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The Boomer Bulletin - 2009
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Technology & Growth

Posted By L. Gary Boomer, Tuesday, November 24, 2009

Is your firm’s technology limiting its growth? Do you continue to invest in the same technology year after year, or is your firm integrating back office operations at the same time it’s investing in new integrated core production applications such as tax return preparation and financial reporting?

Notice that I use the term integration. There has been confusion among many in the accounting industry regarding the difference between linking applications and integrating applications. Linking allows data to transfer from one application to another, and it is generally a one-way link. Integration is more robust and allows applications to share data stored in one or more databases. Most firms still have far too many databases and spend an inordinate amount of time reconciling data.

An overview

The following graphic illustrates core production and management applications that firms are using today. Some firms have chosen to go with applications from one vendor (suite), while others purchase multiple applications from different vendors and expect their IT departments to integrate them. While we see both strategies work, it may be what you don’t know you don’t know that is limiting your growth and profitability.


Breaking down the investment

Where you spend your IT dollars is as important as how much you spend. According to Forrester research, companies that spend 40 percent of their IT budgets on new and innovative technologies get the greatest returns. Firms that spend only spend 15 percent of their budgets (an average amount) on innovative technologies get the poorest value. Sadly, we see this often in firms. Buying new hardware and updating tax software is not innovative. Examples of genuine innovation include digital content management, portals, email management and training.

Get positioned for the future

It is important to segregate production from management. Most firm’s management systems are lacking. Many believe that a time and billing system is a management system, but it is only one component and, for the most part, is being misused for pricing.

The saying, "the shoemaker’s kids have no shoes” often applies to accounting firms. Their back office systems generally do not integrate and often involve multiple databases, many of which won’t communicate with other applications. This arrangement requires an inordinate amount of reconciliation and reporting using spreadsheets rather than with business intelligence tools built directly into the integrated systems. The following questions may assist you in determining how well your firm is positioned for the future.

Back Office

  1. Does your time and billing system integrate with the general ledger, payroll, receivables and payables?
  2. Do you utilize spreadsheets to produce management reports?
  3. Are your financial statements timely and accurate?
  4. Do you utilize a scheduling and workflow application that integrates with client and employee data?


  1. Do you produce financial statements from Microsoft Word and Excel?
  2. Does your system provide check-in/check-out and version controls?
  3. Does your system efficiently manage email and protect the firm?
  4. Can you access client data 24/7?
  5. Can clients access their data 24/7?
  6. Do you utilize data extraction and analysis tools? Are they integrated with your work paper content manager?
  7. Have you defined, documented and named your key processes?
  8. Do you provide adequate training to all employees including partners?

Your back office: Left behind?

The back office may be limiting your growth, yet very few firms have concentrated resources toward improving the integration and management systems. Frankly, many partners resist being managed and held accountable; therefore, limited resources are allocated to back office systems.

Most are tied together with journal entries, and reporting is done with manually prepared spreadsheets. If this sounds like your firm, I suggest you step back and develop a back office integration strategy that allows the firm to:

  1. Use business intelligence tools for reporting and holding people accountable.
  2. Integrate client and employee data for scheduling and workflow.
  3. Automate expense reporting and bill payment.
  4. Utilize electronic billing and Automatic Clearing House for client payments. (Improve cash flows and collections.)

Increased productivity is not a dream

The production side includes content management that has expanded from a simple paperless objective to one that includes scanning & digital documents, managing dynamic and static documents, email, knowledge management, engagement management and portals. Few firms currently have their arms totally around all of the requirements. The largest firms are struggling with change management, politics, and a departmental rather than a firm perspective.

Firms that solve their content management issues will increase their capacities to grow, retain and attract quality people as well as improve client services through the use of self-service portals. As in the banking industry, there were those who resisted and early adopters.

The only difference is that technology has been available for over ten years to the accounting profession, but many firms have resisted because their processes were not well documented and, until recently, there was an adequate supply of labor. Today there is a shortage of labor, and in order to compete in a commoditized market firms are forced to look to technology as the accelerator.

If you feel your firm is not leveraging technology to its potential, you might try the following:

  1. Diagram your systems, including applications, vendors, databases, responsible parties and integration capabilities.
  2. Utilize someone outside of the processes to facilitate the review of the processes for redundancy, loops, and unnecessary reconciliations.
  3. Evaluate your personnel to see if they are capable of getting you to the next level. (The back office requirements are different in a $5M firm than in a $1M. While firms often grow, their back office staffs often do not.)
  4. Develop an integration strategy that includes core applications, back office, and the Internet.
  5. Develop a budget and timeline with buy-in from partners, managers, and staff.

What’s getting in the way?

Why are these initiatives so difficult for firms to accomplish? First, the typical firm has over 50 applications running on its servers. Why? Because of industry diversification and multiple versions associated with many applications such as QuickBooks and tax software.

Another reason is that many end users, especially partners, are weak links in the process chain. Since they don’t understand the system very well, they propagate the use of both paper and digital systems. This arrangement is expensive and redundant. A training and learning culture coupled with state of the art technology and process innovation are key.

Many firms are spending close to necessary on hardware and software. With a slight increase, they could significantly improve integration. It is an easy decision to hire another accountant or manager, but it is a difficult decision to increase the technology budget by the same amount as the investment in 1-2-5 additional people.

This is where charge hours often get in the way of good business decisions. Another missing link is the re-engineering of processes to take advantage technological capabilities.

Integration empowers firms to establish and automate processes, from client acceptance and establishment of client files to work papers, billings and a portal. In defense of firm management, a totally integrated system (production and back office) has not been available off the shelf.

Firms that have excelled in this area have had great leadership, innovation and technology skills to integrate their existing applications though Web based applications. These firms also view technology as a strategic asset rather than overhead. They have developed a technology team that consists of the following skills:

  • Engineering & IT skills
  • Communications
  • Budgeting and cash flow
  • Project management
  • Human resources
  • Business savvy
  • Training

Because one IT person generally doesn’t possess all of these skills, firms are sourcing parts of their IT department to vendors.

Technology is a strategic asset if managed properly. It takes planning, people and processes. Will it hold your firm back, or will you make the necessary investments in innovative technology to allow your firm to grow?

Tags:  IT planning  L. Gary Boomer 

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