by L. Gary Boomer

Despite significant investments in technology, most firms have not realized their vision of integrated applications that seamlessly share client and firm data.

In fact, most firms currently have a stable of applications that represent departmental requirements rather than integrated firm solutions. The net result is that most firms are required to enter redundant data, such as clients’ names, addresses and telephone numbers, into multiple applications.

Maintaining these multiple databases is a time-consuming and costly venture. Many are quick to blame the software vendors and say that they have not lived up to their promises of an integrated suite of applications.

The problem is more complicated than just the selection of application software. It involves database architecture, process improvement, training and discipline.

In order to explain the issues to a diversified management team in a professional services organization, we recommend splitting up the problem into two areas: production and firm management. The production side involves importing client data into a work paper container (including a trial balance, version control and check- in/out features), and then on to a tax return and financial statement.

The documents (files) that are produced during this process are referred to as dynamic documents due to the fact that they are continually changing throughout the pro­cess. Once tax returns and financial statements are finalized, the documents become static and should be stored dig­itally with protection from changes. The degree of importance of these features (dynamic and static) depends upon several factors:

●  Type of client;

● Services provided the client;

● Firm standards, processes and procedures;

● Remote access via the Web; and,

● Security levels.

Multiple applications

Firms should evaluate the number of applications that they currently have involved in this process, as well as the integration capabilities. The following is a partial list of typical applications that, in most firms, are supplied by several competitive vendors:

● Trial balance;

●  Content -- programs of work;

● Analytic and data extraction;

● Depreciation;

● Tax return preparation;

● Tax research; and,

● Financial statement reporting.

Integrated databases -- alternatives

The software vendors are moving toward integrated databases, such as Microsoft SQL; however, licensing and costs have been an issue and will continue as an issue in the future.

Small firm requirements are similar, but differ from large firms that must manage significant data files and large numbers of users. Multiple-office versus single-office requirements are also relevant. In some cases, teams of personnel work on a single client, while in others only one accountant is involved.

Finally, remote access via the Web is an issue that many firms must deal with, and security is important to everyone. These circumstances make it clear that one size does not fit all requirements. Another factor coming into play is Web-based applications versus desktop or server-based applications.

Until recently, the tools were not available for the applications to be housed and maintained by the vendors, with firms simply accessing the application software and data files over the Web.

This is referred to as the application server provider model, and has gained increasing attention over the past few months for numerous reasons:

● Improved bandwidth;

● Data security;

● Reduced IT infrastructure within the firm;

● Reduced IT management requirements at the firm;

● Access of applications and data from any location via the Internet; and,

● Outsourcing to India.

Hesitancy toward the ASP model has primarily been over control, the need for continual Internet access and a lack of the necessary application software. The vendors are now developing both client/server and Web-based applications.

Difficult decisions

The decisions are becoming increasingly complicated and require IT, communications, management and accounting skills. Too often, firms are making decisions without complete knowledge of the requirements and capabilities (current and future). IT professionals often shudder when they learn of decisions made by a group of end-users.

The need for improved communications and additional skills beyond accounting are apparent when it comes to making firm IT decisions. Don’t misunderstand: The end-users’ (accountants’) perspective is important, but often they don’t know what is either available or coming in the future that can better assist them.

Firm management systems

The other side of the house is the management side, and frankly, most firms are in no better shape there than on the production side. The old story about the shoemaker’s kids not having shoes could be applied to most firms.

Generally speaking, accounting firms do not have good integrated management reporting systems. The majority of accounting firms utilize a time and billing/accounts receivable program that is not integrated with a general ledger, accounts payable, payroll, customer relationship man­­­­agement and scheduling/workflow system.

Journal entries and spreadsheets are the “duct tape” that hold these systems together. Accountants are comfortable with them, but they do not create inte­grated systems with drill-down and analytical capabilities.

Most firms rely too heavily on the “spreadsheet” for management reports. They spend a great deal of administrative time in auditing and reconciling their own firm’s data in order to ensure accuracy. A good integrated management system will save significant amounts of administrative time (redundant data entry and reporting). It will also ensure the accuracy and reliability of the reports.

Solutions and strategies

The solutions to the integration problems (production and management) are not as simple as just replacing the existing applications. The solutions require strategies based upon deciding where your firm wants to be three years from today, and then developing the IT strategies to support that vision. Simply accepting the cards that you are dealt is a risky strategy, and one in which your technology will probably simply be managed as overhead rather than as a strategic asset.

Over the past decade we have seen two criteria that have differentiated the firms that have profited from technology from those that have been frustrated. Those that have profited have had leadership that understands the importance of information technology and manages it as a strategic asset.

The need for leadership

Larger firms should create the position of chief technology officer. This person should be on the management team and understand the firm’s vision, processes and IT capabilities. They must also be capable of dealing with the politics in a professional services firm. IT skills are simply not enough to meet this requirement. Most chief executives and managing partners do not have the required skills or the time to adequately manage IT. They need someone on their team they both respect and trust.

One of the CTO’s responsibilities is to manage the implementation of solutions that integrate and exchange data as seamlessly as possible. In the past, too many firms have made departmental decisions that have negatively impacted their firm when it came to integration. Accounting firm solutions tend to be more difficult than the typical small business solutions due to diversification and constantly changing compliance regulations.

Midsized and smaller firms will most likely outsource the position of chief technology officer. They should utilize the relationships they have with larger firms that have the position of CTO. Perhaps they can hire these people as consultants, or better yet, as members of a firm advisory board on a part-time basis. The advisory board solution provides multiple benefits: an outside perspective plus accountability.


The good news: Integration will improve over the next few years. The bad news: Technol­ogy requirements and the complications associated with making good firm decisions will be more involved as firms move toward digital document management and improved workflow and scheduling solutions.

The need for leadership, planning and improved communications within your firm will only grow.

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