[IMGCAP(1)]Building and running a technology practice inside a CPA firm requires an understanding of the differences in priorities, skill sets, cultures, personalities, and goals of the traditional CPA practice and the professional services technology firm.

Having built and run both a midsized independent technology consulting firm and a midsized technology practice within a larger CPA firm, I have been faced with growing businesses inside organizations with significantly different cultures.

If you are considering adding or growing a technology practice inside an accounting firm, now would be a good time. Interest in these practices by CPA firms is currently very high. Many firms are challenged with expectations for limited or no growth and ever-compressed margins within their traditional core practices of audit, tax and accounting support. They are looking elsewhere for complementary additional services that build value consistent with their “trusted advisor” role within their current client base or markets.

At first glance, offering technology consulting can be an attractive option for accounting firms. When technology services include financial system implementations, they would appear to be a natural fit. Areas of overlap include accounting expertise, direct client management skills, the discipline of traditional billable hours with the associated time entry requirements, and experience with the firm’s target client base.

However, there are differences that need to be carefully managed in order to successfully develop or merge these two businesses. Frequently, accounting firms lack some of the critical skills and experience needed to grow successful technology practices.

Financial system implementation projects frequently consist of the configuration and installation of technical ERP products, integration across multiple systems and platforms, strong reliance on the client’s business and technology capabilities, and elevated risks that stretch the limits of the accountant’s comfort zone. If software customization or programming is required, this adds an extra layer of uncertainty to the project.

Your firm, therefore, needs to make some basic decisions about the type of accounting system implementations it can handle. Do the projects need to remain low risk by limiting software programming provided by the firm? Should more complex system integrations between the client’s business systems be avoided? If the project costs run above estimates by 10, 20, or 50 percent, how comfortable are you with managing this issue? By limiting implementations to out-of-the box functionality, your firm limits both its risk and opportunities inherent in tailoring enhancements and added-value solutions in specific target markets.

I have found that the ability to customize financial systems beyond the standard out-of-the box functionality is a critical advantage to the client and the firm. Managing the associated increased risk therefore becomes a key issue for the accounting firm.

Key differences between the personalities of technology consulting practices and accounting firms also often have an impact on the ultimate success of the practice. Technology consultants are generally more willing to embrace change, are looking for a variety of technical challenges, generally enjoy providing a variety of services, and need the creative challenges provided by a client’s specific project implementation, which can vary from client to client. Keeping these consultants challenged and motivated, therefore, is important to growing the practice.

In addition, while two projects can have similar requirements and processes, they can differ widely in complexity, scope and risk. They can use the same software products, require implementation of the same financial modules within the product (such as accounts payables or financial reporting), and have the same number of users. However, the depth of integration between the client’s business systems can introduce significant implementation roadblocks to the project.

Additional factors, such as the skill sets of the client’s staff, the client’s ability to embrace new or different technology, and the client’s ability to manage changes in project scope are often critical to the perceived project success. Accounting firms frequently find such variants daunting.

Accounting firms are generally adept at planning and managing audit and tax work efficiently. After the first year, these engagements can become repetitive and predictable in their management and outcome. The same may, of course, be said of technology projects. Unfortunately, the technology practice often involves a higher degree of risk. As new versions of the same software packages are released, they can significantly affect the product’s stability, its ease of integration with the client’s third-party products, and its capability to support the client’s existing processes with no changes. These disparities require skillful management of expectations by the technology practice of both the client and the CPA firm.

I have reviewed some key attributes of technology implementations versus more traditional accounting projects. Another key difference between the technology practice and the accounting firm lies in the business development functions. Unlike the built-in annual cycle for accounting audits, many ERP implementation sales also require a more consistent and dedicated sales effort. Working with ERP publishers reinforces the on-going sales and marketing efforts required by this type of practice.

As a result, the accounting firm is generally not as experienced with the marketing and sales processes needed to maintain and grow a technology practice. The longer sales lead times, repetitive marketing campaigns, dedicated sales staff, and pricing/promotion tactics are frequently a foreign language to the traditional CPA practice. Understanding the costs, efforts, length of time, and sales efforts needed to build the technology practice are critical to its success.

I recently attended an ERP conference where the speakers heavily emphasized the sales and marketing requirements for the typical technology practice. To run and grow a technology practice requires the skill sets of marketing, sales, client management, project discipline, staff management, financial and accounting skills, and additional vertical subject matter expertise. Finding the right team that has these capabilities to balance growth with returns is a key requirement for your successful technology practice.

Seth Zarny is the Information Technology Partner at the Washington, D.C.-based firm Raffa PC. He joined the firm in 2004 after 19 years as a principal with Information Resource Associates, a financial systems and technology consulting firm. He sold the company to EYT, formerly Ernst & Young Technologies, in 2003. He specializes in technology consulting services, including financial system implementations for several leading product lines.

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