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James Bourke
James Bourke
 

Strategic Technology Spending

Does your firm’s technology allow your staff to service your clients properly, 24/7, anywhere/anytime, in a more productive and profitable way than using manual tools?

February 22, 2010
by James Bourke, CPA.CITP

How does your firm view technology? If you are like most, you continually struggle to obtain benchmark information to use as a sanity check to ensure that your spending is in line with your peers. If that is your view, I challenge you to take a hard look at your technology and ask yourself the following question: “Is the technology deployed within my firm allowing my staff to properly service the firm’s clients, 24/7, anywhere/anytime, in a manner which is more productive and more profitable than utilizing manual tools?” If the answer to that question is “Yes” then forget benchmarking, since you are viewing technology as a “strategic asset.” This method allows you to focus on the big picture of managing your practice versus micromanaging specific line items on the Profit and Loss (P&L) statement. 
 
I am not an advocate for taking your firm to the bleeding edge, spending on all of the latest and greatest technologies to hit the shelf. Instead a firm that is near cutting edge on technology deployment is putting the right tools into the hands of their staff to properly and cost-effectively serve their clients.

CPA firms seeking to obtain internal technology benchmark information should be extremely careful. The biggest flaw with most is that they don’t truly compare the actual components of your firm’s technology spending to the subject group. Firms differ in how and what they report. Examples of discrepancies in various firm’s reporting include:

  • Placing all disbursements for hardware (including laptops, desktops, printers, etc.) in a firm’s technology spending budget.
  • Placing only items that hit a firm’s P&L.
  • Adding depreciation on hardware and amortization on software.
  • Adding wide area networking (WAN) costs in technology, while some will include it in telephone.
  • Adding the cost of BlackBerrys and other smartphones and PDAs in their technology budget.
  • Adding the cost of BlackBerrys and other smartphones and PDAs in telephone.
  • Adding the cost of mobile phone data and communications in technology.
  • Placing the cost of mobile phone data and communications it in telephone.
  • Adding the cost of internal technology personnel in technology.
  • Adding the cost of internal technology personnel in technology in labor.
  • Adding the costs of health insurance and pension expense for internal technology personnel in technology.
  • Adding the costs of health insurance and pension expense for internal technology personnel in employee benefits.

As you can see, unless everyone participating in the survey is on the same page and abides by the same definition on what should be included in “technology,” the end result can be misleading and result in a cut in your technology spending when no cut should be warranted.

Another good sounding block to use is to bring in an expert or participate in a small circle of firms that share technology spending (and other firm metrics).

If you choose the expert route, make sure you or your firm verify[ies] their credentials and that they understand your industry and the technologies that you deploy. A CPA who has been immersed in the technology aspect of the profession for a number of years and has consulted with other firms on the same topic would be your best choice.

If you choose to participate in a close circle group of firms and share certain financial metrics, it would be best to choose from one of the existing groups that focus on CPA firms. Before participating in the group, make sure the discussion leader is a recognized expert in the CPA industry and consult with the firms that participate to make sure the group is right for you.

I started this story by asking a question:

“Is the technology deployed within my firm allowing my staff to properly service the firm’s clients, 24/7, anywhere/anytime, in a manner which is more productive and more profitable than utilizing manual tools?”

If the answer is no here’s a list of some of the technologies deployed by some of the nation’s leading accounting firms (both large and small) that are giving them a competitive edge in their marketplace:

  • The utilization of client portals to both send and receive private and confidential data between client and firm.
  • The utilization of a document management application to store all client and firm specific documents electronically and securely.
  • The deployment of BlackBerrys and similar devices that allow partners and staff to respond to clients and co-workers instantaneously when required. Many of the firms that are leading edge in this area have made the decision to deploy these devices to all staff with client contact. Since the device can be secured for little or no up-front cost in return for entering into a one- to two-year contract with the wireless carrier, the monthly usage/data fees pale in comparison to the productivity gains and potential billings by the partners and staff.
  • The utilization of a virtual private network (VPN) to access client data and resources that may currently reside behind the firewall of the firm.
  • The utilization of Web-based, Software-as-a-Service (SaaS) and/or cloud computing applications within the practice. These would include practice management, tax preparation, engagement management, client specific accounting, document management, etc.
  • The use of dual monitors for all staff (professional and administrative).
  • The use of personal scanners deployed on every desk within the firm.
  • The use of laptops vs. desktops for all staff (professional and administrative)

The above list is by no means complete or all inclusive, but simply a guide to help get your firm pointed in the right direction. If your firm is not currently utilizing some of the above technologies, chances are, your technology spending is probably a little light.

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James C. Bourke, CPA.CITP, CFF, is director of firm technology at WithumSmith+Brown. He is a past president of the New Jersey Society of CPAs and currently serves on AICPA Council and the chair of the AICPA CITP Credential Committee. He was recently named one of the Top 100 Most Influential People in the Profession.