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This month, Terry explores the trend of CPAs moving, or considering the move into technology consulting, as well as why some top VARs have not yet expanded their offerings.
What is some of the key advice can you offer the increasing amount of CPA firms that are getting into, or back into, technology consulting?
Petrzelka: I think the phrase “We are not in Kansas anymore” might be the right phrase to use to describe how this segment of the market has changed over the past three to seven years. In my mind, there are three things CPA firms need to be mindful of if they are moving in this direction.
Firms need to stay true to their roots. That is, understand what industry or industries the firm is strong in and make sure to set up their technology practice to align with the industry/industries focus of their CPA firm. This will only make their firm stronger in the market with companies in that industry niche, but also allow them to leverage all aspects of their entire firm.
As they re-enter and if they are going to focus on ERP platforms make sure the publisher that they align with and build their practice around is a leader in that industry – where the publisher along with ISV solutions drive key, quick success returns on investment.
Make sure you understand clearly the publisher of choices direction on providing TRUE cloud solutions… not pseudo cloud solutions, but truly multi-tenant solutions as part of the near and long term product strategy
To expand on the above, why do you think this trend is happening?
Petrzelka: There are two simple reasons: grow and protect.
First, the grow part. CPA firms must find a way to expand their business and grow their business with their existing base and technology offers them an avenue to do just that. Plus, almost all mid-market to upper mid-market companies have held off as long as they could to invest in any technology upgrades to their business – even some from the Y2K timeframe.
Because of the exponential use of technology to accelerate the competitiveness of businesses, there is no longer a chance to sit it out and wait. Companies are making the move and update their technical solutions, their technical business infrastructure. Since most companies feel safe and cared for by their CPA firm, it is a logical next move for the company to trust their CPA firm to assist them in any technology planning and evolution of use of technology in their updated business model.
With successes with their existing client base, then CPA firms with a strong, well branded technology arm can not only use their CPA branding but their technology branding to go after new clients with a much broader set of services [door openers] to acquire new clients as well.
Finally, the protect part. The protect reason is that on the flipside if a CPA firm – call it Firm A – does not have a technology practice and another CPA firm – call it Firm B – does and Firm B finds their way to convince a client of Firm A that their technology solution is right for the business, well guess what? As the new Firm B technology solution is successfully delivered to this client, the doors now open for Firm B to openly have discussions related to the benefits of moving all of the company’s business to a one-stop shop firm to support them – that being Firm B.
There are some reseller/VAR firms – especially in the top 100 -- that have yet opted to expand any services or add new products. Why is that and what advice can you offer there?
Petrzelka: In my mind there are four main reasons why this is happening:
1. To pick up a new ERP publisher or a significant new product other than ERP adds a tremendous cost burden on the partner – major investments of people, time and energy. And at this time, even though there is a lot of technology being inserted into businesses, the reality is that most partners are struggling to make money on a monthly/quarterly basis, especially not enough money to support a major investment into any new product or service. One last point, even though publishers want partners to pick up more of their offerings, the publishers, themselves, are impacting the ‘making money’ formula because of the publishers ever increasing demands on partners to sell more to earn the same. So, how can the partner invest? That is tough.
2. Some have tried to expand by what I call dabbling with adding new services/new products. They decided to enter the game by being opportunistic versus being strategic in their plan and their approach. So, they set out on a plan to go fishing instead of moving out with a full commitment, a full vision and the appropriate measures to judge success and progress. They spent – really threw away – bottom line profits foolishly, and they were burnt by this approach, some really badly therefore they are not going to do that again.
3. Most channel partners have been horizontal partners delivering across an array of industries and used their quality service and keen project management to brand themselves and gain the market recognition and successes of the past and today. So, with the changing market to be more solution driven, solutions for industries, partners have to retool their technical skill base, their consultancy foundation before they can invest in the right product that will fit their newly found, industry-driven partner business. This holds true as well as future clients/prospects desire one partner that not only knows the industry, the industrial strength consultancy staff, but also has in-house the infrastructure skills and capability to deliver the entire enterprise solution -- not just the ERP solution.
4. The last reason might be that partners do not want their big brother -- their main ERP publisher -- to know. With all of the changes happening in the major ERP publishers channel programs, the channel partner just does not want the publisher to know until they are fully ready to go to market. They do not want to burn any bridges earlier than necessary. So, silence does not mean they are not doing it, it means they do not want anyone to know what they are at this time.
My advice is that partners need to look within their major asset – their installed base. They need to fully understand their clients’ needs and requirements for new products that augment their ERP and new services that can deliver value-added consultancy services to accelerate the growth and profitability of their client base. This approach where partners focus on their top clients allows the partner to learn from their base and gather the necessary information to wisely make investment decisions on what the next strategic investment needs to be to both add value to clients but also how to accelerate the success of their business.
Plus, the partner can utilize their installed base to gain the experience, prove the value and establish a solid reference base for future growth and expansion. Once established, the partner can head out and utilize this new product/service offering as a means to capture new clients as a result of this new line of business and it opens up new opportunities for their well-established set of products and services.
Got a question or concern Terry can address? Send it to firstname.lastname@example.org for our next column.