[IMGCAP(1)]Technology is the accelerator for improving performance and meeting client requirements in todays economy.
You can do more with less, but reducing investments in training and technology (as some firms have done this past year) only results in making your business less competitive. Does your firms technology provide competitive advantages, or is it holding you back? The amount your firm invests in technology may not be as important as where it invests.
Too many firms simply maintain existing technology rather than invest in new hardware and software that bolster innovation and new revenue streams.
Firms that have implemented digital platforms to manage documents and workflow will achieve significant savings in time and improved client service in the years ahead.
Technology plays a significant part in a competitive strategy that firms should follow in order to avoid further commoditization and advance the performance and production of personnel. The easy cuts were made this past year in most firms. Now firms must address performance issues at all levels, including partners and others with seniority who have not maintained their skills and risk obsolescence.
Technology plays a significant role in four primary areas that comprise a competitive strategy for the years to come:
Process and workflow;
Marketing and sales; and,
Client experience and value add.
Lets evaluate all four areas and examine some examples of how your peers are leveraging technology.
Talent management will always be a critical ingredient in fostering the success of an accounting firm. As Baby Boomers retire and the digital generation emerges within the workforce, firms must make investments (time and money) in advancing management to stay relevant. Moreover, transferring knowledge from retiring partners to young people is essential in order to maintain the vitality of a firm.
Bodies of knowledge continue to expand, and the need for training now reaches far beyond traditional continuing professional education. Todays talent needs technical, soft skills and IT training. Training and learning is also a two-way street, and the younger generations can teach a firm much about the application of technology.
Many partners have not been trained in management and possess few leadership skills. Some have figured it out over their careers, while others demonstrate poor management skills even though they may have great technical skills. To grow, firms need more than just technical skills. I hear this comment too often: I had to figure it out, and so can they.
I also hear many technicians say they dont have the time to manage and have little desire to empower people. These are poor excuses for not managing talent. The younger generation is looking for defined expectations, feedback and accountability. Not surprisingly, young people are often frustrated with the lack of accountability at the partner level.
Many tools are available to help firms in this area, including learning management systems that specify learning ladders for various levels, develop personal curriculums and track progress. Other tools such as the Kolbe Index ensure a firm has the right people on the bus and they are in the right seats.
Process and Workflow
Firms that strive to improve processes and utilize digital workflow tools have several advantages over those that still use mostly paper and outdated processes. In reviewing tax workflow from a significant number of firms, I conclude the following:
1. Too many touches are still present in the process.
2. A significant number of loops in the processes especially during review are also evident.
3. Firms drive errors out at the end of a process using the highest paid personnel.
4. Processes for low-risk returns are the same or very similar to those for high-risk returns.
5. Firms are not using technology to gather and enter client information, conduct workflow and deliver files through portals.
Outsourcers in India are innovators of workflow software, and they introduced Six Sigma into the process. The intent is to drive errors out of the process at the lowest possible level in order to reduce costs. They also rate the difficulty of each return and match the experience of the preparer with the degree of difficulty. They grade each return for instant feedback and strive to accomplish one-way workflow in order to avoid loops in the process. They also provide at least twice the amount of training as firms do in the U.S.
The following technologies will increase efficiency if a firm changes its processes, trains and ensures compliance:
1. Scanning and organizing tax information into standardized PDF files with bookmarks. Use low-level personnel to scan.
2. Using OCR technology to transfer client information automatically into the tax software.
3. Workflow applications to track documents through the process and manage due dates.
4. Document management to move work among offices or allow people to work from home.
5. Portals to provide secure delivery and document storage. (Clients love portals, but many tax partners resist implementing them because this technology represents change.)
Marketing and Sales
Marketing is back in vogue as firms struggle to acquire new clients and retain profitable clients. The good news is that technology offers potential new strategies and channels that cost less than traditional methods of advertising and print. In order to leverage these tools, firm leaders must open their minds and change some existing paradigms. Yes, this is social networking, and like older social networks such as the Rotary, Chamber of Commerce and Kiwanis, you must participate in order to benefit. Sales cannot be your primary purpose for participating, or you may do more to damage relationships than build them. The beauty of social networking is that technology allows you to manage more relationships and provide value online as well as in person.
An interactive Web site that builds communities will differentiate your firm from its competition. Content is king, and you must be willing to give content away in order to build relationships and gain market share. Most people think of social networking as Facebook, MySpace or LinkedIn. These all serve a purpose, but most firms and their clients will gravitate to purpose-driven or filtered networks. Do not focus on the platform, but rather on the content and experience for your clients. Portals, blogs and communities are all important components of a social networking strategy.
CRM is a term that many firms have discussed but few have implemented with success (for numerous reasons). Cleansing and maintaining a client and prospect database requires time and discipline. New social networking tools allow this information to be provided and updated by clients and prospects rather than the firm. Systems are also capable of identifying who knows whom. Leverage your existing contacts through relationships with contacts of your contacts. The multiplier effect can be lucrative if you provide a community and experience that clients and potential clients desire.
Client Experience and Value Add
Value is established via leadership, relationships and creativity. Leadership provides direction while relationships provide confidence, and creativity provides new capabilities. Technology is often associated with new capabilities but can also support a firms leadership and relationship-building efforts.
I have mentioned a number of areas in which technology can provide a strategic advantage, but the most significant development to impact firms over the next few years will be cloud computing or Software as a Service. SaaS will change all firms strategies and help small firms to compete. Large firms may be challenged by resistance to change or lack of IT leaders who are willing to give up control of their data centers and large number of technical personnel. Firms are already moving to a hosted environment in the following areas:
Tax return preparation;
Optical character recognition and tax file organization;
E-mail, calendars and workflow; and,
Office space is an investment in which many firms spend too much. Space design in many offices is inefficient, and firms typically do not utilize space efficiently. A digital platform reduces storage requirements, and cloud computing will reduce the number of servers and space required to house them. Investments in bandwidth and sourcing will likely keep total technology investments at current levels, but productivity and capabilities will be significantly greater.
Firms should leverage investments in technology by planning, improving processes and training personnel. Digital firms will be better equipped to utilize personnel and provide a more satisfying client experience.
Start with a vision, develop a plan, assign responsibilities and hold people accountable.
It is about progress, not perfection.
L. Gary Boomer, CPA, is the president of Boomer Consulting, in Manhattan, Kan.
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