By L. Gary Boomer

One of the first questions that partners ask when it comes to technology is, “How much is it going to cost?” Given the current status of the profession and the economy, this is a relevant question.

Let’s start by asking a few questions based on what I see firms currently dealing with - as well as the present technology and what will become available over the next three years. I will then try to answer the question of how much I think it will cost to do it right in a $3 million firm and in a $30 million firm.

Contrary to what many may think, the issues are much the same - it is simply a matter of scalability. In some cases, the smaller firm may have an advantage; in others, the larger enterprise benefits from scale.

Some of the pertinent questions are:

● Does your firm want to take advantage of the technology that is available to reduce time, reduce costs and improve customer service?

● Is your firm willing to create and foster a training/learning culture in order to increase efficiency, and to attract and retain quality people?

● Do any of your partners have special technology training requirements?

● Does your firm intend to implement a document management system (less paper) during the next three years?

● Is it the intention of your firm to comply with software licensing agreements?

● Do you intend to operate in as secure an environment as necessary to manage risk and protect client data?

● Do you plan to continue replacing your computers on a three-year basis?

● Do you intend to utilize the Internet through the use of “Private Client Sites” for storing, retrieving and collaborating on client documents?

● Do you intend to integrate your databases in order to reduce redundancy and ensure accuracy of data?

● Do you intend to implement a client relationship management system and integrate it with either your existing or a new practice management system?

● Do you intend to take advantage of outsourcing in India and other countries with lower labor costs than the U.S.?

● Do you want to utilize video conferencing to reduce travel time and expenses?

● Do you plan to add another office, whether through growth or merger?

● Do you want to access documents and files from any location (home, another office or clients), while maintaining security and controlling versions?

● Is your firm willing to operate from a strategic plan and budget in order to maximize the return on your investment?

Let’s assume that your answer to the majority of these questions is yes. The important thing is to make sure that your partners are in agreement and share a similar vision.

We have recently upgraded our internal technology budgeting tool, The Boomer Budget Builder. In doing so, we have noticed several trends when preparing an inclusive budget.

● Firms are beginning to learn the importance of training/learning programs.

● Document management requires standards, policies and procedures. Rules must be established and adhered to by everyone. If you can’t or won’t follow the rules, you are out!

● Firms are relying more heavily on the Net for research, communications and even outsourcing. Due to this, bandwidth redundancy is becoming as important as security.

● Hardware is becoming a smaller percent of the overall investment while end-user training and support, outsourcing, software and communications costs are increasing.

● The cost of copying and printing is being replaced by the cost of document storage devices, scanners and document management software.

Standards, policies and procedures must be reviewed in order to take advantage of the technology. Do not listen to those who say that the technol-ogy doesn’t fit their business. Stubborn resistance and a lack of knowledge tend to be the major impediments to progress.

Given these trends, let’s look at sample budgets for a $3 million firm and a $30 million firm (see box). The number of offices as well as practice type must

be considered; however, you should note that the percentage of the technology being spent in various areas doesn’t vary as much as you might think.

As you compare the numbers, notice that the large firm spends a greater percentage on IT personnel. This is primarily due to the fact that most $30 million firms have a chief information officer or chief technology officer, which will increase labor costs. They also tend to have a larger number of engineers with certifications. Their software investment is about 1 percent less than a small firm’s, mostly due to scalability.

The numbers for both firms include estimated outsourcing fees, communications costs (voice and data), copiers, software licensing, document management, CRM and integration of your data.

By now, you should have come to the conclusion that hardware only represents about 16 percent to 17 percent of the total investment. Communications costs range from 8 percent to 10 percent and software from 17 percent to 18 percent. The keys to focus on are staffing, training and end-user support. Proper funding of these initiatives will reduce frustration and improve productivity, as well as attracting new - and retaining existing - talent.

I predict that if your firm can complete all of these projects and have a well-trained partner group and staff, you will be very happy three years from today.

Some of you may want to move faster than others. I must caution you that to move quickly, you must have an excellent plan, budget and leadership, along with qualified personnel. You must be able to make decisions knowing that improved products will come into the market during the next three years.

Waiting is not the answer. Your biggest challenge will be finding the time and people to lead the projects. Do not allow the resisters to jeopardize the future of the firm by doing nothing. Utilize end users and don’t expect your IT personnel to drive the projects.

Good luck!

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