Technology has become as important an element of a firm's success as staff — and needs to be managed just as carefully. This panel will examine how pioneering firms are choosing the right technology, integrating it into their practices, and making sure staff and clients are using it correctly so they can get the most out of it.
Transcription:
Chris (00:12):
Alrighty everyone, Thank you very much for your patience and for waiting. I really do appreciate it. And yeah, just to recap, for those who don't know, I am Chris and I'm the technology editor for Accounting Today. And I got to say there is a lot of accounting technology out there. I think you all know that too, right? I mean, look, how does a firm manage all of it? Well, good thing we've got some great speakers on this exact topic. And so we have ourselves, Seth Feinberg. Why don't you maybe talk a little bit about yourself, introduce yourself here.
Seth Fineberg (00:45):
Sure. For those who don't know me, I'm Seth Feinberg. I've spent 20 plus years covering accounting, accounting technology, the accounting profession as a whole. I was in Chris's shoes at one point. I was Technology Editor for Accounting Today, I was also the head editor for Accounting Web. These days I'm acting more as a consultant to the profession, kind of trying to bridge the gap between, in better relationships between accounting professionals and the technology vendors and service providers therein. So happy to be here.
Chris (01:22):
Alright. And we also have Hitendra Patel, why don't you introduce yourself a little bit too?
Hitendra Patel (01:26):
Thank you. And my name is Hitendra and I've been in the profession just like S 20 plus years. I worked with accounting firms for about 12 years doing actual processing with tech account technology companies, selling software to accounting firms. I've been writing quite a lot on CAS and everything. And all my life I worked only with technology and all the companies and I've worked with so many accountants firms, different sizes from from solo practitioners to top 10 firms. So I know what the technology differences can be and hopefully I can share some insights that you can take home.
Chris (02:04):
Alrighty, great. So with that in mind, let's start off with a pretty broad question here. How should firms be thinking about technology?
Seth Fineberg (02:15):
I think that the question that they should be asking is really looking at it from a point of view of what are my biggest pain points? We talked a little bit about this in our automation session yesterday, but specifically when it comes down to the tech, you should kind of have a plan already in mind of like, okay, we're kind of suffering from this, that, or the other thing, whether it's internally or externally, meaning, you know, work with clients and start pretty much from there. I'm sure you probably already have some relationships with some core accounting vendors who are out there. The world today is really all about the add-ons family of things that supposedly integrate with what you have and that can get overwhelming. A lot of us in the room here are not technology experts. It's hard to sort of do a deep dive on things that when there's multiple solutions out there. But I would just say, Chris, start with what you're trying to solve for in your firm. It could be one thing, it could be a group of things and that will kind of set you on your path.
Hitendra Patel (03:29):
Yeah, I think I remember from the IBM days, IBM had an internal unwritten rule called if something works, break it, meaning you must go and try something different all the time. And especially in today's world, technology is moving so fast that if you miss out on those opportunities of enhancing your technology, you are actually doing a disservice to your clients. And secondly, if the clients find out something is better somewhere else, they're always going to be looking for it. And for example, chat GPTs in everybody's face. So clients are very aware of what's happening in accounting technology space. So you got to have that experimentation capital in your budget for technology experimentation. It could be just 1% of your revenue or even the bottom line, but if you do that, there is at least an accountability that okay, somebody's looking at technology, new availability and things like that.
Seth Fineberg (04:25):
All right, we're just getting going. Yep, yep. We're good. Can get him a microphone?
Chris (04:41):
Yeah, actually let me just grab that.
Seth Fineberg (04:50):
So one of the things that Chris had just asked was just kind of about getting how should firms should be thinking about technology. My response was kind of more thinking about it from what is the problem you're trying to solve for? And Hitendra was more about, well you might need to break something.
