that you’re capable of doing this too?

Raphael Kammer: Right from the start, we set out to incorporate a slightly broader range of services into our client relationships. However, we didn’t do that straight away. We started in the traditional way, with optimisation consultancy for accounts and HR management. These are the areas where trust is built, so that clients say: „You’re from a law firm. You know how these things work in principle.“ At the same time, however, we’ve also incorporated all these Office-related areas, such as the whole Microsoft ecosystem. We don’t work within the systems themselves or on administrative tasks; instead, we look at the organisational side of things. We put this into practice, for example, by using digital signatures. That’s not a Microsoft issue; we use other tools for that. Or we invite people into collaborative workspaces right from the start, for example via Teams. When we have a larger project, we organise it straight away in a programme like that, even if the company hasn’t worked with it itself yet. We essentially use the technical tools we work with to whet people’s appetite for more. Because I’m convinced that, particularly in smaller SMEs, people don’t just want to digitise for the sake of digitisation, but because they want to achieve something through it. And the more they can experience for themselves, through collaboration, what it actually means to work together on documents, to have direct access to documents, or to be able to do things on the go using a smartphone, the more ideas will emerge and the greater the motivation to invest in these areas.

Paul Liese: This actually raises the follow-up question: As a client, can you expect a tax adviser to also be an IT specialist? Or is it possible to manage without IT expertise?

Raphael Kammer: Here, too, the question is: what exactly is IT? We’ve resolved this for ourselves by not offering any direct consultancy services ourselves when it comes to IT infrastructure. You can’t buy a laptop from us. Nor do we set it up for you. We don’t deal with any security features or firewall configurations that you might need either. We rule that out as a matter of principle. Of course, we do know a bit more about these things, so we do at least raise our clients„ awareness of these issues at a general level. So when we say, “We’re moving towards digitalisation; we’re generating more and more data,„ the issue of “personal data’ naturally arises. That’s where the GDPR guidelines come in. In the field of accounting, we have the GoBD and all the relevant commercial law requirements. So, requirements arise from these legal areas which, in addition to the fundamental interest that every business owner naturally has in protecting their company data, must also be met accordingly. And that, in turn, is also something of a passion of ours. We offer process optimisation in compliance with the law . In other words, we advise not only on what is possible, but also on how to implement it correctly within the bounds of the law.

Paul Liese: Right. That brings us to the next question: how long has this area of practice been around for tax advisers, and what are the key factors for success if you want to get into it?

Raphael Kammer: I think that’s a very interesting question, because I can’t, of course, back it up with any specific date. That doesn’t work. I don’t know. We’d probably have to ask DATEV whether they have any survey data on this, but I’m not really sure about that. I believe there are already quite a few tax advisers on the market who support their clients, at least in this straightforward area – how can I digitise my document exchange. However, they tend to do this more out of self-interest. They’ve optimised their own processing workflows within their firms accordingly and say: „Dear clients, please do send us the data digitally.“ And there are certainly – I really don’t want to use the word right now, but – solutions from that green software company that are quite well known in this regard. And quite a few law firms are already making use of these solutions. I don’t know exactly how many there are, but I believe the number is gradually increasing. What we do goes beyond that, though. We offer that as well, but we take a much broader view of the whole topic of „digitalisation“. I can’t give an exact figure. However, I can see that there are different approaches amongst law firms. We’ve deliberately spun this off into a separate company because we also want to be able to work with businesses that aren’t clients of the law firm we’re affiliated with. We’re quite open about this. We don’t go out and poach clients, because the tax adviser often plays a very important role in our projects. After all, simply digitising the processes within a company is fine, but the real potential arises when this is utilised holistically. Other firms incorporate this into their services. You look at their range of accounting services, and there you’ll find the digitisation of accounting listed. Excerpts from our service portfolio are also included there.

