Unlocking the Power of AI in Professional Services: Expert Insights by Shamus Rae

**Collar Colour: How AI is Impacting White-Collar Jobs**

**Upending Expectations: White-Collar Jobs and AI**

Not long ago, it was widely believed that repetitive, blue-collar jobs would be the first to be disrupted by advancing artificial intelligence (AI). However, the arrival of generative AI has shifted the trajectory, indicating that white-collar jobs will be the first to feel the impact. Jobs like accounting, management consulting, and law are now finding themselves at the cutting edge of technology.

Shamus Rae, the CEO of Engine B, a start-up focused on expediting the digitization of the professional services industry, recently joined the London Futurists Podcast to discuss the forthcoming impact of AI on professional services.

**Shifting Perspectives: From Innovation to Accounting**

Shamus Rae’s background in technology and innovation sets him apart. With 13 years of experience as a partner at audit firm KPMG, where he headed Innovation and Digital Disruption, Shamus was uniquely positioned to establish Engine B. Interestingly, his expertise lies more in technology than accounting. In the 1990s, he founded a technology-oriented outsourcing business and subsequently built a 17,000-strong outsourcing business for IBM in India from scratch.

**The Importance of Data for Engine B**

For Engine B, data is of paramount importance. According to Shamus, without accurate, up-to-date data held in standardized formats, advanced AI cannot be effectively utilized. Consequently, a significant portion of Engine B’s time is spent acquiring the right data from clients and ensuring its compliance with standards. This focus on data infrastructure is critical, as it sets the foundation for effective AI implementation.

**Harnessing the Power of Data and AI**

Engine B utilizes a combination of pattern recognition deep learning models, introduced during the 2012 AI revolution, and generative AI, which emerged during the 2017 AI revolution. While the larger firms are building their own solutions, Engine B is in the process of developing co-pilots for its smaller clients.

Interestingly, when the Institute of Chartered Accountants in England and Wales (ICAEW) reviewed the approaches of various audit firms, they discovered that data models and approaches to client data were largely the same. This revelation was not unexpected, given that data science is not a core skill for accountants. Nonetheless, it underscores the importance of data, which Engine B treats with utmost confidentiality, avoiding any access to, copying of, anonymization, or storage of client data.

**Transforming Data Swamps into Data Lakes**

Most companies’ data is poorly organized and often requires cleaning and standardization before it can be effectively utilized. The concept of transforming “data swamps” into “data lakes” aptly describes this process. For instance, large companies often have numerous leases, and determining which is current and applicable can be challenging. By correlating information from payment records, this task can be automated, eliminating the need for manual data exploration.

Engine B faces a significant challenge due to the vast array of accounting systems used by different companies worldwide. With approximately 300 accounting systems tailored to specific client requirements, Engine B has the ability to extract useful data from nearly any accounting system within an hour.

Engine B currently serves paying clients in the US and the UK, participating in the audits of 50,000 companies. As its clients are global firms, the company plans to expand its services to additional regions in Europe and the rest of the world, anticipating a substantial increase to around 200,000 audits in the near future. Shamus acknowledges that Engine B is more advanced in the accounting sector than the legal sector but emphasizes that the advent of generative AI is altering the landscape.

**Reimagining Training and Partnership**

The rise of AI automation in auditing raises the question of how young accountants will acquire necessary skills. Shamus believes that the arduous process of traditional training, characterized by repetitive tasks, can be replaced with a quicker and less painful alternative. Accountants of the future may view their predecessors’ training as a therapeutic experience endured for the sake of future generations.

A similar transformation has occurred in the legal profession, where reviewing thousands of legal documents during investment or acquisition transactions, known as “disclosure” work, has been largely automated without diminishing the expertise within the profession.

**Embracing New Business Models**

The automation of repetitive tasks poses a challenge for audit firms. It undermines their funding model, which relies on charging clients a significant fee to employ numerous junior professionals for grunt work. Partners then benefit from a share of this revenue and charge additional fees for their own limited time.

Shamus predicts that professional services firms will need to abandon their current hierarchical structures, which feature many juniors at the bottom, a smaller number of managers in the middle, and a minute number of partners at the top. They will need to adopt a diamond-shaped structure as automation replaces most junior positions.

Additionally, lawyers and accountants must learn to sell more than billable hours. They must now demonstrate the value of AI systems that have effectively replaced much of the work that was previously carried out by junior professionals.

While Shamus acknowledges that senior professionals in professional services appreciate the transformative potential of GPT technology, there is still an element of denial, with individuals assuming that everyone’s job will change except their own.

As AI continues to advance, it is increasingly clear that white-collar jobs will undergo significant transformations. Engine B, under Shamus Rae’s leadership, is at the forefront of this revolution, rapidly expanding and reshaping the professional services industry.

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