Speaker 4 (05:12):
It's kind of hard too. It is a partner in a firm or staff in a firm. There's two different perspectives and I've lived on both sides of that. The partners, when they decide to spend money on technology, they're really deciding on dollars that don't go home with really, it just ends up staying the firm. So their perspective there has got to be something of technology is an investment. It's clearly got to be a good investment, something to increase productivity and either put them in a new market or help them with productivity or help staff have a little better life kind of thing. I mean there's clearly some things you want to accomplish there. And on the staff side of that, it's always frustration that we don't have the newest tech or this is not working so good or what's the deal. And the one thing I need to say, I don't know how far down the road you guys got, I apologize for being late, but plus just left the station. Just get going. The key thing, the key thing that I would say, the number one thing I would say about firms is you need to stay out of if at all possible, the panic catch up, what I call catch 22 thing. And that's when a firm's going to go out and they're going to look around and market and they're going to say, whoa, we're way behind all these other firms are doing all this other stuff. So we got to catch up. So they'll go out in what one year and they'll panic and they'll spend a lot of money and time and catch up in a lot of ways. And then the problem is all that money spent shocks the partners big time. And then often what happens is the next year or two they panic, they don't do anything and that's really not a great approach. You still need to keep doing things. When I caught art little firm up the one time, I made it very clear with my partners, I said, we're in catch up and we're going to do a reasonable spend here. It's going to be hard because it's going to be money we're not taking home. And that's always hard. I don't care who you are, but I think it's going to be good spend. Then next year we're going to plan on spending like this and plan on spending another like this. Now those, and this is the next years I've heard experts and pundits talking all the way from 20, 25% of gross revenue, which is a huge number down to more reasonable numbers. Look, I don't think anybody can give your firm the right number. I think you need to sit down internally and say, what are we willing to for go as partners and try to keep investing?
(07:50)
It is an investment. And I'd say one of the real critical things about this investment in the firm is keeping your staff, I can't even begin to tell you how valuable your staff are. And if you don't believe me, whoa, lose one, good one. And holy cow, back when I was in public practice in my little firm, even back then, we had some partners that didn't quite get that memo. And one particular time we had a young lady that she got pregnant and my one partner wanted to just give her relieved time and leave and he was just like, we don't want to pay her a whole lot. And I don't even know what he was thinking. She, one of our best. And to be honest with you, she ended up being in the firm essentially a partner without a title because she didn't pass a CPA exam and having a accounting degree, she's fantastic. So what I told him, this was back in the day, I mean this was back when we were using discs and computers and all this nonsense and I said, look, I'll take a portable computer over her house, I'll load our tax software on that thing. I will run tax returns back and forth every night if I have to. But we are going to keep that relationship with Janice and we are going to keep that and we're going to keep that going. Now in today's world, you can do that a whole lot easier, but if we had lost her folks, what a huge waste. She is still with the firm, even as I checked a few weeks ago, she's still there and runs a huge clientele, like I say, partner, partner without a title. Absolutely terrific. I got to hang on to those people. So investment in technology is money that doesn't go home. It's an investment in the future of your firm. It's also an investment in keeping the employees.
Seth Fineberg (09:38):
Yeah, excellent. And I think in your words, you said it's an investment, not an expense.
Speaker 4 (09:44):
Oh, No way. Looking that way. I will say one thing though, problem is I have too many opinions on this particular topic. I've been in this industry for a lot of years and I've seen a lot of the pundits and experts and I think some of them are fairly good at what they have to say, but too often what I see is what I call chaos bagger, chaos managers, they run around and all they want to say is, you can't be doing the same thing you've always been doing and you've got to change tomorrow. The first time I heard that folks, I was on an AICPA strategic planning committee, 1999, 2000, 2001 in that timeframe. And back then the AICPA wanted us to really be promoting new services. So even way back then they were saying, okay, taxes going away because everybody's going to be doing their own tax return. Write up, bookkeeping's going away because of all these new automated systems and everything. Consulting's where you got to be. And here, let me give you some of the new services they were promoting and see if any of you're doing any of these web trust, elder care, anybody can go store, some of you might remember that mess, right? Alright, lemme ask you a different question. What are your top revenue sources today? Because they're the same ones that the AICPA was going to be disappearing around 1999, 2000. Number one is tax. Am I right? Tax number one, audit accounting write up. Is it still big? It's huge, right? There's so many companies that still need help with their stuff. In fact it's evolved now look, all of these things evolve, right? They transition. The big thing right now, and I do agree with the pundits that run around saying you got to consider this is that outsource CFO stuff, because a lot of businesses can't afford, they can't afford a full-time CFO, but they'll buy a slice of your staff to be able to do certain things.
