by Wayne Schutz

If your CPA firm has tried and failed to build a substantial technology practice, odds are that one of these problems prevented you from succeeding:

  • Followed the obsolete billable hours model.
  • Gave away services to retain accounting clients.
  • Pursued unprofitable business or unqualified prospects.
  • Failed to create recurring revenue.
  • Lost technology staff members.
  • Tried to use accounting staff as part-time technology staff.
  • Used the firm’s internal network administrator to work with clients.
  • Allowed accounting partners to meddle with technology services.

The above topics summarize the typical problems within CPA firm technology practices. A good question to ask is, "What’s needed to succeed with a technology practice?"In order of importance, here are 10 answers to that question:
1. Create a separate entity where the CPA firm can have an ownership interest but not manage it. You want to avoid CPA firm ownership because most firms’ partners won’t know the first thing about technology, but will try to give their advice on the best direction to guide the technology practice.

If you start from square one, consider merging in an existing technology company. If you are looking for technology practices to acquire or merge with - only consider those ones that work with market-leading products, that are aimed at a broad range of industries. And recognize that they should charge above average fees and deliver outstanding service.

Consulting practices that specialize in niche markets like nursing homes or gold mines probably aren’t worthwhile to acquire - unless your firm does significant business in those niches. In general, look for a firm that could offer consulting services to 90 percent of your client base.

2. Consulting companies with recurring revenues are worth their weight in gold. Companies made up of one-time purchase clients are low value.

Strive to convert every client relationship into one where they pay annually for the privilege of calling you for technical support on their software. Do not give this service away by offering to let your clients pay hourly.

When the marketplace was converting from DOS to Windows accounting software and then from Windows to Y2k compatible software, new sales were booming. Today’s marketplace shows huge slowdowns in new software purchases.

Successful consulting firms already have specific procedures for selling into their existing client base.

With the shortage of qualified prospects, you won’t make enough money on the initial sales of software to justify pursuing one-shot clients - they have to be convertible to recurring revenue. Prospective client requirements are so detailed that most of them won’t fit into the accounting package you offer.

At a minimum, your target clients should require:

  • An annual telephone support plan for their accounting software - this can range from $1,500 to $3,500 per year.
  • An annual telephone support plan for their computer network - this varies depending on the size and complexity of the network.
  • Subscribe to a discounted monthly/quarterly/annual payment for a quantity of on-site hours. Never allow new clients to pay a la carte. They must subscribe to an annual plan or not receive service at all. This is standard practice in the accounting software marketplace - why should your firm be different?

Existing clients will be smart enough to estimate the number of hours that they use your telephone support each year - and if they don’t spend more than the support fee you would like to charge, they decline to purchase a support plan. The goal is to get away from a la carte support offerings.3. Create a technology newsletter and send it to all of your accounting clients every month - both on paper and via e-mail.
Don’t make the mistake of being a traditional newsletter mailer and hiring a graphic design team and going through 15 revisions over several months and using your secretarial staff to fold and bulk-mail 5,000 newsletters (which adds another month to the process).

Instead, use Microsoft Publisher’s built-in newsletter templates to create a PDF version of your newsletter and upload that via the Internet to the U.S. Post Office’s Net Post ( to do all your bulk mailing online.

If you want to create a growing technology business - repeat this newsletter each and every month. It is not important that this be anything fancy or anything with hundreds of pages.

The consistency of receiving your newsletter will pull in more new business than you think. Leveraging the power of the Internet to handle the mailing is going to cut your processing time and expense.

4. Find out what the most competent consulting firms in your area charge per hour, then add $25 to it to determine your rate for consulting. You can command a premium consulting rate for knowing your client’s accounting procedures well.

Make absolutely sure that you hire experienced consultants so that clients don’t get that dreaded "on the job" training feeling when your staff visits. Paying an extra $5,000 per year for an experienced consultant is highly advisable.

Generally look for consultants with two to four years of hands-on experience with the software and who have earned vendor certifications.

5. The idea of offering consulting services on a subcontract basis to other CPA firms is a fairy tale. I’ve never heard of any CPA firm generating significant revenue from subcontracting to other CPAs. Other firms don’t trust your motives and fear you will steal their accounting work.

6. Sell the software at suggested list price. Some CPA firms become resellers for different accounting packages and promptly resell the software for whatever their cost was. Doing this doesn’t allow you to recoup any of your sunken training or marketing costs for big expense items like free demos, mandatory vendor certifications and training classes.

Never resell the software at cost. Once you enter a discount relationship with a client they expect a discount every time they deal with you. If you feel that some type of discount is in order, consider offering a few hours of free installation/configuration time with the purchase of the software.

7. Stick with market leaders! Just because you can buy an off brand accounting system at a discount of 7 percent doesn’t mean that you can build a successful practice with it.

At this point, Microsoft/Great Plains, Best and Accpac International are the market-leading accounting software vendors. There are a slew of second-tier, midrange accounting systems that are cheaper, but they also carry significantly more risk that they are going to be acquired by a competitor.

The accounting software market has consolidated tremendously over the past few years. Those second-tier accounting packages are still independent for a reason - nobody wanted to buy them!

8. As a CPA firm technology department you must do QuickBooks consulting. But don’t under-charge for it! Develop some QuickBooks expertise.

Many of your clients won’t be candidates for larger accounting systems. Using your QuickBooks skills is a natural complement to your firm’s CPA practice.

Your clients should be charged an annual maintenance fee for technical phone support from your firm. Expect this to be between $495 and $795 (charge more if they have payroll).

QuickBooks seminars are also hot business generation tools. Your experienced consultants can host these seminars with a minimum of preparation time if they purchase the training manuals through QuickBooks’ vendor, Intuit or one of the many different training organizations that offer them.

9. If you don’t have the stomach to create a new technology practice - partner with an existing reseller who has been in business for 10 years or more. Many CPA firms have been burned trying to market technology services in the past.

If you don’t want to create a division within your firm, partner with an experienced consulting firm that possesses many of the characteristics we’ve talked about. CPA firms who partner often find significant billable engagements arising from computer system implementations, such as internal control reviews and system documentation.

10. If your technology practice includes reselling hardware, recognize that all of today’s profit is in the service not the actual hardware. Clients are savvy about the cost of computer basics.

When clients express an interest in purchasing their own hardware, guide them to Dell or Gateway and offer to handle the set-up and configuration for them.

Have the hardware vendor ship directly to the client’s door so your network technicians don’t have to lug it. The area where you make the money on hardware sales is in the troubleshooting, installation and ongoing telephone support plans.

There is value hidden in your existing client relationships. If you failed in attempting to establish a technology department in the past, consider re-establishing it.

You would be surprised how many of your CPA firm competitors have established technology practices and are using them as a "back door" entrance to your lucrative client accounting relationships.

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