The economy has offered a boon to the accounting industry in recentyears, but a time of reckoning has come and firms are faced with newrealities. They must discover new ways to do more with less whileincreasing profitability.
Some might believe that the answer is to work harder andraise rates. Those options are, at best, short-term solutions to alonger-term problem. Doesn't it make more sense to recommit totechnology and increase leverage and margins?
Most firms utilize technology only to sustain the way theyhave always done things. We also encounter too many firms usingobsolete technology (and, frankly, we expect to see more like them inthe near future).
Resistance at the leadership level in many accounting firms is stunting growth and limiting profitability.
Let me cite just a few examples:
* Filing paper tax returns;
* Using paper for the billing process (billing drafts and paper invoices);
* Research via paper versus the Internet;
* Preparing financial statements using word processing versus automating the process and eliminating redundant data entry; and,
* Auditing around the computer, rather than through the system.
If some of these examples strike a chord, keep reading and consider what a simple change in attitude might do for your firm.
Firms using technology to accelerate profitability duringdifficult times view it as a strategic asset, while firms merelysustaining outdated processes and procedures view technology asoverhead. Resistance to change is not unusual, but awareness can helpyou start thinking differently.
Creative strategies are imperative in light of theever-evolving economy. According to statistics from The Boomer Circles,firms invest an average of less than $10,000 per person per year ontechnology. Remember that average is where the worst of the best meetthe best of the worst. Most firms don't want to settle for average.
Traditional thinking suggests that a firm should simplycut personnel and budgets, rather than consider how technology mightallow personnel to become more productive. Many partners say that theybelieve in the potential of technology, but few truly understand itsstrategic value.
Moreover, many partners do not understand how to take fulladvantage of the high-powered tools already at their fingertips. Theyoffer a variety of justifications for this ignorance, but the bottomline is accountability. Partner compensation must take into accountongoing self-development. IT skills and adherence to standards,policies and procedures are as important (if not more so) than chargehours.
Increasing profitability during difficult economic times is possible. Here's how:
1. Start (or expand) the firm's training and learning initiative (including IT, technical and soft skills).
2. Improve integration of production and management applications (reduction of databases).
3. Ensure secure, fast and easy remote access.
4. Re-engineer your firm's written standards, policies and procedures.
5. Implement portals for all clients.
Leadership, discipline and accountability will ensurefollow-through and success. If your firm is serious about doing more inthe face of today's economy, don't wait to tackle the items on the listabove. Many of the best firms are already well on their way. Firms thatinvest in infrastructure and training of personnel grow faster andsustain a higher level of profitability.
Don't get caught trying to sustain profitability by "milking" your current technology into obsolescence.
Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
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