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What Could Your Firm Accomplish With Increased IT Investment?



According to Flexera’s 2021 State of Tech Spend Report, financial services firms spend, on average, 10% of their revenue on IT. Among accounting firms, that figure is closer to five or six percent, according to our surveys of Boomer Technology Circles member firms.


Can you increase that number by at least 1% in the next year? I believe it’s not only possible, but it should be the goal of every IT and firm leader.


In this increasingly digital world, every firm leader should recognize the importance of investing in technology. In the past 18 months especially, technology has moved to the forefront of virtually every firm initiative, and firm leaders have recognized that tech is the engine that drives their firms.


In the meantime, we see potential cost-cutting opportunities in other areas because office space spending is down. So what could you accomplish if you had an additional 1% of revenues in your firm’s IT budget? The answers will be unique to each firm, but I can think of a few places many should consider.


Pay off technical debt


Technical debt happens when firms choose to save money in the short term but increase complexity and costs in the long term. Some examples include supporting several versions of desktop accounting software rather than transitioning all clients to a cloud-based solution or using servers or desktop computers that are no longer on support contracts or even skipping the regular refresh cycle to preserve cash.


Taking on technical debt insn’t always a bad decision, but it can hinder a firm’s ability to grow because it has to pay off the debt before being truly innovative. A 1% increase in the IT budget could go a long way towards fixing what’s broken or what has been put off being addressed for too long for many firms.


Prepare to scale


If you want to grow your firm efficiently, you need to take a strategic approach to scaling. Simply trying to hire more people isn’t effective, and it can actually slow you down.


To scale effectively, you need to track performance metrics across the firm to determine how to optimize your operations best. Without these metrics, it’s tough to get a good handle on your firm’s health, which requires understanding the impact of each service the firm offers and how technology and other resources are being used to improve productivity.


Investing in the integration of financial, talent and client data allows firm leaders to see the big picture and also zoom in on certain areas when needed.


Disparate systems limit the type of data your firm can analyze to increase efficiency and improve performance, both of which are crucial for scaling and growth.


Upgrade your team’s quality of life


Technology plays a huge part in how employees feel about their jobs and whether they’re engaged with the firm. This includes everything from the hardware on their desks to the video conferencing tools and other software they interact with every day.


Last year, many people had to use whatever equipment was available to get up and running from a home office as quickly as possible. If you haven’t already, it’s time to replace any makeshift set-ups with higher-quality equipment. For example, if some members are still using old travel monitors, upgrade them to a 34-inch curved display. Or replace paper routing sheets and engagement-tracking spreadsheets with an automated workflow solution.


These can have a big impact on how employees experience their everyday work, and may even influence their decisions on how long they will want to stay with your firm.


Look for competitive advantages


Emerging technologies, including robotic process automation (RPA), data analytics and blockchain, are increasingly accessible to firms of all sizes. If you haven’t yet invested in these technologies, consider allocating some of your increased IT budget here. Many of these technologies can have the dual purpose of creating value for your firm internally as well as being highly sought after new service offerings that your clients will appreciate.


Invest in Innovation

Innovation isn’t something that just happens magically when someone comes up with a new idea. Sustainable innovation is a process and methodology that your firm needs to look at as an opportunity for long term investment. Assigning an innovation leader, dedicating resources to an innovation action committee, and developing a firm-wide culture of innovation are excellent first steps in preparing your firm to adapt for success in our rapidly changing world.


These technologies can help your firm internally and become a service you offer your clients down the road.


IT is the backbone of your firm, and the need to invest in technology to increase and protect your firm’s value is not slowing down. The economy has picked up, and spending on office space is down. Take this opportunity to bolster your IT budget now while you have the resources and put your firm on the path toward greater engagement, future readiness and growth.

 

Do you need help getting firm leaders in alignment on IT strategy?


Boomer Technology Consulting can help you prioritize IT projects and ensure they support the firm’s overall vision and strategic plan. Complete an interest form today to begin fast-tracking your firm’s success.

 

Marc Staut, Shareholder and Chief Innovation & Information Officer at Boomer Consulting, Inc., helps meet the growing needs of CPA firms by leveraging his experience to provide strategic technology assessments, planning, visioning and coaching. He feels that “technology should be an enabler – something that’s approachable, aligned with and integral to the success of each firm.” Marc is a regular speaker, author and panelist on technology in the accounting profession, cloud computing, mobile technology, leadership and vision. 


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