Accounting firms utilize some of the most complex and difficult information technology systems to integrate and manage. This results from:* IT governance and decision-making processes;
* Having numerous applications and their accompanying databases;
* Planning from a departmental, rather than a firm, perspective;
* Lack of knowledge on the part of partners and decision-makers; and,
* The use of multiple vendors.
Clients have similar requirements to firms, but they typically utilize integrated, core business applications unique to their industries. As a result, they typically have fewer systems to integrate.
To illustrate, consider the applications that your firm currently utilizes and note the name of each vendor. The following list of firm applications is not meant to be all-inclusive, but I think you will quickly get the point: personal tax; business tax; estate tax; time and billing (accounts receivable); trial balance (work papers); write-up or financial reporting; document/content management; general ledger (accounts payable); payroll; accounting research; learning management systems; e-mail; MS Office (Word, Excel, PowerPoint); project management; tax planning; tax research; portals (SharePoint); and client relationship management.
Most firms operate at least 15 applications (from five or more different vendors) that utilize multiple databases. Data is captured in a redundant fashion, and firms spend a great deal of time reconciling and ensuring its accuracy. Let me explain the complexity of the situation in a mathematical formula where "n" equals the number of applications, and (n*(n-1)) equals the number of required connections for integration. (See the table at right for an illustration.)
In practice, most firms don't integrate or connect all of their applications. Consequently, the spreadsheet is the most popular tool among accountants, because it allows for easy importing and exporting of data, analysis and reporting. Middleware connects software components or applications. Web services are software systems that support interoperable interaction over a network. SharePoint from Microsoft and MetaStorm are two examples of middleware that some firms are currently using. Not only do these applications assist with connectivity, they also provide workflow. Note from the chart that the number of connectors required with the use of middleware is two times the number of applications.
Before exploring solutions and strategies to improve firm systems, partners must realize that connectivity is only part of the problem. IT professionals also manage network and desktop operating systems, and Web interfaces, as well as interfaces with client systems. While this appears complex, several strategies can improve integration, reduce complexity and improve productivity, including:
* Utilizing fewer vendors;
* Making technology decisions based upon firm vision and strategic plans, rather than on technology;
* Adopting improved forms of IT governance;
* Hiring business strategists, rather than engineers, for leadership and relationship positions;
* Documenting, and enforcing adherence to, processes, standards, policies and procedures; and,
* Training and development of end users.
Making these strategies work requires clear communication between firm leaders and IT professionals. It also requires more than passive involvement by firm leaders, including the managing partner, human resources, the firm administrator and the chief operating officer. Today, technology impacts every area of a firm, and people must exit their silos in order to develop enterprise, rather than departmental, solutions.
Both firm management and IT professionals have been guilty of impeding or avoiding communication. Firm leaders need to establish clear and consistent objectives, and IT must use simple terms, rather than hiding behind complexity. Risks should be disclosed early in the process, and management should determine the level of risk that they are willing to accept.
This all has a significant impact on IT expenditures. One size does not fit all, and IT personnel often over-design systems in order to protect their own interests. Management can also be guilty of pet projects that offer relatively low return.
To make progress, firms should focus on results and process changes - not on technology, which is too often faulted when the real issues are process inadequacies and a lack of end-user training.
Bridging the gaps between firm management and IT is critical to success. These gaps are not unique to public accounting; in fact, they are prevalent among most industries. Too often managing partners and chief executives focus only on growth, and delegate technology to IT professionals. While this sounds reasonable, the reality is that it results in ineffective decision-making.
A much better approach is for firm leaders and IT professionals to work closely together. IT must clearly understand management's vision and strategy, and firm leaders must understand the capabilities, risks and return on IT.
Technology is a firm resource that accelerates performance when properly managed. As such, everyone must see technology initiatives as belonging to the firm - not just the IT department.
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
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