(11:52)
And there's like three, I see three levels there where they can play, alright? They can be a simple bookkeeper for the south sort stuff or pretty much just like you think scorekeeper, they can also be more of a controller enforce and decide on and manage internal controls, rules, company policy, things like that. Or they can out actually outsource themselves. Your more experienced accountants to do more of the full real CFO look ahead. Do we need a new plant? Do we need to buy our trucks? Do we need to get financing here or there? Do we need to go that step? So yes, your services will change, but I don't want, and I don't like when people step in and say your traditional services are going to be gone tomorrow. They evolve and your opportunities evolve or technology replacing. And that said, that doesn't mean you shouldn't dive into some of the new technology.
(12:49)
Let me put it this way, dive into the new technology that works. When I tell firms to look at investments in technology managing the firm's technology, my first advice to them is don't be a pioneer. Alright? There's something new out there. You don't want to be the pioneer. It's okay to be a bit of a follower here because let them work out all the terrible kinks and all that other stuff. Find out if stuff's working, but do stay on the early adopter curve side of that where you're paying attention to what's going on in the industry and you're looking at the costs and things that are coming out. What was the big hype for a number of years here, and I'm going to kind of embarrass some group here, but honestly, how many of you actually have working profitable ongoing blockchain practices? Nobody. It was a giant waste just like it was with old ODBC and a bunch of other stuff that certain groups and people got all hyped up about folks.
(13:51)
That technology is built into tools. There are tools out there with blockchain and Bitcoin, all these other different things. There's technologies out there with that. You're going to use those technologies, you don't need to have a practice in that area, but you do need to be aware of it and understand it. Alright, so there's a lot of that stuff. So investment in these newer technologies where they make sense. I'm sure right now you all found through the pandemic really quality remote access tools are to die for. And very often a lot of firms will have people in their home offices and they have junk to get on these calls with. And so what they need to do is they need to be willing to invest and make sure they have quality microphones, quality cameras, decent place to have calls and do things. That is the future as much as I would, I'm a bit of a traditionalist and I love the idea of people coming back to the office Again, if you can get them back in face to face, I still think is the best way to get all kinds of business done.
(14:53)
Now that said, that's not going to happen completely and the world is good with that and they've kind of expected that of us and our employees and staff. People expect that of us that they want to be able to work from remote at times, but let's make sure when they do that they're not in on a meeting or a call and people are like going, what? Huh? Or later after the call they get together and say, wow, that was terrible. Did you see that stuff in the background? Or I couldn't even hardly hear that person or whatever. So there's a lot of places where you can look at emerging technology.
Chris (15:25):
Actually I'd like to kind of jump in there.
Speaker 4 (15:27):
Please do.
Chris (15:28):
This actually goes into something else that we were thinking about. So I talked about this a little bit yesterday as well. There is accounting technology as it is marketed as it is talked about, and then there is accounting technology as it is actually done as one actually has it, right? And so this leads to questions of how exactly should firms find and evaluate new software? How do they cut through that fog and avoid a situation where they pick up a terrible teleconferencing software?
Hitendra Patel (15:57):
I think one of the approaches is don't think of it like a switch. So you're going to take out one component and put one in that's going to disturb the entire apple cart. So you are looking at things that will fit in your entire tech stack, which means it must have some integration capabilities, APIs if you can use them and things like that. So anything that comes in as a isolated island of a technology piece, that's going to be very difficult for you to pull off because it's not the cost of the software itself, it's the cost of implementation. Your staff learning the new software, your clients getting used to new reports and formats and things like that. If they're collaborating on that particular piece of software, suddenly they see something totally different. Something was there yesterday, today, it disappeared. So you got to be a little careful as to how it's going to fit in into your entire scheme of things in technology.
Seth Fineberg (16:50):
I would say going even broader than that in terms of evaluating new technology, I think that's probably one of the most daunting tasks to think about, but it can actually be enjoyable. I think start with the relationships that you already have with vendors. If you know, don't have one, really reach out to your community, your fellow accountants, start talking to them. Look at blogs and articles, webinars, just get a start of someone's talking about a particular tool set that might be of interest or use to your firm. And then I think you brought up the idea too about the individual at your firm who's maybe tasked with doing that going, okay, let's see the next four to six apps that kind of do this, get back to me in a couple of weeks or a few weeks, whatever it is, and let me know.
