As firms begin to plan for 2007-2008, they should be wary of relying on previous strategies for technology. Technology will remain an important tool as the accounting profession transforms; but remember, it must be employed with vision, leadership and strategy. Technology can't fix problems associated with poor leadership, management and the inability to attract quality people.The profession has been stuck in "me too" mode in terms of technology. Firms that differentiate themselves have invested significantly in end-user training and digital content management - including the use of client portals. They also have adequate IT support for end users, either from internal or external resources.

Many firms are examining and re-engineering their processes, along with making significant investments in time and money. Granted, they face obstacles, but most of these are cultural and personnel issues, not technology. As a result, the most progressive firms are beginning to take client service to the next level and moving ahead of the pack.

Many other firms, however, are ignoring the issues and simply deferring decisions. This strategy to wait may prove costly, if not disastrous, to some in the near future. I make this bold (and sometimes unpopular) declaration because digital firms can manage data much more efficiently than those still operating with paper or in a mixed environment. Digital firms can also offer new and improved client services beyond the scope of compliance work. They can mine data, as well as do special procedures related to data extraction and analysis.

Have you taken time recently to ask your clients about their most pressing dangers, opportunities and strengths? I assure you that a tax return or financial statement is not at the top of their lists. People, growth and data security are much more likely to be priorities.

In 2007, firms should focus on the following areas if they want to remain competitive, reduce costs and increase revenues through expanded services:

* Leadership. Without committed leadership, technology does not advance in professional services firms. Successful firms have a partner or chief information officer who provides steady vision and leadership in the area of technology. Much like the managing partner position, technology leadership is undervalued. It is difficult to focus limited assets on multiple projects without strong leadership.

* Security. The increases in spam, denial-of-service attacks, and lost or stolen notebooks have increased the importance of security initiatives during the past year. Many firms are finding that their security measures are inadequate, and they do not have policies and procedures in place to protect themselves. Most firms also do not adequately protect client data on notebooks and simple storage devices such as thumb drives.

Do you have polices and procedures in place to ensure the confidentiality of client data? Depending upon your state, you may be required to notify clients if data is lost or stolen.

* End-user training. Training and learning offer significant rewards, yet many firms ignore them altogether. The need for them will only grow, however, as firms move to Microsoft Vista and Office 2007. The ability to attract and retain quality personnel is linked to a firm's capabilities for instruction. Hiring someone with the requisite skills to coordinate adult education is essential for training and learning to be effective. Small firms can be successful in this area by establishing relationships with other firms for a joint venture.

* Integration. Firms have too many applications and databases. They are entering data multiple times and then spending an inordinate amount of time ensuring that the data is correct across multiple applications. These issues can only be resolved through planning, consolidation of databases and working directly with vendors.

* Infrastructure. Servers, switches and cabling are similar to the plumbing in our homes. We only think about them when they don't work or seem slow. Server virtualization is the trend. It is also important to maintain current versions of operating systems and install software patches in a timely fashion. Delegate or outsource these tasks to qualified IT professionals. Don't be cheap; spend the money to do it right and keep the infrastructure up to date.

* Content management. The paperless trend continues. A choice of hardware and software is not as important as processes, policies, procedures and discipline. Know your objectives going into a document management project. As Jack Welch said, "It is not efficient to maintain both paper and digital systems."

Think about the fax machine; you didn't know exactly how you would use it until you installed it. The same is true with content management. E-mail management may be your biggest challenge. According to our research, each employee in an accounting firm uses four reams of paper each month, with a cost of $75 to $150 per client per year to manage a paper system. Paper is simply too expensive to file, store and retrieve.

* Workflow. FedEx and UPS track workflow and packages electronically utilizing wireless communications and the Internet. Web-based workflow systems integrated with document management are a strategic byproduct of outsourcing to India. Files and documents are stored in a remote, secure location with daily or real-time back-up, and can be tracked anytime during each process. In addition, they are indexed and available for download from anyplace via a Web browser.

* Client services. Strategic planning and executive coaching may not sound like services typically offered by an accounting firm, but an increasing number of clients are requesting them. As new services are adopted, firms have increasing opportunities to become primary advisors. And in today's economy, whoever administers a client portal becomes the client's de facto primary advisor.

Automatic aggregation of information is the chief benefit of portals. What if each of your clients had a secure, private portal to access tax returns, financial statements, wills, trusts and other important documents? Clients could also use it to add their own documents and communicate with the firm.

Think of them as electronic safe deposit boxes, and your firm is the banker receiving the annual rental fee. If you don't offer them soon, clients' attorneys or bankers will. Don't settle for being just a trusted advisor, when you can be the primary advisor.

* Connectivity and bandwidth. Continue to monitor developments in wireless and broadband capabilities. The ability to stay connected will only increase during the next year. If history is any indication, capabilities will increase substantially as prices remain constant. Also, look to redundant solutions where you can combine capabilities through switching.

* Web strategies. The notion that you don't know what you don't know applies to Web strategies. Vista, Exchange 2007 and Office 2007 will provide new capabilities for integration. Do you have current policies and procedures related to your Web site and accompanying services? Portals, content management and remote, secure data storage (the application service provider model) are all possibilities you should consider.

* Outsourcing. Outsourcing refers to all IT-related capabilities - not just to the preparation of tax returns in India. The topic stirs emotions, but it is rapidly becoming a simple economic decision for firms that want to manage overtime and provide timely client service.

Consider the following questions: Where will client files be stored in three years? Do we want to run applications remotely from home, client offices and even hotels? Do we want to employ the necessary IT skills or outsource them? Are the firm's file and server rooms secure?


Unique services, differentiation and process improvements may be the keys for many firms in an increasingly competitive, commoditized and litigious environment. Move forward with confidence in 2007-2008 by developing a strategic plan to secure a sense of direction. Getting everyone in your firm to reach for common goals is a challenge, but the rewards are significant. The alternative of playing the hand you are dealt is simply too high-risk.

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