Who owns a Practice Management system?
There are two issues with the question above. What is the definition of a Practice Management system and who does the ‘who’ refer to - the accounting firm or persons within the firm? The term ‘Practice Management system’ has been around for over 30 years; look for a definition and you will find many answers, but no two will be quite the same. The aim of this article is to try and make a clear definition of what a Practice Management system is today and offer some advice on who within a firm should be responsible for it – once we know what ‘it’ is.
Defining Practice Management software in 2018
What constitutes a Practice Management system is tricky to define - it is a moving target. What might have been labelled a Practice Management system 10 or more years ago would not qualify as one in many people’s eyes today.
Back in the day, a system that attempted better reporting than was strictly necessary for a time and billing system called itself a Practice Management system. The reporting often was better, with improved reporting possible through holding extra dimensions on the client record such as ‘office’, which was a step up from trying to hold the office location cryptically within the client code. From the late 90’s as systems moved across to MS SQL databases the situation improved again. Vendors of some older systems did move their database format to SQL but they did not, however, redesign their structure to take advantage of all that SQL could offer in terms of performance or reporting. Systems like these are still in widespread use today, 20 or more years since their first inception. They may have had a face-lift in the interim, but peel back the layers and it is something instantly familiar to people last touched those systems before the Millennium. New vendors did emerge who could take better advantage of SQL because they had no legacy system data structure to maintain. However, their world was time and billing centric and not all of them have had the ambition or resources since to go beyond that.
At the same time that ‘ERP’ systems were becoming established in large organisations, more forward looking accounting firms began to realise that if one system could replace what two, three or more disparate systems were currently doing, they too would be able to operate more efficiently and possibly reduce system costs at the same time. The age of the ‘mini ERP’ Practice Management system was born. Today Practice Management systems exist that look to address multiple key areas for accounting firms, combining engagement budgets and schedules, due dates, even CRM and of course time and billing into a single system, and I would argue that only systems that attempt to meet this higher ambition should today be labelled as ‘Practice Management’ systems, where they are really trying to help you ‘manage the practice’ and not just ‘manage better time and billing’.
But a question that firms then face when they decide they want to go for a more holistic Practice Management system is ‘who should be responsible for it’? Time and Billing systems were usually the responsibility of the Finance team, but when time and billing is just one element within a bigger picture, should Finance still have that responsibility?
With ‘mini ERP’ Practice Management, firms where separate teams have been responsible for scheduling, due dates, CRM etc. now have to share a single system with finance. These teams have different responsibilities and objectives; how are their combined needs to be met? For example, finance may not have seen a need for year specific engagements for work like tax returns and audits, but year specific engagement records are vital for those concerned with scheduling staff and managing due dates. For reasons like this it is crucial when implementing a cross discipline Practice Management system that right from the initial selection process all interested parties should be consulted and represented on the project team as a single ‘joined up’ solution needs to be arrived at. Experienced vendors should be able to offer plenty of insight, but ultimately the decisions have to be made by the firm. The combined system then has to become the single ‘place of truth’ for all. Failure to achieve this means you will fall short of your original objectives.
But who sits in the chair as ‘Project Sponsor’? This often divides down the reporting lines established by the firm’s executive. For some firms this means that a system as key as ERP Practice Management is the responsibility of IT. More so if the system is to be hosted on equipment they are responsible for. Where this occurs, the key thing is for IT to have close liaison with the stakeholders in time and billing, due dates etc. and to keep them informed of new features in later releases of the software, as the relevance and value of these to the firm can often be more fully assessed by those using the system day in, day out.
If Finance remain the primary owners, then they have the same responsibility to communicate with others and this includes IT, who will need to be more actively involved when there is a significant technology impact, such as making sure security issues are addressed when wanting to add native mobile applications (e.g. for time and expense entry) as part of the overall Practice Management solution.
At one of our Star User Group meetings last year we undertook a short poll with those attending, including asking them their role in their firm. 40% were IT and 40% were finance, reflecting the historical roles these departments have played, and 20% were ‘Operations’.