Key Topic: Digitalisation

Paul Liese: You’ve actually already gone some way towards answering the question of how many tax consultancy firms there are Offer digitalisation consultancy. I’d say there’s a growing number of law firms that are increasingly recognising the importance of this issue – or perhaps this is simply a logical consequence of the fact that matters relating to automation and artificial intelligence will become increasingly automated in future, leading people to simply say: „I’d rather be part of that process, rather than just standing by and watching as my core role at the firm gradually disappears.“ Right?

Raphael Kammer: Exactly. From a purely commercial point of view, the latter should certainly also be a motivating factor. When you talk to companies about what they don’t particularly like about working with their tax adviser, you often hear: „He doesn’t advise me.“ That depends very much on whether – and this is open to debate – the preparation of accounts, payroll, annual accounts and the discussion of such matters constitutes an advisory service, or whether it is more a matter of data processing and, ultimately, a declaratory service. In all the firm statistics on how this turnover is recorded, DATEV is once again quite far ahead with its surveys, and in many firms up to 95 per cent of turnover – I don’t know the current figure – results from reporting activities. Personally, I am convinced that automation in accounting will lead to the value of this service being interpreted differently in future. How it will then be measured – we do, of course, have the Tax Advisers„ Fees Regulation, which influences this accordingly – and what that ultimately means, I cannot assess precisely. But my guess is that the more people realise that these are actually just data records transferred from one system to the next and then processed automatically, the more difficult it will be in future to continue to command a price on the market that corresponds to the actual manual labour involved today. So, as a firm, you’d be well advised to start looking into this now and consider what else you can actually do with this data and information. One approach is to develop services such as business consultancy or more complex legal advice on structuring such solutions. Or you could take a slightly more proactive stance and say: ‘We also want to play a part in bringing about this success in accounts and administration through automation in the first place.’.

Paul Liese: Yes. You can’t exactly complain of boredom, as you told me earlier when we had a brief chat. That means success is fundamentally possible if I focus on it. And that’s what I see in many law firms. The law firms that say, „This will be a key focus of my work going forward, and I have one, two or three staff members who do nothing but that,“ are always successful in this area. Would you agree with that?

Raphael Kammer: From our point of view, I can confirm that. What I might add, however, is that you don’t need to be a tax adviser to do what I do.

Paul Liese: Exactly.

Raphael Kammer: I, for my part, do of course have a background. I wanted to become a tax adviser, but then made a conscious decision against it because it was clear to me that the topics that actually appeal to me – even in the future – have less to do with the work that someone is only permitted to do if they hold that title. And that puts law firms in an exciting new position that they haven’t been in before, particularly when it comes to recruitment. What sort of people am I actually hiring? By venturing into such business areas, you can really look beyond the horizon, because the requirements are completely different. It takes you much further into the realm of management consultancy. When someone asks me what I do, I say: „Digitalisation consultancy.“ „Right, what does that mean?“ „Our focus is on process and organisational consultancy.“ The next step, which we don’t handle directly but rather through partnerships, is the area of technology consultancy – in other words, traditional IT consultancy. This covers the whole field of security, administration and hardware, but also the solutions themselves. Our approach is as follows: first, there’s a strategy at the top; then we move down to the organisation; then to the processes; and only then do we actually look at the tools – in other words, the technological basis for all of this. And this makes it a great way to develop a network of collaborations and simply position oneself much more broadly. These are opportunities that lie within this approach, which many law firms can capitalise on. But of course, this also requires a shift in mindset. In other words, working with other people, deliberately venturing into areas where you may not yet be so well-versed and where you don’t know which book to consult or which course to take to refresh your knowledge for this work. It also has a bit to do with a clear willingness to embrace change.

Paul Liese: That’s actually why we launched the hsp Community online a few weeks ago – so that you can exchange ideas with others working in the same field. After all, you come across certain situations with clients and have to work out which tool is best for the job. There are now so many tools on the market that are really good at just one thing, so you have to work out which one is the best fit. You can only achieve that through a network. So the question is: Who are you competing against? I don’t really see it as a matter of competition at all. In fact, I see it as a great opportunity to work together to develop solutions and, in doing so, put our clients in a better position. After all, as a law firm, I ultimately benefit from the client being in a better position.

