More firm spending continues to roll into IT, and recent Accounting Today research showed that as of late last year, most accountants were spending anywhere from 5 percent to 10 percent of their annual budgets on IT, and it's expected for that to remain the same or increase over the next year.
The Accounting Today technology survey also revealed that, in addition to the above-mentioned spending percentages, 28 percent of firms polled indicated that they spend 10 percent or more of their overall budgets on hardware, software and peripherals.
Exactly how firms are going about planning their technological futures - be it replacing outdated servers and software, virtualization, or opting for cloud-service - varies based on size and business relationships.
IT strategies also largely depend on whether change is needed internally or externally.
What is clear is that many practices are seeking outside counsel via the accounting software reseller community and technology consultants - which in some cases are affiliated with the firm.
Los Angeles-based SingerLewak acquired a technology practice several years ago, and as a result formed the Enterprise Risk Management Services Division. And last year, the firm established a cloud consulting services group, SingerLewak Systems. Although historically such practices affiliated with accounting firms have not always worked together directly, both groups are seeing more internal interaction.
Recently, the firm's ERMS Division is handling a heavier internal workload, moving the firm towards virtualization and using hosted or Software-as-a-Service-based applications and services - tasks ERMS senior manager Rick Mark and SingerLewak's director of IT, Ho Nguyen, are working on jointly.
"I think because our firm is large enough to have dedicated IT, we are trying to push productivity in terms of identifying services, specifically looking at what services and what apps does it make sense to do and what's available to us," said Nguyen. "Whether it's internal or external cloud, we want to make sure that all of our users can get to what we need them to."
Mark stressed that developing an IT plan for a firm involves, generally, looking at where a firm is and wants to go and, more important, paying attention to what other firms of a similar size are doing.
"The CPA industry is pretty tight-knit, so with all the networking that goes on, they need to talk about what they do and use that time to plan for themselves; do the research on what your competition is doing for sure," said Mark. "Companies are changing daily and weekly these days, not yearly, and we have to build to absorb at whatever speed our clients are at. As a profession, we don't do that enough to ourselves."
Washington, D.C.-based CPA firm Raffa is approximately the same size as SingerLewak, with roughly 230 staff, and also has an affiliated technology consultancy. The consulting division admittedly doesn't work with the firm's IT department as much as it does for clients, but it's seeing more internal demands due to changing technological requirements.
"I am seeing the tipping point in firms upgrading their technologies. External cloud-based accounting systems have matured enough that they are in competition with on-premise [systems] in terms of functionality in some areas," said Raffa technology partner Seth Zarny. "I see smaller firms dealing with Google Apps, and many clients are still in Excel and Word. Using standard Microsoft tool sets is the right move for some types of things they need. Internally, there is a mix of standard and leading edge [technology] on workflow and the document management side, so we're helping with that."
SEEKING OUTSIDE HELP
Another developing trend in IT planning involves CPA firms seeking out the assistance of outside technology consultants and accounting software resellers, as the growing technological demands on their firms are often beyond the scope and expertise of in-house IT personnel.
Simi Valley, Calif.-based technology consultancy and Sage and SAP reseller Arxis Technology has seen increased demand for its services from CPA firms of all sizes over the past year and doesn't expect a slowdown, as many firms feel the need to compete, as well as to address overdue upgrades neglected due to poor economic conditions.
"Because you have something as disruptive as the cloud, all of a sudden lots of firms who may have been just keeping IT spending at a minimal level are coming out to say, 'We need to rethink things' and what to hear about cloud and security," said Arxis partner David Cieslak. "We will go in, and we've done quite a few lately, where we look at existing applications, what's on the desktop, and lay that down along with what's available today. We say, 'Here's what we recommend from an application, infrastructure and cloud perspective, and as you think about spending, here's the biggest bang for your buck.'"
Arxis recently conducted this level of consulting work for Kramer & Olsen Accountancy, a 15-person firm in Santa Ana, Calif. The firm had generally kept up with system upgrades, but had wanted to go paperless and needed advice on the systems, software and security measures needed to do so. The firm has an outsourced IT manager, but felt there was more planning to be done outside of his capacity.
"We mostly wanted to get our system set upgraded to be able to have us be a paperless firm. We've been on the sidelines with this and it was time to move and be efficient and keep up with changes of software we use," said K&O managing partner David Jorgensen. "Arxis came in, looked at our system (hardware, software, security), as well as the software we needed and the fact we intend to go more paperless. We are also starting to grow more, so Arxis gave us good advice for the next three to four years with the anticipation that cloud computing will be more realistic for our firm and we are being conservative."
Jorgensen also said that he and the firm's office administrator are making an effort to interact more with their IT person, which he said lately is "more like once a month, rather than just when there is a problem." He also expects that Arxis will return for future planning and upgrades.
Another technology consultancy working more with accounting firms is New York-based Net@Work. The firm, also a top Sage reseller, is seeing multiple opportunities to both help plan and implement needed technology for accounting firms, and is even seeking help from its primary accounting product vendor.
"Partnering with accounting firms has become a big focus for us right now, and Sage recently assigned 90 [Sage Accountants Network] members to us," said Net@Work co-founder Alex Solomon. "I want to go to as many of those [firms] and say, 'Let us help you help your client,' whether it's through CPE, IT strategy, implementation - whatever we need to do, as it's such a big source or referrals for us."
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