Speaker 4 (17:53):
So I would put someone on the case also say you're doing the right thing, you're here and what we have to say is probably good ideas and what not, but what the others in the room, these other firms and people you're talking to at lunch and at dinner or whatever, talking around amongst these other firms, that's golden. That's absolutely golden. When I first started with my little firm and I was just a staff young junior growing up through the firm, I was told to go to this conference and we were a little worried about our tax prep product we were on back in the day and it was a product that was kind of owned by some family members and it was whatever. And I go to this conference and I really thought we were fine, we could stay where we're at, whatever. I spent a lot of time talking to a lot of the other attendees, what do you use for tax prep?
(18:40)
What do you think of this product? What do you think's going on? I got enough warnings just from attending the conference and talking to the other attendees. This was in November of that year and I went back home and I said, folks, we've got to move to Lacerte because this other stuff we were on is in trouble and I didn't know that. So we did the panic conversion November December, which was kind of tough, but we were able to dodge it by asking our peers. So asking your peers is really big testing of software. If something's new out there you're hearing about, you think, oh, that's pretty cool. You may want to do your own internal test or pick a client that you think is willing to work with you on a test with a solution or something and spend a little time. And yes, if you're looking to adopt any new technology, it's going to be a bit of a learning curve, it's going to be something new, it's going to have to be a test. So when we would do that with clients we installed back in the day, we did Great Plains Peachtree, QuickBooks, a lot of, and whenever we'd hit a new module or hit a new product, we would always try to find a client that was willing to work with us on it and we'd say, look, just straight up with them, we're new to this so we're going to probably bill you half our time. We're going to spend the other time learning and working and walk through this product, but we really think this product is going to fit your needs and be a great fit. And we had great success with those stories. The only time we really had a real bad experience with something like that was where one of my people were trying, they were kind of trying to force a square peg in a round hole.
(20:15)
In other words, stay with a product. We knew, even though when I got looking at it later, the customer or the client really needed something little different. And that was one of the cases where what we should have done really in that case was reach out and partnered with some other firm that knew that product and they could have come in and solved that for us, that was one that we really did get hurt on. So I'd say new stuff, great ideas, and also experiment with it and be willing to keep looking every year sit down. And right now, right now is a great time to sit down and say what worked well for us last year? What really is working well? But at all times consider even the stuff that's working well. Is there something better or something we can change and talk to everybody. We used to have a little fun with it. I mean we'd often have these little firm meetings where we'd buy pizza, have everybody come in and we'd talk at lunch, what's working, what's not working, you know, having trouble with this or that or with QuickBooks or what's going on. And we moved to a certain network, worked for them for a lot of years. They've recently, that'll form, I'm still very close to them. I give them a lot of advice. And two years ago they transitioned over to Access, which has both its benefits being a powerful Walters core product, but also it's got its challenges coming off the server where they were very comfortable. And so for that first year, by the way, be ready for this on something you do big like that with tax prep, that first year's going to be a little tough. So I talked to them now after their second year this past tax season and they're very happy with it. They've just got a few, every product has a few holes here and there and they're different holes. So access has different holes than Lacert. And so it's just one of those migration things. But they are so thrilled. I'll tell you this particular case, they are just so thrilled to move away from what they kind of perceived as a company trying to compete with them. That was their big thing that bothered them.
Chris (22:14):
Actually, so this actually speaks a lot to just overall nature of the profession as one really about relationships. And so of course we have our relationships with clients, we have relationships with other firms, but there's also relationships that someone might have with their vendor now clearly, you know, buy or subscribe to a product from a vendor that's clearly establishing some sort of relationship and that's kind of what they would really love. But going a little bit beyond that, how exactly does one develop a relationship with a vendor?
Seth Fineberg (22:47):
This is definitely kind of core to something that I believe in strongly. I've seen the profession over my time in it and I've seen how those relationships have become increasingly strained. I think because there are a lot of choices out there and some promises aren't always delivered on, maybe communication falls off, don't sort of give you that kind of roadmap. So as far as establishing that relationship, there's always a rep, there's always someone at the vendor, at the service provider whose job it is to connect with you all with accountants, that's their job. And if they don't have anyone like that, to me, I think that's a red flag. I know Val sitting up here is very, very committed to making sure people know and have a direct line to either him or someone in Zoho who can answer the questions and problems that you have. And you come up when you're with accountants world, yeah, it was the same thing, right? It's like because that relationship is as crucial to them as it is to you.
