Document management systems clearly illustrate the problem that accounting firms have with technical solutions to management problems. That is, even where the problems are pressing and technology-based solutions are plentiful, many firms are hesitant to embrace them.

"We have come a long way, particularly in the accounting industry," said Matt Peterson, president and chief executive officer of eFileCabinet. "The concept of the paperless office has gone mainstream. Yet at the same time, it has not been embraced by the majority of accountants. Many accountants still see it as a nice to have, but not a need to have."



The 2014 Accounting Firm Operations and Technology Survey and E-Book, a report from Insight Research Group and the Network Management Group, stated that 32 percent of accounting firms reported that the most significant technology challenge they face in the next three years is enhancing workflow and internal efficiency. This challenge tops the list of critical management issues.

Yet at the same time, the report notes that 59 percent of firms are using no formal document management system, or are still using a paper-based manual system. While 85 percent of large firms use a formal workflow system, 58 percent of all firms were not using workflow software, including 87 percent of sole practitioners.

"Document management began with a focus on file storage and retrieval," said Julie Pierce, general manager at GruntWorx. "Accountants looked primarily at the cost benefits of eliminating paper documents and filing cabinets. But this was just a starting point, designed to introduce the concept to accountants and give them an easy vision of the longer-term advantages of document management. Over the past five years, this simple technology has evolved into a driving force for efficiency, workflow and profitability for the firm."

"Document management is becoming less about imaging or scanning, and more about managing streams of incoming electronic documents," agreed Andrew Bailey, president of Cabinet Document Management Solutions. "Most businesses are getting their documents via electronic methods. The days of getting lots of paper documents and then scanning them are slowing considerably. More important is the ability to accurately index and file documents that are electronic to begin with."

Nonetheless, with more than half of all firms still not using document management to its full potential, solution providers are scrambling to make the path of evolution easier to understand and to implement.



There are four main reasons firms -- particularly small and midsized firms -- have been slow to adopt document management:

It's disruptive. "It's a complete change to the firm's workflows," said eFileCabinet's Peterson. "And all companies fear massive changes, because they bring the unknown. ... The common thread in all of these is that the files are no longer just documents, but rather the central repositories of knowledge and information."

"To be effective in a practice, document management must be strategic and subject to universal processes," added Jordan Kleinsmith, enterprise product manager at Thomson Reuters. "This means that all teams or departments must operate in the same manner, so that everyone can reap the benefits. Often, this behavioral hurdle in an office is the biggest inhibitor to a successful shift (i.e. partners/teams/etc. wanting to do things in their own way), so tackle it as early as possible in the shift, and sell everyone on the benefits of standardization."

Some systems are proprietary, or tied to a single program. "We recognize the issues practitioners have when document storage is in a proprietary file type or database," said Brock Philp, president and CEO of Doc.It. "Access and delivery of documents becomes a challenge if the practitioner does not have the version of software used to create a document from the previous year. E-mails could become a problem as practitioners move from Outlook to tools such as Gmail or Yahoo! mail."

Losing the familiar. In order to adopt a DM system, a firm must abandon existing practices and procedures that are deeply entrenched, well-understood and work for the firm. "Usually, an office scans documents into the DMS, but still uses the hard copy to pass around," said John Iarussi, marketing director for Office Tools Professional. "This duplication of effort is inefficient, where use of a digital document is much easier to manipulate, assign, organize and keep track of than traditional hard copies. Integrating document management into a practice management system is a crucial step."

The process of evaluation and adopting the DMS can seem daunting. "One trend we have seen is that people will take a lot of time 'kicking the tires' before making a final decision," noted eFileCabinet's Peterson. "They want to see whether there is a clearly defined return on investment, especially in the smaller firms. They do two and three inquiries/test drives. They look at and discuss the products at conferences and trade shows. That requires work and management attention, even though those who do adopt it believe they can use it to grow their business."



Three forces are driving DMS from simple file storage to a more robust management solution - the need to enhance the efficiency of workflow processes; the increasing importance of mobility; and requirements for compliance.

"If you are like other practitioners, you are suffering from document management and/or workflow issues," said Doc.It's Philp. "If you recognize there is room for document management and workflow improvement in your firm, you don't have to take on that improvement alone. It is now possible to get control of your document management and operate more efficiently and effectively without changing your existing tax, audit, accounting, bookkeeping or payroll software."

"Workflows are designed to meet the goals of improved efficiency, better service to clients and growing the business," said GruntWorx's Pierce. "Though it does require planning and change to existing procedures, it is clear that firms using effective document management systems are better able to collaborate with their clients, are more competitive, and are ultimately more successful."

"The need to access source documents and data, when firms need them and where they need them, has made workflow integration with document management a rising expectation," explained CCH product line manufacturer John Barnes. "With this, mobile access and document scanning/indexing to make documents and their associated data more usable has become the primary component of innovation."

Perhaps the most critical force, however, is the growing body of regulations related to the security of personally identifiable information -- particularly in financial services, which are deemed to include both accounting and tax preparation firms.

"The role of compliance is outsourcing to a cloud-based system, for the simple reason that you can't meet the compliance issues in your office," said Office Tools Professional's Iarussi. "Staying compliant in the face of requirements from the SEC, the FTC, Sarbanes-Oxley and the Gramm-Leach-Bliley Act is time-consuming and expensive."

"Movement to cloud-based document management is growing rapidly," agreed Cabinet Document Management Solutions' Bailey. "But if you are interested in moving to the cloud, make sure your provider has taken the necessary steps and precautions as far as security is concerned, including the use of AES 256-bit encryption on all communications and storage. Make sure they have redundant data centers which are secure and have passed the necessary audit steps under SSAE 16."



Solution providers in document management spend time in thousands of accounting and tax offices each year, helping them to better understand the benefits of a more advanced DMS. They offer a variety of ideas and advice for companies undertaking the upgrade process.

"Identify your needs, research the solutions, embrace the technology, and invest in it," advised Iarussi. "Once you break the 'traditional manual processes' that firms are used to, and embrace the technology most owners and partners know they need, you can increase productivity growth, maximize billable time and, of course, net more revenue for your firm."

"Begin with a structured plan and strategy for implementing or upgrading the DM solution/process," said CCH's Barnes. "The plan should include a high-level overview of the firm's goals for the process, including constraints; a defined workflow to ensure that new processes add value to the firm's activities and enable it to efficiently achieve a stated business goal; an engaged group of partners and champions pushing for adoption; a best practices process team; structured training; and timely implementation."

"The cost of adopting paperless systems is much less than the cost of continuing to do business on paper," explained Thomson Reuters' Kleinsmith. "In addition, since many programs now operate on a tablet, practitioners tied to working with paper in hand can find a pretty close approximation in the form of document management on a tablet."

"Document management is changing as practitioners have begun to realize there are two distinct document types they are managing," said Doc.It's Philp. "One type is dynamic -- those documents they collect or create during an engagement. These documents are uniquely organized by type of engagement. The other is static, similar to the accordion folder in a practitioner's paper file room. Static are the final representation of the practitioner's work. These documents are organized by client but must be secure and in a timeless format such as PDF. As you are making decisions on document management and workflow software, look for solutions in a format that looks familiar for both dynamic and static documents."

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