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Enjoying Life on the Web?

The Internet is emerging as a tool accountants are taking seriously

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The slogan on the long-sleeved, dark blue shirt is from another era: "Visions 2000. Leading the E-Business Revolution." It was a period of optimism about the Internet, in this case from Sage Software. At the same time, a company then known as Great Plains marketed a product called eEnterprise. That company introduced the discussion of its product line in the 2000 annual report with this phrase: "Great Plains provides e-business solutions that interconnect business communities." It boasted of the percentage of its products that had Internet capabilities.

Then came the dot-com implosion.

The Sage Software reseller conference, "Visions," was renamed "Insights" and the prominent discussion of e-business is years past. Great Plains disappeared into Microsoft in 2001, and the name eEnterprise merged back into the Dynamics product line. The dot comers went back to real jobs with visions of lost stock options dancing in their heads.

But in the last year or so, things have changed. Accounting professionals have discovered the Internet. No one is claiming we are on the verge of mass adoption in this community. But they have gained widespread acceptance as products to be factored into purchasing decisions.

At November's Creative Solutions users conference, the Internet "was what everybody was talking about, but instead of hypothetically, they were telling each other that it would be ridiculous not to do it," says Teresa Mackintosh, CSI's vice president of marketing. It was a totally different story from 2004.

In November alone, CSI saw a 30 percent increase in the number of users of its Virtual Office, an application-hosting environment. There has been a 50 percent increase over the last year. The story is the same for others. The use of TurboTax Online has jumped dramatically this season. The amount of revenue for Internet products for Wolters Kluwer, parent to CCH, has doubled to 20 percent of the total in five years.

Several converging trends have fueled interest in the Internet:

* Document management

* Collaboration

* Remote access

* Disaster recovery

The first three are intricately related since a lot of the work of tax and accounting professionals involves documents that more than one person need to access, which means they are often working at different locations.

Storm Warning

The last hurricane season, which exhausted the usual selection of people's names and letters of the Greek alphabet to name storms, also has triggered more interest in the Internet.

In fact, the Internet has changed the formula for disaster planning and recovery. When Hurricane Katrina destroyed much of the communications infrastructure in New Orleans, the Internet remained up when cell phones went down, that is if you had a back-up electrical supply.

"What we have seen is a huge up-tick in demand from companies that were putting off purchases," says Richard Heitman, director of product management and product marketing for eVault, an Emeryville, Calif.-based company that markets Internet-based back-up systems.

Heitman rattles off the usual problems with back up: the person who is responsible for making back-up tapes does so only as a part-time duty, and often forgets. Tapes fail or not all the critical data is backed up. The building floods and the back-up tape is destroyed when the water rises.

Besides that, regulatory requirements will mean that having good back-ups is mandatory. It's going to be part of due diligence.

"Tape is going to go away," says Heitman.

The advantage of the online service is that the data is already dispersed to other sites so that one storm doesn't knock out data at multiple cites that devastate a region. EVault has seven data centers and its vault centers are backed up.

The company's system not only backs up the data, but also tells the customer which back-ups have been successful and which failed. The latter is something that businesses often learn only when they need data that hasn't been saved.

Another major advantage of these systems, says Heitman, is that they alleviate the need for the firms to have the expertise to perform back ups and testing. A piece of software is installed at the client site, which compresses and encrypts files, and transmits them to the company's computers "where they stay encrypted," he says.

A small company can purchase eVault's services starting at about $85, depending on the amount of data. That can rise to thousands of dollars a month.

Other factors include speed and the perceived dependability of the Web.

"I think the dependability of the Web has become a non-issue," says Tom Davis, a sole proprietor based in Valdosta, Ga. He believes that the experience that accountants have had with Internet-based tax research has helped them become accustomed to using electronic services.

"I can't imagine that folks are still buying CDs," Davis comments.

Speed is also quickly becoming a non-issue. Davis notes that as applications increasingly operate as fast over the Web as they do on servers in the office, they have become more accepted. While broadband has been available in major metropolitan areas, there have been large parts of the country where it has not, notes Mackintosh. Now wired and wireless-Internet access are becoming rapidly available.

Most of those interviewed agreed that the move to the Web is being led by multi-office firms, for whom the Internet increasingly is a way to tie offices together.

Web-based applications are also proving to be a way to increase productivity and billable time, says Jim Bourke, director of IT for Red Bank, N.J.-based WithumSmith & Brown.

"My philosophy has been to migrate as much of our client data as possible to a Web-based model," says Bourke.

In particular, he points to the benefits of Internet-based tax preparation, still not in use at most firms. However, Bourke is enthusiastic about RIA's GoSystem RS for tax preparation, because data is always available to preparers.

"I tell the staff 'there are no more snow days,'" says Bourke. "When we had snow days, we would lose productivity for eight hours a day for every person."

Also, much of the firm's professional staff is out of the office and Bourke wants to keep them there doing work, not spending time driving back to the office to prepare reports. Completing tasks in the field is not just about saving time. It's also about projecting an image to impress clients that they are getting value for the fees they pay.

"We encourage the staff to 'let the client see you working. Let the client see the value of the dollars they are spending,'" Bourke says.

There are other multi-office firms moving rapidly on Internet initiatives. Interviewed for the January Accounting Technology article about the use of wireless communications, Matt Camden, chief technology officer of Chicago-based UHY Advisor noted that his firm was adopting the Internet to connect its offices, which would allow it to dismantle its frame relay network. He expected the impact of using the Internet as the backbone for data communications will save about $20,000 per month.

Tax Lags

Despite the early entrance of RIA into the online field with its GoSystem RS, online tax preparation is far from being the choice of professionals.

However, its use by consumers is exploding. The number of federal units or TurboTax online sold this season through January 21 rose to 289,000, an 80 percent increase over last year's figures.

The number of online returns prepared by professionals is rising rapidly too, but from a smaller base. The number of firms using CCH's Global fx has risen by 50 percent, but the number of users has increased by 500 percent, says Mike Sabbatis, the company's vice president of sales. The large percentage increase in users reflects a growing number of bigger firms opting for the online tool.

One benefit is that Web-based applications are easier to deploy. "When you look at the support required to launch applications, I think it's much easier on the IT people," says Sabbatis.

One place that native online applications have not taken off is mid-market accounting, although quite a number of businesses have entered the online world via Citrix.

There are other avenues. Creative Solutions provides hosted office applications, including CSI's own software and Microsoft's Office and Outlook.

"It's a complete CPA practicing environment," says Mackintosh.

Still, accounting is likely to be one of the last applications to be accepted, according to the views of leaders of the two largest mid-market players. They think that users will migrate to the financial packages from related applications.

"I think you will see some ancillary things pop up," says Jim Foster, executive vice president for Sage Software. He points to Sage's recent purchase of Verus Information Services, which provides credit-card processing services, as being part of that trend.

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