Hitendra Patel (24:00):
Having spent those six, seven years with a technology vendor, I know that we had always had that aim to get feedback from the users, but at the same time we wanted to involve users into the future roadmap. So you have user forums, you have advisory boards, you always look for firms that can come and talk their mind to us. It's not just big firms that will talk to the big technology vendors. We actually look at even the smallest of the firms. You need the whole sample of the market. So there are always these opportunities to reach out to the technology vendors. Sometimes it's just that you don't know how this operator operates, so you don't know the nuances, you think it's not there. That's where the user forums come in. So okay, now I know what it is, but here is what I think is missing and it might be useful for the entire market. Technology vendors are more than willing to listen. You just need to keep talking to them. You just need to keep sending them emails. Whatever one finder say, wait, you are pretty active in giving up. Say why don't you come and talk to me. And most technology vendors have these customer success teams. I was heading one, so I know that customer's voice is so much important for technology companies. So you'll be surprised how much time they're willing to give you. Don't think they're too big for your firm. Nobody's bigger than the customer.
Speaker 4 (25:21):
Very good point. In fact, if you remember back, some of you got some age on you here maybe, do you remember Great Plains and how well they treated their partners and everything they did, they were one of the real champs in the industry with that.
Seth Fineberg (25:33):
Doug Bergham would talk to you directly.
Speaker 4 (25:37):
Yeah, Absolutely. Doug would and kind of sad they sold to Microsoft because Microsoft has been more of a closed door for their partners. Some of these tech vendors are that way. And I would say to Contender's point, if the company is more of a closed door and is not willing to reach back out to you and is not willing to talk with you, that ought to be a little bit of a warning sign because one that has been and can't, I'm not going to use the name because I helped them devise their accounts program 20 plus years ago and for many years it was top shelf and they cherished accountants, they cherished accounting firms. Now it seems like they've kind of closed the door, they're not listening and they've kind of turned their back on our profession. I'm very upset about that.
Seth Fineberg (26:21):
Perception is everything.
Speaker 4 (26:23):
I'm very upset about that and I think that that's a huge mistake on their part. It's going to cost them. Alright now in my new role at Zoho, that helps me because we're very open and looking for accounts and doing things. So yes, talk to your vendors. There should be some kind of relationship that can be had there and if they're very good they will listen to you, which they should. They don't always, but they should. And like I say, if they don't then that, like we say, that might be a warning, like a warning flag.
Hitendra Patel (26:59):
Quickly to share one statistics, very interesting one. And being a technology company, obviously you're always changing the software and on an average our enhancements in a year, 70% of them were triggered by the user requirements, user feedbacks and people asking us to do things. 30%. I leave it to the technologists because for example, IBM Watson and do a chat bot, which is artificially intelligent. Those things came from the technology guys, but 70% is what the market wanted and I'm sure that's the average almost everywhere.
Speaker 4 (27:35):
By the way, the feedback you have for these tech companies, if they're smart, is terribly valuable. I mean terribly valuable. Often you'll find stuff wrong or you'll find stuff where you might even find great. So solution, case studies and things where they didn't even think about their solution working that way. It's like holy cow, that's great. And you can also find the holes for them and help them find where, hey, it drops off here, this doesn't work. And like I say, they, a smart company's going to just value all that terribly. Well.
Chris (28:05):
Alright, so moving on. This is more of a philosophical question I suppose. So I hope you'll forgive me. But look, obviously we all want our software to do every single thing very, very well, but we don't always have that luxury. So all other things being equaled, is it better to invest in software that does one or two things very well, even if you'll need to get several different packages? Or is it better to get one that does all things good enough again, assuming all of the things are equal?
Hitendra Patel (28:37):
Yeah, I think I will relate that to your car. So you see on the speedometer that it can go up to 140 miles an hour, but you're never driving more than a hundred. So treat it like that. Okay, you extract like 70, 80%, that's pretty fast. That's more than enough, right? It's pretty fast. That's pretty fast. So let's say 70, 50%, okay, not accounting software, payroll software, you have to run a hundred percent. You can't miss out anything. So depending upon what you're doing in terms of selling a particular segment of your service, you might temperate your expectations a bit. And as long as you can manage the rest, 15, 20%, somehow maybe write your macros with Excel, whatever you should be. Okay? Because there's no software in the world that will do a hundred percent exactly what you need.
