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Fast Tracking Your CAAS Transformation

by Roman H. Kepczyk, CPA.CITP, LSS BB

The transformation of traditional compliance services to full-fledged Client Accounting and Advisory Services (CAAS) continues to be one of the hottest topics being discussed in our firms today, but not everyone is on the same page as to what “Advisory” means. To get everyone driving the firm’s advisory efforts in the same direction takes a conscientious effort on everyone’s part and a standardized game plan that everyone can follow. Below we summarize key components from our client advisory whitepaper: “8 Steps to CAAS Practice Transformation,” to ensure you have a comprehensive plan.

Why Advisory? Firm owners need to first understand the business and technological factors driving the profession towards advisory services. Significant increases in Internet accessibility, more powerful computing power, and increasingly less expensive data storage have led to the development of cloud-based business applications that disintermediate traditional compliance services by automatically integrating data in real-time to support faster and more accurate decision making. Sage firms have taken advantage of these digital ecosystems (often referred to as the technology stack or “Tech Stack”) to identify opportunities to help clients grow their businesses, make more timely decisions, and save money, which is the core of the advisory practice. Big Four Accounting Firms, Silicon Valley Start-ups, and advanced accounting services firms have jumped onto these technologies to provide entry-level bookkeeping services targeted specifically to entice your clients so they can upsell more lucrative advisory services.

Getting Owners Onboard: Firm leadership must agree on the firm’s advisory strategy and rebuild the firm in that vision in such a way that all owners support it moving ahead. This means having frank discussions on how to structure the firm for a successful transformation. Legacy compensation systems that favor individual performance or book of business management over firm performance and growth will get in the way and need to be addressed immediately. Firms also need to address individuals that are hesitant or incapable of making the transformation, and specifically for those that are close to retirement and whose compensation could be negatively impacted with these changes. With technological change happening at an increasingly faster pace, the firm’s progress will be held back by resistive owners, so it is imperative to get everyone onboard.

Knowing Where to Start: The best place to start is where you already have success! Whether tracked as accounting or advisory services, the firm has already helped clients solve business problems and is targeting niches that the firm has many clients in, which is one of the first places to look. Firms should pull together niche teams and discuss specific opportunities to help automate those clients’ business information systems and document how your knowledge and previously successful advisory engagements can be applied to other similar clients.

Build the CAAS Team: It is near impossible for any one person to keep up with and be good at all the technical, project management, consulting, and marketing skills required to build an advisory practice, so it is important to identify individual skills which can be shared and leveraged within the practice. Most niche leaders have worked with clients so long that they instinctively apply advisory skills without thinking about it. To help others get onboard quickly, the firm should proactively adopt a structured consulting approach that allows team members to acquire inquiry/listening skills as well as facilitation skills which can be reinforced by formally debriefing advisory engagements with the leader following completion. Marketing advisory services internally with firm members by sharing success stories is as important as marketing externally to existing clients and prospects to grow an advisory practice within the firm.

Build the Tech Stack: Success promulgated by advisory services will be supported by validation from the client’s business information systems, which in most cases is built upon their accounting application (QuickBooks, Sage, Xero, etc.). While many firms created spreadsheets to analyze data in the past, today’s tech stack utilizes APIs (application program interfaces) and machine learning (fancy word for macros) to integrate ancillary business information sources such as accounts payable, accounts receivable, payroll, inventory, banking, etc., so the data interchanges with the accounting application in real-time or on a scheduled basis. Firms should then utilize a data visualization tool to create business information dashboards that allow clients to “see” their key performance metrics in real time rather than waiting for traditional after the fact month-end reporting, which is representative of traditional compliance practices and reporting. While Tableau and Domo are outstanding data visualization tools utilized within the “FinTech” marketplace, we believe the integration of Microsoft’s Power BI (Business Intelligence) with the rest of the Microsoft 365 suite gives it the best potential looking ahead.

Famous Person = Advisory Success: Being identified as one of the top experts in a particular advisory area will put your firm on the fast track to success, which is why we recommend every firm designate a “famous person” to be the face of a particular niche or industry segment. How do you develop a famous person? You let the industry segment know by providing articles or blogs in that segment’s publications, by interpreting surveys with important segment statistics, and by speaking at industry events (or at least participating on panel discussions and webinars). Analyzing, writing, and speaking about specific niche trends forces the deliverer to crystallize their thoughts in an organized fashion that can be further used to educate clients, prospects, and internal firm personnel.

Measuring Advisory Growth: “What gets measured gets done.” To grow advisory services, it is important to review the firm’s engagement work codes so you can properly identify advisory projects and track profitability. Having the firm agree upon key performance indicators and growth targets (i.e., 10%-20% year over year growth) will position the firm for advisory success.

Competition? Your Clients are Your Advantage: The technology industry and the profession’s CAAS transformation has created a very competitive environment and some of the automation factories including Botkeeper, Pilot and Bench have created tech stacks that allow them to offer accounting services cheaper than that charged for these services by traditional compliance firms. The good news is that firms can quickly ramp up their knowledge of these tools and build their own tech stack customized to the needs of their clients or to “white label” them with a provider. The better news is that your firm has a competitive advantage in that you already have a relationship with clients that trust you and want advisory services to help them run their own businesses more effectively. All you need to do is deliver them!

Transforming your firm’s service focus from compliance to advisory is being seen by many as the future of the accounting profession and warrants serious discussion within the firm. Putting together a comprehensive CAAS transformation plan supported by all firm members will ensure success and help you fast track your progress!

Roman H. Kepczyk, CPA.CITP, CGMA is Director of Firm Technology Strategy for Right Networks and partners exclusively with accounting firms on production automation, application optimization and practice transformation. He has been consistently listed as one of INSIDE Public Accounting’s Most Recommended Consultants, Accounting Today’s Top 100 Most Influential People, and CPA Practice Advisor’s Top Thought Leaders. He will be presenting his Building a CAAS Practice webinar to Boomer Consulting circles on December 2, 2021 – register today!


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