The digital transformation threatens to disrupt much of what we thought we knew about firm management and technology, resulting in a sudden crowd of players wanting access to the C-suite and control over the IT budget. Who is providing the required technology vision and leadership in your firm? Is it just those with “CPA” after their name? Is this creating, rather than eliminating, silos? Does technology really matter?

Today, the group answering these questions may range from firm leaders and managers to internal and external IT professionals; service niche leaders; and marketing, client experience, analytics, innovation and other creative titles. Often the CIO has been too focused on just keeping things running and may have failed to:

  • Communicate adequately;
  • Build a team with the necessary skills;
  • Focus on the client experience;
  • Build external relationships with peers and business partners;
  • Sell the vision to the C-suite, including the necessary budget; and,
  • Transform the business model to reflect an adequate ROI.

All progress starts with the truth, and let’s face the fact that many partners resist increased investments in technology, mainly because they don’t see the immediate return or they may be concerned about a negative impact on their deferred compensation.

According to Joseph Schumpeter, there is a transformation that occurs from creative destruction. That transformation starts during commoditization of existing services and may last several years until the period of rapid growth of the newer services begins.

Many CEOs are realizing this trend and trying to determine the skills required and who should provide IT leadership in their firms. CEOs tend to get the CIOs they deserve. The CEO who sees technology as a potential accelerator will look to a CIO who has more business savvy and entrepreneurial skills. The CEO who lacks technology expertise or views IT as overhead will tend to get a CIO who controls and often says “No.”

This is often a balancing act of maximizing cash flow from existing services while developing and selling the services of the future. This is a challenge and much different than selecting, from a pool of accountants, who should lead a technical service area. The options are numerous and each CEO needs to select a leader who can both give and receive trust.

Trust is a key factor in that firms with a low level of trust pay more and get less for their technology investments (tax), while those with high levels of trust operate faster and at a much higher level of return (dividend).

The multi-dimensional business models that CPA firms have become and the fact that several of the leading vendors have been slow to move desktop applications (especially tax preparation) to pure Web-based applications also complicate the decision. This causes firms to operate in a hybrid environment (in the fog, rather than in the cloud) and makes integration more difficult, if not impossible.

The business model is also moving up the continuum of value from transactional and compliance work to more advisory services based on business performance and strategic planning. This fact alone creates a much broader role for technology to automate “no- or low-value” steps in processes to greatly improve the client experience.

As long as the profession sells hours, the motivation for efficiency and improved experiences (both client and staff) are minimized. Therefore, the profession is challenged with a transformation process that requires different mindsets, toolsets and skill sets.

The day of the rugged individual is ending, and an era of a collaborative team approach has come. This also applies internally with technology leadership. Internal IT leadership must be focused on collaboration and getting to “Yes” rather than “No.”

“Yes, we can do that — but here is the approximate cost. Is it a priority and how do we get a return on the investment? Does the project support the firm’s vision and one-page strategic plan?”

Sometimes, the return comes in the form of reduced cycle time or the elimination or reduction of labor costs. The pricing strategy can also impact the level of return. Are you giving your savings or return on investment to the client?

In most cases, the technology tools are present, yet the mindsets and skill sets of the people providing services are often too narrowly focused. In the past, the focus has been on compliance, while the focus of the future must be performance and strategic services for the accounting profession to remain relevant. Some accountants are taking advantage of today’s opportunity and choosing to move up the continuum of value, while others try to prove they can survive by working themselves and staff longer hours.

Dan Sullivan, the founder of Strategic Coach, states that as a transformation agent, you choose what to bring from the past as you focus on the future. Many firms that are transitioning successfully have learned it is necessary to eliminate or at least reduce smaller clients who are only purchasing one service (e.g., a 1040). This is often difficult due to existing relationships, but, more importantly, due to compensation plans that promote behaviors that are counter to the firm’s plans for growth.

Back to the focus on IT strategy and how this all connects: Initially, technology was focused on the automation of certain time-consuming processes such as the calculation of tax liability, preparation of financial statements, and practice management (time and billing).

Today, those are considered core applications to an accounting firm, yet the firm must focus beyond these areas to new and higher-value services. Are you going to ask your IT leadership to maintain the old platform while moving to the platform of the future? The answer has been “Yes” in most firms, and the investment has been primarily on the core applications and not on innovation that will drive the future revenue streams.

This is extremely difficult because approximately one-third of the partners want to stay the same, one-third want to move into the future and one-third are looking to see who is moving and who is staying. Strong leadership and consensus-building are required.

Technology is important, but leadership, management, processes and accountability are the keys to execution. Often those with the strongest opinions tend to have the least amount of knowledge about technology. This creates an environment of procrastination and avoidance of risk.

The best leaders in IT are those who are entrepreneurial and share the vision of the firm’s CEO. The problem can be with either the CEO, the CIO or both. If the CEO doesn’t have a clear vision and an understanding of IT capabilities, the firm will suffer. If the CIO doesn’t understand or agree with the CEO’s vision, the firm will also suffer. The need for leadership, collaboration and trust are paramount.

It all starts with a vision and a one-page written plan. Then the right team must be assembled to execute the plan in a timely fashion. This is where technology, marketing, sales, human resources, and project and firm management must come together. A culture with a high level of trust will accelerate the transformation, as well as increase the return on your technology investment.

Think — plan — grow!