While IT professionals are being asked to do more with less in the current economy, lower costs and a higher return on investment are the results of behavioral changes, rather than a reduction in the IT budget. At a recent Boomer Technology Circle meeting, we asked IT professionals how they could immediately improve efficiency. The solutions they offered are simple and easy, but involve behavioral changes on the part of end users, including partners.Let me stress the involvement of partners. As you rise to the top of any organization, most problems are behavioral, rather than technical - and CPA firms are no exception. The IT professionals also stressed the need for the managing partner's support, which requires discipline and commitment. Many partners do not realize that they are a major cause of problems and inefficiencies.
To better understand why I am focusing on partner leadership, rather than simply suggesting a budget cut of 10 percent or nixing specific line items, you must understand the nature of the necessary changes. While there are more, this article spotlights five areas that can impact your IT spending and return immediately:
1. Printing and the number of printers;
3. Software licensing;
4. Adherence to firm standards, policies and procedures; and,
PRINTERS AND PRINTING
Printers have now proliferated throughout firms and even serve as a status symbol in some. They are relatively inexpensive, but toner, paper and maintenance can be costly. Maintenance is often the responsibility of IT, rather than administrators or end users. In addition, end users can be demanding and often complain to IT because they can't print or their software isn't working properly. In reality, the cost per hour of a top IT person is higher than that of administrative personnel and entry-level accountants.
Many partners and managers want individual printers to avoid leaving their offices. Here are some questions that they should ask:
* Do I really need to print this?
* Can I share a better-quality printer with others?
* Does this need to be printed in color?
To most high-level people (partners) this may seem irrelevant, but across an entire firm it becomes significant when other costs are considered. These include filing, storing, retrieving and destroying paper.
Maintaining both a paper and a digital system is considerably expensive and almost impossible to do with efficiency. It doesn't make sense to move from a digital to a paper document, then back to digital. You may laugh at that statement, but I am always surprised at how many people scan paper back into the system when the original document is digital.
Assuming a cost of $3 per ream of paper, an end user going through a ream a month costs $36 over a year (not including toner, labor and shredding costs), while someone using five reams of paper a month will cost $180 a year!
People, especially accountants, often base decisions on what is easiest, rather than what is best for the firm or their co-workers. We refer to people who act this way as "wizards," because they have just enough rank, seniority and power to sabotage the firm's systems and processes (either intentionally or not). What they don't know they don't know results in the loss of a significant amount of time and money.
Standardized processes and training can help overcome these issues, but the challenge is to get "wizards" to attend training. They often resist change, even if they say they accept it. Like others in the firm, they must take time to think, rather than merely react.
Server virtualization allows one server to act as multiple servers, reducing hardware costs, space requirements and power consumption. This technology first became popular with mainframe and mini computers. Many firms are successfully reducing costs while increasing performance through virtualization. Some even report consolidating between eight and 10 servers into one server. Hosting services are using hardware virtualization to reduce fees.
For more information, visit www.microsoft.com/virtualization/default.mspx or www.vmware.com.
While licensing is typically the responsibility of IT, departmental leaders often over-license core applications, such as tax prep or research, assuming that everyone in their departments will need them.
Software costs are rising. According to our most recent survey of leading firms, they range from 25 to 35 percent of total IT investments. Ongoing discussions persist about whether firms should subscribe to enterprise licensing with Microsoft. These types of agreements are generally for firms of 250 users or more. Small firms can often benefit from volume licensing in hosted situations.
Keeping track of licenses and inventorying equipment are vital tasks. Firms do not want to risk an audit by the Business Software Alliance or Microsoft and be out of compliance. One advantage of an enterprise license is the ability to "true-up" on an annual date. By selecting the appropriate date (normally in June, July or August), firms can reduce the number of required licenses during peak season.
Software licensing is becoming more significant as a percent of a firm's total IT investment. It requires strategy, tools and time to manage for compliance purposes. The IT professional should not be solely responsible. Others on the firm management team should also be involved. In addition, firms must be consistent when negotiating strategies with primary vendors, and not give in to the temptation to over-license.
Standardization in IT saves money on purchases, maintenance and compliance, yet many firms allow select offices and end users to deviate from standards. This practice does not make sense and costs firms thousands of dollars annually.
Leading firms are now utilizing a "rip and replace" policy during mergers. This increases the chance of successfully merging cultures and eliminates many IT support and maintenance issues.
Some of the critical areas of standardization are tax software, audit software, practice management, research, notebooks and desktops, servers, printers, cell phones, operating systems, and e-mail management.
Adherence must start at the top, so the managing partner or chief executive will set the tone.
Every firm has unique processes. The key is not to have too many of them and to establish standards and best practices. In order to maximize efficiency, everyone should adhere to these processes and avoid deviation.
Three areas that produce significant results when standardized are time entry and billing, tax return processing, and financial reporting. Standardizing e-mail procedures and processes, and then training end users how to properly use their systems, can save end users five or more hours per week and reduce the firm's risk in case of litigation. Efficiency comes from knowing how to use technology, not from simply having access to the technology.
TRAINING AND LEARNING
Training and learning are most beneficial when conducted on a "two-way street" model, which requires everyone to teach as well as learn. Commit to a training-learning culture where the entire firm gets smarter.
IT and soft skills are spiraling downward in many firms because there is little or no training. Gartner Group says that for every one hour of training, end users increase capacity by five hours. If this is even partially true, firms can reap a significant return on their training investments. Metrics from the past five years indicate that most firms average 50 percent chargeability (when factoring in all personnel). Using 50 to 100 hours of this non-chargeable time for training will improve performance significantly. Managing people and getting them to focus on the "big rocks" is a requirement, not a luxury.
IT training is only one component of a training program. The others are traditional technical skills and soft skills. Most firms fail to provide training in the area of management skills. People with good technical skills are often placed in management positions with little or no training, and they generally fail.
According to a recent study, the total training time required during the first three years in the profession is approximately 150 hours. This includes orientation, firm culture, technical skills, IT and soft skills. As people progress through the profession, more of this time should focus on personal development, client development and developing others. Too many accountants fail to recognize the importance of IT and soft skills. Life-long learning (not state board hour requirements) develops quality personnel.
In summary, these are all IT management strategies that should be used in good times as well as in bad. Bad times rapidly expose poor management and weak strategies.
As firms attempt to do more with less, IT is a huge differentiator. Firms must continue to focus on increasing revenue per full-time equivalent. The agriculture and manufacturing industries are great examples. In 1900, over 50 percent of the American population was involved in agriculture, and by the year 2000 less than 3 percent were, yet output was 10 times greater.
Americans have always used technology and improved processes to increase productivity. In manufacturing we only hear about the number of jobs the U.S. has lost to China. While the Chinese have 10 times the number of industrial workers, their output is only 25 percent of that in the U.S. We continue to increase manufacturing production in the U.S., but fewer people are employed in manufacturing.
Don't be afraid to get help from the outside. It is hard to change a process when you are a part of it!
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
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