This article was originally published in the May 2014 issue of Accounting Today (http://www.accountingtoday.com/ato_issues/28_05/from-app-store-to-technology-ecosystem-70441-1.html#Login).
App stores and mobile devices have changed how software is developed and distributed. These stores have also driven the consumerization of technology and certainly appear to be here to stay. The impact on CPA firms and the profession has been significant. These changes should motivate firms to think differently about their technology and integration strategies.
In the past, most firms chose their strategy from two options:
- Best of breed
- Vendor suite
The term "IT ecosystem" has been introduced and has numerous definitions, but the one that impacts firm thinking the most is, "Technology ecosystems are product platforms defined by core components made by the platform owner and complemented by applications made by autonomous companies in the periphery." These systems offer a broader range of solutions than the original platform and solve important business problems within an industry or profession.
Successful technology ecosystems make it easy to connect to or build upon for core solutions and future solutions. The core company's solution has limited value when used alone, but substantially increases in value when used with the complementary applications in the ecosystem. It is easy to name some of the well-known companies, like Microsoft, Apple, Thomson Reuters, Wolters Kluwer and Intuit. Android and social media platforms are other examples. There are also other accounting platforms from companies like AccountantsWorld, Intacct, NetSuite and Xero.
What is more difficult and challenging is to name all of the members of their ecosystems. Even more important, which applications work and will they be in business in the future?
Let's start with the challenges and forces that are making ecosystems important. There are both business pressures and IT constraints at play in today's rapidly changing IT environment. Some of the more important business pressures are:
- Shorter change cycles
- Customized products for niche markets
- New, innovative products
On the IT side, some of the constraints are:
- Complex business processes and systems
- Proprietary applications and interfaces
- Budget restrictions focused on maintenance, rather than innovation
From these business pressures and IT constraints come many of the problems that CPA firms are facing:
- Multiple databases with redundant data
- Millions of manual touches in the processes (tax, financial reporting and practice management)
- Hundreds of applications (count how many you have in your firm)
- Multiple vendors and third-party service providers
Business and IT leaders today want to assemble flexible, modular, prebuilt components together into a dynamic IT platform that differentiates their firms from the competition and allows them to operate faster, better, cheaper and easier. This is where selection of the right platform (business process management) solution and ecosystem becomes important and requires different thinking than just a few years ago.
Most people are familiar with the benefits of a modern, integrated back office, but it has been elusive in the client-server environment. The benefits that are most often talked about are:
- Agility - the ability to quickly respond to changing circumstances (scale)
- Differentiation - the ability to deliver timely and higher-valued services
- Insight - the platform supports key analytics and metrics
- Efficiency - the platform maintains or lowers costs while improving client satisfaction
- Transparency - reporting requirements and increased regulations can be handled with less difficulty
- Client service - the ability to provide relevant information at the time and place of the client's choosing
Firm leaders should start thinking about a technology ecosystem that supports rapid change with a high degree of flexibility and adaptability. Technology innovations such as Software-as-a-Service and cloud computing have helped make this concept workable. Firms can now avoid large upfront investments and take a "pay as you go" approach. This approach is modular, so that the acquisition of a new functionality in one area need not cause disruption in another.
Too many current systems are confusing due to the alternative processes built into different applications within a system. A good example in many firms is the storage of dynamic and static documents. Most firms lack consistency in their processes, and therefore do not get the return on investment that they anticipated.
The task of dealing with complex operating and legacy systems may seem daunting. You can simply start the process by convening firm leadership to determine what has changed in the technology landscape and what new options are available.
Core application delays often cause decision-makers to evaluate alternatives. The assessment phase should focus not only on core processes, but also on future services and how to utilize digital data in a more efficient manner. Many firms spend time in low-value aggregation services scanning paper documents with digital information back into their digital systems. These steps can be eliminated with the right platform.
A good place to start is in a firm's back office. The payoff can be huge. Is your existing platform future-ready and capable of playing nicely in today's ecosystem? Are your processes efficient? Is the information timely and relevant? Do you even know and understand what is available and possible? Who will lead this effort? Are they open-minded and willing to change?
Another part of the assessment phase is your own readiness for transformation. You may not have the right skills and personnel to ensure the success of the project.
The ecosystem concept is not difficult to understand, but developing an integrated platform with the desired features and functionality is a challenge for a firm of any size. Most firms have tolerated inefficiency and survived with the force of the spreadsheet and excessive hours. You may have to devote resources to tasks that do seem, at first glance, to not provide direct benefit to clients. Chances are if the changes benefit your firm, they will benefit your clients. Some of the areas of rapid return and time savings are expense reporting, bill payment, document management, project management, workflow, CRM, and financial reporting.
Mobility and operating systems should be part of your consideration in selecting ecosystem applications. The number of Apple devices in the firm continues to grow, so think beyond just Windows. By making the right selections of software, the applications and documents will be available anytime, any place, and on any device.
Five Action Steps
- Convene your accounting firm's leaders and key players to discuss the current and future needs. What are their dangers, opportunities and strengths?
- Align the technology platform with the firm's strategic vision.
- Determine IT governance.
- Develop a roadmap addressing the platform, talent, budget, due dates and responsible parties.
- Firm leadership should communicate the plan to employees, business partners and clients.
Little did we know that a free or inexpensive application on a mobile device would cause us to change our thinking with regard to IT strategy. Often, it is what we don't know that costs us time and money.