Competition rather than rivalry

Raphael Kammer: That’s right. I do think the word „compete“ might not be entirely appropriate these days. But it is true – at least in my view – that various disciplines are trying to find a foothold in this area of digitalisation consultancy. Take, for example, IT system integrators who still make their money today by, as the saying goes, ‘selling hardware’ – that is, some sort of hardware configuration. When major American e-commerce giants announce they now want to get involved in the IT sector too, they suddenly find themselves with a competing partner in the market, meaning they have to consider how to position themselves. I’m actually noticing more and more that IT system integrators are increasingly trying to build up a consultancy arm as well. In that regard, they still have a few things to sort out, because providing consultancy based on a solution is one thing, but truly supporting a company at the organisational and process level – what exactly is the company’s objective? In which direction do they want to develop? How do you then deduce the implications for the organisation and the individual processes? – has nothing to do with IT at first. Often – at least in my experience with SMEs – digitalisation initiatives are driven by the IT department, and software solutions are then introduced which, whilst fundamentally sensible, aren’t always the right solution for what the company actually intends to achieve. The impetus simply comes from the wrong direction. IT is always important, but it isn’t necessarily always the right driving force for process alignment.

Paul Liese: Which brings us to the final question we’ve been asked here: management consultancies – how does one deal with them successfully?
There are currently three players in the market. Management consultancies have always done this – helping companies to optimise their operations. Tax advisers are now entering the market. And, as you’ve just described, so are IT system integrators. But it’s really all about this holistic approach to consultancy. Is the process – from the very start – when the customer rings the company and wants something – right through to the end – when the invoice has been issued and the service provided – optimal? And I see it exactly the same way as you do. I can’t organise and assess whether the process is optimal based on the solution itself; instead, I first have to approach the process with an open mind, without any specific tool in mind.

Raphael Kammer: I couldn’t agree more. What I find fascinating – and what I’ve been exploring both in my own thinking and in the literature – is the question of the future of consultancy. All companies want to scale up. Consultants would like to do so too, of course, but it’s not that simple. And this breakdown I’ve just described – involving organisation, processes and technological tools – these are things that can actually be neatly standardised within a service offering. The key question is simply this: what does that mean for a consultancy? Is my product independent? Do you really just look at the company and its processes, without tailoring a solution to them that you might later wish to sell as part of a cross-selling strategy? Or do you say: „We have a portfolio of solutions. Based on that, we’re also happy to help shape the processes that influence them“? I think these are still very exciting developments. And the big names on this list in particular are, of course, global consultancy firms that offer both consultancy and technology. One could almost say – even if it’s a bit provocative – that in auditing and tax consultancy, the preparation of financial statements and their audit are being separated. One could view the field of digitalisation in a similar light. Is it wise to do everything from a single source? I believe time will tell. This is where the traditional disciplines of management consultancy – management consulting, organisational consulting, process consulting, HR and IT – begin to blur, because you can overlay this layer of digitalisation consultancy onto everything. And I believe that developing the right consulting approaches for the future is a major challenge, particularly for tax practices.

Paul Liese: But also an opportunity.

Raphael Kammer: Absolutely! We’ve noticed here at the firm that project-based working isn’t something people have been doing repeatedly for many years. Or methods for achieving objectives, for example. We’re currently experimenting a bit with OKRs to see how we can manage goal achievement a bit more agilely in internal projects to start with. These are issues that will certainly continue to play a role in some form or another in tax practice firms in the future, particularly in relation to agility, in order to cope with these tasks.

Paul Liese: Yes. Thank you very much, Raphael, for your feedback. It’s very valuable, as are the ideas it has sparked. I’m looking forward to hearing the feedback from our listeners and also from the editorial team, who will now be refining the article. I hope you have a great Friday and a lovely weekend.

RK: I hope the same for you.

Paul Liese: And that’s what we wish for all our listeners too. Until then, take care!