'Accounting firms are a business," said Lynette Downing, business analyst at the CPA firm of HLB Tauges Redpath, in White Bear Lake, Minn.

A very profound statement, yet the systems that most firms utilize don't integrate to support a business. Take a moment and think about how everyone, including the vendors, has talked about an integrated system for the past ten or more years. Are we any closer today than we were 10 years ago? I am confident I can find differing opinions. Why is this the case, and what should firms do to break through the ceiling of complexity and simplify their processes in order to leverage today's and future technology?

Vendors like CCH and Thomson have been investing millions of dollars into next-generation systems, but they have the unenviable task of maintaining legacy technology and can't totally focus on Software-as-a-Service. The vendors' investments plus the resources firms have expended in an attempt to make integration work make me ask the question: Can firms get there from here?

HLB evaluated their systems and determined that they were not going to be able to make the pieces fit and operate efficiently without going to an ERP-type system. They chose Maconomy and are in the process of implementation. This is a very good firm, with great IT skills and leadership, yet they will readily admit that changing paradigms and processes is not an easy task. You can see how complex the problem is by making an inventory of all the applications that your firm uses, from core applications to the back office. My guess is the number will likely exceed 50 if you include QuickBooks versions used by clients and supported by the firm.

Dan Sullivan, my coach and founder of The Strategic Coach, has always said, "You must simplify in order to break through the ceiling of complexity," and I believe his visionary statement applies when it comes to developing a system for today's accounting firm. Developing a requirements list with priorities classified as "must have," "nice to have," and "didn't even know we could do that" is not an easy task for even a seasoned business analyst like Downing.

While everyone in the firm has an opinion, getting those opinions to integrate and work in a manner that is best for the firm requires time and knowledge that a firm may not have internally. Some firms try to rely on the vendors, but their knowledge of their entire product line is often limited. It requires a team and can be summed up as planning, people and processes.

Let me provide a brief checklist of features today's systems need in order to meet the needs of a growing accounting firm:


Easy to use.


Remote access.


Integration with the general ledger, time & billing, accounts payable and receivable.

Online billing, collections (credit cards and ACH payments), and bill payment.


Document management.

Records retention.


Project management.

E-mail management.

Integrated with MS Office-SharePoint.

Client relationship management.


Business intelligence.

International currency conversion.

Integration with core applications like tax and financial reporting.

Knowledge management.


Talent management and development.

Web site, marketing and community.

Performance management.

Data aggregation - eliminating data entry.

Privacy and security.



From a quick review of this list, I am sure you will conclude that it is incomplete and that most firms don't currently have many of these systems and features today - so why do they need them in the future?

Given the fact the old client/server approach hasn't provided integration for the past 10-15 years, why should we believe the vendors will resolve these problems and challenges with outdated tools? Enter the Internet, the cloud and new systems based upon these tools. In the cloud world, some vendors are linking their software at the server level so that they can simply turn on integration. This eliminates the risk, costs and stress of integrating various applications internally. Are they all ready for prime time? No, but the benefits are promising and other industries are rapidly leveraging Web-based systems. It is time to think differently and focus on faster-better-cheaper-easier. That means we are going to have to evaluate everything; it is going to take everyone's focus and commitment to compete in today's economy.

What we have is a paradigm shift, and it is difficult for many CPAs to leave the comfort of the past and venture into the future with a different set of opportunities and risks. This is not new to the accounting profession, starting with mini computers, personal computers and networks. Change is constant and accelerating. Yes, privacy, data security and bandwidth are all issues that need to be addressed; however, what I am learning about the cloud is that it is far more connected and easier to integrate systems that are far more intelligent. It sounds smart to be negative about change, but ultimately change does happen and I see it happening on a global front, rather than just in the U.S. It is time for firms to change attitudes toward how to make the cloud work, rather than why it won't work.



We used to have an edge in the U.S., but I am seeing firms from other parts of the world move forward by leveraging the cloud and integrating systems that leverage new technology, processes and a global workforce.

I recently visited New Zealand to review Xero, after researching them for several months. I was thinking of Xero as a viable solution for client accounting and firms moving up the food chain into more controller and CFO-type services. I was pleased to see Xero not only does client accounting in a more efficient manner, but it also solves many of the firm's problems by integrating cloud-based solutions with the accounting engine. I was skeptical and thought only the smaller firms that did client accounting were using this type of solution. I must admit, I was pleasantly surprised to learn that members of the Big Four and larger regional firms are using the solution in New Zealand, Australia and the U.K., with some early pioneers in the US.

While cloud-based systems won't meet all of the needs of a U.S. firm today, they will meet many of the requirements, like e-mail, document management, knowledge management, firm management and performance management. In order to get the concept, you must change your thinking and focus on how firms can eliminate or automate those commoditized services that provide little or no value, even if they are necessary (e.g., data entry and expense reporting). By focusing on higher-valued services like real-time reporting and business intelligence, the value of the CPA increases exponentially.



Even if the technology were all available today, most firms would be unable to properly leverage this asset due to old paradigms:

Time determines value. (Clients determine value, not time or effort.)

It is a standard practice to accumulate time and bill after 30 days. (With banks becoming stricter on lending, too many CPA firms are allowing themselves to become cheap banks.)

Clients value monthly financials and tax returns. (Clients value real-time information and strategic advice, not after-the-fact compliance services.)

Staffing for the "push," rather than the "pull," economy. (In the push economy, firms had to staff and train based on the budgeted needs of clients and the market. Under the pull economy, firms can take a sourced approach and only utilize resources as demanded. This requires a paradigm shift.)

Control versus meshing of resources. (Meshing works two ways for CPAs, and they are both positive. First, meshing allows firms to only staff on demand, and second, clients are learning that it is much cheaper to mesh a CFO and other business resources than it is to employ them on a full-time basis. Furthermore, firms have multiple resources beyond just the CPA - IT and HR, to name just a couple - that clients need access to and are willing to source. Again, we need to think outside the box and think of the firm as a business.)

Technology is overhead. (Technology is a strategic asset and should be managed accordingly. The chief information officer must have a seat at the management table if firms expect to compete and profit in the future. It is what partners don't know they don't know that costs and limits their opportunities and profits.)

In my opinion, firms can get there from here, but it will require new and creative thinking (leadership) to rapidly transition. My advice for firms is to develop a three-year plan and budget with the end result in mind. This will take time, should involve the participation of many people in the firm, and will probably require outside expertise and facilitation. It will also require acceptance of change.

These are exciting times for CPAs, with vast opportunities based upon their role as most trusted business advisor. Accounting is "cool" when viewed as the business engine, rather than after-the-fact reporting. We must take the role of trusted advisor seriously and elevate our capabilities by leveraging technology and developing talent. Just like Apple, in three years a large percentage of firms' revenue will come from services they don't even offer today.

Think, plan - grow!

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