On The Outsourcing Trail

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by Robert W. Scott

Lissa Johnsen believes she knows what CPA firms and their clients want in technology, both in terms of the software needed to run accounting firms and the services that clients demand from them. After all, she’s a CPA who spent 14 years in public accounting.

Johnsen’s firm, Raleigh, N.C.-based Business Technology Solutions, provides technology services to CPA firms, and also helps them provide reselling and technology services to their clients. "We give them the opportunity to have more services than they normally would," says Johnsen.

Partner Insights

Tech Alliance Strengthens Relationships

There’s no doubt in Henry White’s mind that his firm’s technology alliance with Business Technology Solutions benefits both his Raleigh, N.C.-based CPA firm and its clients.

The 31-year-old firm, Stancil & Company, sometimes has clients that need more than QuickBooks and Peachtree. So he introduces Lissa Johnsen’s reselling firm to its clients. "We feel that if we can put them (BTS) in front of people, it strengthens our relationship with the client much more than going in there with something that we don’t have the resources to support," says White, one of four partners in the 23-person firm. The arrangement enables Stancil to concentrate on providing traditional services to closely held family businesses and a concentration of not-for-profit organizations.

The firm entered the relationship just over 19 months ago. Stancil makes joint presentations with the reselling firm. "We stay in the loop throughout the process," he says. "We allow them to go in to assist with the installation and training."

The company has a client services department, which can provide the QuickBooks training and support. But as far as supporting MAS 90 or even BusinessWorks, White notes, "You can’t be everything to everybody."

The CPA connection is very important in developing a partnering program. "I’m very active in the CPA association in North Carolina. I discovered it was a great opportunity for partnering," says Johnsen.

BTS was formed when Johnsen decided to leave the accounting firm of Brown, McLeod, & Johnsen in October 2000 after seven years. The other partners joined Cherry, Bekaert & Holland to pursue traditional services, while Johnsen organized BTS to concentrate on technology services that include reselling. The firm, with twelve people, includes five CPAs, and has annual revenue of $1,275,000. MAS 90 represents about 50 percent of the business, Abra 30 percent, and the rest comes from FAS and BusinessWorks engagements.

The reselling firm concentrates primarily on the market in Eastern North Carolina, with some clients in southern Virginia, South Carolina, and western North Carolina.

Johnsen, who also had a nearly seven-year tenure at Price Waterhouse, has drawn on her CPA connections to develop an alliance program to provide technology services that firms cannot provide for themselves or for their clients.

"They are already busy keeping up with tax law, auditing, and general accounting, and all of a sudden they have to learn a software package," says Johnsen. The other issue driving such arrangements is the increasing sophistication of technology handled by resellers. "Fifteen years ago, you could be a reseller because you could put software on a diskette."

CPA firms are responding to the BTS offer. BTS has signed 34 CPA firms officially and partners less formally with another 15. In fact, Johnsen has a smorgasbord of services. Official partners receive copies of MAS 90 and BusinessWorks, and discounts on training. CPA firms can let BTS represent them as their consulting arm or have BTS perform engagements under its own name. CPAs can bill the clients or let Johnsen’s organization do it. Commissions are legal in North Carolina, where BTS does most of the work, provided firms tell clients that they are receiving commissions. Two firms buy their software from BTS and resell it, but most simply refer the business to the VAR.

Network support for CPA firms is also increasingly part of the BTS service package, particularly for small firms that don’t have complicated networks, but who also don’t have staff. "We can be their outsourced IT department," she notes. Currently four firms use BTS in that way.

Johnsen intends to intensify the effort. She recently hired a staffer with MAS 90 experience, and plans on becoming more active in marketing to and through the CPA alliance network.

There are many people looking to take technology issues off the hands of CPAs, from VARs to classic outsourcers. Increasingly, VARs perform network administration for small firms, and more frequently, are taking the reselling and consulting services off the CPAs’ hands. You could say those are not quite the same, but if you accept the premise that firms must have their own technology to run the firm and provide technology services in order to keep clients, then hooking up with a partner who can sell and install is as important a part of the outsourcing equation as outsourcing network support. More than one person interviewed for this article said that CPA firms that can’t provide technology services, whether through their own staffs or through partners, will lose clients.

A Wide Range

There are many kinds of technology outsourcing, from the giants like Accenture, IBM, and Unisys, that will take over the company’s needs, down to the firm like Johnsen’s that will take over a single LAN. It looks like accounting firms are increasingly seeking ways to solve their technology headaches.

"With Sarbanes-Oxley and all of the negative press about IT, IT has been a tough place to be," says Jennifer Wilson, a partner in Convergence Coaching. "Accountants don’t like to have anything siphoning off profits for long."

Wilson, whose firm provides practice management advice to CPA and reselling firms, sees a viable role for resellers providing services to smaller CPA firms, which often do not have money to employ a network administrator on staff, although it’s something that she doesn’t think has become terribly common.

Wilson has seen the dynamics of the channel-CPA relationship from two points of view. She was a partner at BDO Seidman, and earlier a vice president at the former State of the Art (now Best Software’s Mid-Market Division). Wilson is based in Bellevue, Neb., and provides consulting services, along with Jim Metzler, former partner at Gaines, Metzler, Kriner of Buffalo, N.Y.

"I don’t see a lot of outsourcing. I see a lot of alliance development. I see a lot of non-CPA firms aggressively reaching out to be the technology arm of a CPA practice," says Wilson.

One expert voice supporting outsourcing by firms was Gary Inman, formerly director of information technology for what was then Great Plains. Two years ago, Inman was quoted by the Illinois CPA Society in its Insight Magazine as advising firms with 10 to 100 CPAs to outsource everything that can be outsourced.

Technology Resolutions for 2003

It’s never too late to follow up on your resolutions. L.D. Bean, CFO and COO of the Xcentric Group, an Atlanta-based company that offers technology outsourcing services to CPA firms, provides a list of technology resolutions.

Technology Planning. Build a technology plan to assist in making decisions about hardware, software, and training. Make a fairly specific budget for year one of the plan, and less specific budgets for years two and three.

Networking. Review current network infrastructure and security. A properly configured network can increase productivity in your firm tremendously. Determine if your firm uses the best network solution for the way it does business.

Internal Security. Protect the firm from unauthorized physical access to any technology system that contains vital or confidential information. Develop a security policy including passwords for logging to all systems.

Wireless Technology. Evaluate wireless LANs. They can help increase productivity and decrease costs because you do not have to install wiring. A WFLAN can be constructed and torn down in multiple locations with relative ease.

PDS. Start using them because of their ability to take your calendar, contacts, and email with you. Since they synchronize with your computer, you only have to enter the pertinent information, such as appointments and contacts, once.

Intranets. Implement an Intranet or portal. They can consolidate resources like research Web sites, internal documentation, applications, and databases. A portal or Intranet can provide a standardized interface for workers in the office, at home, or on the road.

CPE. Attend one technology-related CPE course or conference each year. To harness technology, you need to know what is available and how other firms are using it.

Software Licensing.. Verify that software licenses are accurate and up to date. This can cost you money if you are found to have illegal copies. Each year brings more complexity and less flexibility to software licensing.

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