The IT-CPA Relationship

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By Robert W. Scott

A few years ago, when ITA president Ron Eagle was still heading a technology consulting practice for the firm then known as Geo. S. Olive, an industrial psychologist profiled Eagle.

Eagle recalls the results cast doubts on Eagle’s role within the CPA firm. "He said, 'Ron, I don’t know how you do it. Your personality is 180 degrees different than an audit partner. You are a risk taker; you are confrontational. CPAs are trained to be careful, safe, and backward oriented.’"

Partner Insights

That may sum up the problems facing IT technologists in CPA firms, whether they are CPAs, or non-CPAs like Eagle. In fact, it may explain the road that Eagle and the Information Technology Alliance have taken. The official view is that technology is part of the profession’s vision. But the visions of traditional CPAs and IT consultants often collide, both in terms of business operations and in temperament.

Five years ago, Eagle was president of ITA, trying to give the organization a change of direction from its roots as Acute, the Accountants Users Technology Exchange, a group that was originally CPAs who used IBM PCs.

This year, Eagle, once again president of ITA, is trying to put together the organization again after it spent two years as a membership division within the American Institute of CPAs. Why didn’t the relationship work and does the separation have anything to say about how technologists fit with CPAs within firms and within professional organizations?

The official reason that the relationship dissolved was that after the defeat of the global credential, the AICPA needed to concentrate on CPA programs, not those that appealed to non-CPAs. ITA was trying to broaden its membership by appealing to more non-CPAs, Eagle says. But he notes that there were differences in outlook.

"The Institute thinks in much longer time periods in getting things done than we do as an organization and longer than IT usually does," says Eagle.

Technology and CPAs are supposed to be a good fit. But finding out how the fit works has often been a problem.

"I’m a CPA and what I do well is some of this accounting and finance stuff. My clients are coming to me for this technology because it’s everywhere," says Eagle, summarizing the problem. But it’s clear that the role of the CPA profession is up in the air and that the role technologists play within firms is also undecided.

"I think the whole deal with Enron continues to segment the profession," says James Metzler, chairman of the AICPA’s technology committee. For 24 years, Metzler was also a partner with the Buffalo, N.Y.-based firm of Gaines, Metzler & Kriner, and the chairman of its technology consulting arm, Gemko Information Group. Metzler believes the problems facing CPA IT consulting practices involve all CPA niches.

"It doesn’t matter if it’s IT. It doesn’t matter if it’s investment planning," says Metzler. In fact, Metzler sees the AICPA needing to play a role in figuring out how to facilitate the integration of niche practices. "The AICPA will put together a set of disciplines that will make the firms be able to run a cross-disciplinary practice," says Metzler

Louis Matherne, director of assurance programs at the AICPA, agrees that how niches such as IT fit into firms is in a state of flux.

"I do think with all the changes going on, that business models for things will continue to need to be worked out," says Matherne, who as director of information technology until his title changed last year, was instrumental in bringing ITA into the AICPA two years ago. In fact, many of the AICPA’s technology initiatives occurred under his tenure, including the Certified Information Technology Professional credential. Many had hoped that CITP would be opened up to non-CPAs.

Matherne says the AICPA remains committed to supporting IT consulting within the CPA profession. He notes the AICPA is an alliance member of the ITA. As to the reasons for the split, "The AICPA is focusing its resources on its CPA membership," says Matherne. "The ITA will serve both the CPA and the non-CPA."

He acknowledges the tensions between IT and traditional services. But asked whether the problem might be the form of the CPA firm itself, Matherne responded, "I don’t have an answer to that."

Metzler believes that the AICPA should concentrate on the "transformation change area," an approach that is used by Convergence Coaching, the organization to which he will now devote his time. That approach, he continues, will help crumble the walls between various niches.

"Let’s suppose the AICPA will put together a set of disciplines that will make the firm be able to run a multi-disciplinary practice," says Metzler. "I think you will see an increase in business."

But it was Metzler, through Gemko, who years ago espoused the concept of sheltering the IT consultant from the CPA mentality through operations that would be owned, but not necessarily identified with the CPA firm.

"I’ve been a proponent of getting [the IT practice] away from the CPA brand," says Metzler. He notes a separate IT brand enables firms to bring non-CPA shareholders on board "and build a brand for the wider market."

However, while he acknowledges CPAs and IT consultants at many firms are separating, it doesn’t have to be that way. Both Metzler and Eagle point to Clifton Gunderson as a place that shows the parties can live together.

Perhaps, not coincidentally, two of the leaders in the firm’s IT area are Matt Camden, director of technology consulting, also an ITA director and former chairman, and Mickey Scheffki, CG’s director of technology consulting, and also ITA’s treasurer.

The CG Way

CG not only is not splitting off its technology practice--it has been buying VARs to expand its reselling business. In the last six months, it bought Telesis, an MAS 90 VAR in Colorado, and two reselling firms in Arizona.

"Maybe we are the exception to the rule," says Scheffki. "We consider technology to be a core service we deliver to our clients. There are still IT consultants who believe a CPA firm is a good place to be."

CG plans to continue growing IT to at least 10 percent of revenue. The total is probably at 8 or 9 percent currently and Scheffki says the firm hopes to achieve its goal next year. The CPA firm, the nation’s thirteenth largest, now employs 125 in IT consulting alone.

Scheffki says that a CPA firm has a lot to offer IT consultants, particularly "the stability," says Scheffki. While many VARs have struggled, let alone attempting to grow, "with the market the way it us, you’ve got to be able to have the infrastructure around you to support you in the downtime," she says.

One thing stands out about CG in contrast to many smaller CPA firms. While many IT operations serve a radically different client base than is served by traditional services, CG prides itself on cross-selling.

"IT consulting kind of grew up in the firm," says Scheffki. "It’s not until the last year we’ve gone out to try to find different clients."

Groups at CG work together in engagements. Perhaps most important to getting the different practice units to work together is that they get rewarded financially for the effort. Partners who refer business to the IT side get "a significant part of the revenue stream," says Camden.

The firm also ensures that everyone gets the message about the importance of IT. Camden reports to the CEO. Attention from top management is considered critical in making consulting work within the CPA firm. In fact, one of Metzler’s principle’s is having a CPA-partners as champion for the IT operation.

Different Scope

For many small firms, the relationship between IT consulting and traditional services is a lot different, and IT groups continue to develop separate identities.

Consider Simon, Master & Sidlow, with its stronghold in the Philadelphia and Wilmington, Del., area. Just over a year ago, the firm placed its consulting and reselling operations under Intellitec Solutions, a technology subsidiary, after more than 16 years of operating a consulting and reselling business.

Among the factors influencing the decision was the size of clients, says partner Rick Sommer. Software clients are simply bigger than many of the firm’s clients for tax and accounting services. Intellitec, formerly the firm’s Information Technology Division, has sold Great Plains and Solomon accounting software to those accounting clients for whom the packages are appropriate. In fact, the firm had ranked among the top 10 Solomon resellers after it took on that line in 1995.

"But many of the firm’s clients would not be a fit for the size and scale of the products we are exploring," says Sommer. Many software clients are likely to use a national accounting firm for traditional services.

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