Seth Fineberg (29:22):
I mean I'm going to go back to my original point of, you know, have to really, technology is there to solve a problem. It might solve all of the things fairly well. It might do a couple of things extremely well. But you have to go into your evaluation, go into even you kind of dive in and doing any evaluation at all. You have to know what it's going to solve for and what matters to you. Does it matter that it does one or two things extremely well and that's good enough for me? Or it actually does all these things pretty well and that's going to be good for my firm? It's very hard to think go into something like, okay, well yeah, I guess this is going to get me from point A to point B and we'll reevaluate in another year. I mean, as Val said, it's an advanced an investment and you have to look at it in that frame of mind and not necessarily an expense. But yeah, bottom line is it has to be what matters to you most. So it could be either or both of those things.
Speaker 4 (30:39):
This kind of gets back to the best of breed versus best of sweet argument. And first let me apologize to everyone in the room because we were promised years ago with the promise of windows, we were promised a one database concept. We were promised that all of our practicing practition tools, our tax prep, our everything, our office, our mail, everything was supposed to, our customer relationship management, everything with Windows and the promise the vendors were making to us back then you go from Doss to Windows on the big advantages, we're going to have one firm database and all your apps and all your needs are going to come off this one database. And that just really never did materialize because we didn't hold their feet to the fire and these vendors decided they're going to do their own thing instead of trying to cooperate with each other.
(31:31)
Okay, could they have done it? Yeah, standards were there folks, ODBC, Oli, all the standards were there to build this one database. But you could not get CCH and Thompson to work together. There's just not a chance Intuit add that to the mix, there's going to be a huge fight in there. So it comes back to is it better to be best of breed or is it better to be best of sweet? Alright, that depends what you're looking at. Lemme explain. Tax prep is its own animal to firms. It's everything that is the big app now. So you choose what you're going to be, right? Are you going to be a Walters Courthouse? You're going to be a Thompson house, you're going to be an Intuit house Now around that as best you can, you try to build, in my opinion, best of suite from around that. So within their suite, what do they have to offer you, right? Within that whole area. Why? Because then you don't have to do migrations or integrations or other stuff when you've got two different products, two different companies and something goes wrong, I guarantee you they're going to do this thing point at each other every time. And it's, let me just tell you, that was probably one of my most frustrating things as a technician running our whole firm as a small firm there and trying to keep everything running was when something would go wrong and I'd have Lacerte pointing at these guys and these guys pointing at Lacerte or whatever. We were going back and forth and all around and that's very frustrating. So if you can cut down on the number of integrations and things and best of sweet, you're still better off there. And as time goes on, what I see as a vision, now remember I've got a little different position here.
(33:23)
I'm being biased on what I'm going to tell you next with the exception of tax prep. Everything else you can find in a best of sweet, okay, you just need to look now that's where I think we're going to go and where we're going to win this thing in a few years. I predict there'll be a tip over point where we do become the player and that's why I joined Zoho. Okay? If you don't understand what I just said, come by the booth, we'll show you what we mean, okay? But tax prep in itself, I don't think you're going to see any players enter, unfortunately for all of us, it's a bit of a locked game. Why you're not going to use a tax prep product. You maybe try a practice management product, maybe even a writeup product, but you're not going to try a tax prep product until for sure it's really working, right?
(34:19)
And you see a lot of other firms using it, correct? A new product coming into the market then has a real catch 22 to overcome. Because to be able to get to where a lot of firms are using it, they have to have the firms trust them. But those firms aren't going to trust them to get there. So they're never going to have the user base to brag on to get there no matter how good they are. And that means they're not going to sell who tried to come in the market, by the way, anybody know this Canopy? Canopy spent a lot of money going after they were going legitimately after federal state everything. And back when I was giving advice to companies, my prior company, we warned them, we said, you know what, your tax resolution is second to none, it's fantastic. Your practice management is doing good and it's got a good chance to sell pretty well, but all this money you're pouring to tax prep is wasted money because of this Catch 22, you're not going to get in there. There was one particular key meeting where they finally did listen to us. So the bad news for us on that side is for firms, you're kind of locked into the choices that are there for tax prep. However, everything else I think is fair game to look out there and I predict going forward, you're better off with a sweet approach than you are with best of break.
Chris (35:43):
Alright, so we've got about five minutes left and so I'm going to have to challenge your parsimony on this final question here. So every single one of us in a lot of different areas at some point have been Pennywise pound foolish right? Now, here's the thing, and not every firm has the resources to invest in the best technology. Is the bargain basement a place to avoid at all cost? Is cheap tech better than no tech Overall, how should we be thinking about this? Hitendra Would you like to start off?
Hitendra Patel (36:10):
Yeah, I don't know if anybody wants to use the paper ledger anymore. So tech is required for sure, but then again, depending upon the stage, a lifecycle stage in your firm's journey, you're looking at your mature, you are growing, you are new, depending on all of that. You got to look at what technology best suits your current operation and business model, that's for sure. And otherwise you're going to be too expensive to operate and you won't be able to compete in the marketplace. So you're always going to evolve. But the baseline, the foundational takes stack. You got to think ahead in terms of what am I going to look like as a firm three years down the line provided all my marketing and business development plans come true. So you actually got to be prepared for the best, not for the worst. Because suddenly if the growth comes in and which I've seen multiple times across many years when growth hits, most firms are not able to handle that. You have a lot of capacity, you're underutilized, you can still manage it, but otherwise everything starts breaking up. So you got to have that resilience built in your technology roadmap for sure. So you're going to look at things like, you know, might do a lot of work in Excel to avoid investing in let's say a subscription priced software. One fine day, you got to go there, you got to move out Excel except for some analytics work that you want to do ad hoc. But other than that you need a system. So don't look at a tool or a software just as a piece of software. It's your system. And on top of that, you're applying your education, experience, expertise, and knowledge. And combined together is your marketable IPR, right? So that's where you need to look at. So technology is your component of what you're going to sell, but not purely as technology. How have you used technology for the benefit of your clients? And that's where you are looking at, okay, here is what I can do with technology two years down the line, this is what I want to do. And prepare your roadmap towards that.
Chris (38:16):
Seth, some thoughts?
Seth Fineberg (38:17):
Thoughts, I'm going to say that, and I mentioned at the beginning about your decisions with technology. I wouldn't look at it from a, can I afford this or not? I would look at it from a can I afford to not do this? And it's just like with your clients, you're all hopefully charging a good amount for what you do. There's value in what you do and that client's going to stay with you for what it delivers to you because you're solving problems for them, you're delivering on service. I think looking at tech the same way as not a oh, cheap is better than nothing or nothing is better. Sure, I mean I get it, you know all have budgets here in and year out. But I would still look at it from a can I afford not to do this?
Chris (39:09):
Alright, Why don't you close this out?
Speaker 4 (39:10):
Well, part of your annual evaluation or how often you evaluate technology, you ought to sit down and say, is there an area where I can get a cheaper product? And I'll give you example here that I've seen some firms do. Instead of having a full Microsoft Office 365 license or whatever, they looked down and said, mail word processing, other little communication tools, things, we can go with Google or something cheaper, we can go there, but let's keep our full Excel licenses because our people still need Excel. So they've dropped off office of 65 licenses and gone to single Excel like desktop licenses and that's worked fine because these other products had worked well for them. The key to that is make sure if you're going cheaper for a product, I don't want to say cheap, but cheaper, trying to take some money and get a product, make sure it still does everything your professionals need to do.
(40:05)
And I could tell you that's why I've seen those firms clinged also to those Excel licenses. Because right now, even as much as we have at Zoho sheet, we have our own spreadsheet, it's good. Your accounts are beyond what it does and you really still need that Excel license for a lot of the things, the deeper pivot tables and deeper things and other capabilities that happens there. So you could evaluate a category, just make sure, I think Seth's points right on. Are you really sure that you're going to not be creating a bigger deal or a bigger cost by moving the stretch?
Seth Fineberg (40:40):
Putting a price tag on it.
Chris (40:42):
And it is exactly 12:20 right now and that's fantastic. So that's about all the time we've got. But I do want to thank our distinguished speakers over here and thank everyone for their patience. And of course you the audience who have been fantastic now. Thank you. We got another session right here moderated by me. I'm not going anywhere.
Seth Fineberg (41:03):
Thank you very much and we're obviously here to talk to you guys. Thank you.
Chris (00:12):
Alrighty everyone, Thank you very much for your patience and for waiting. I really do appreciate it. And yeah, just to recap, for those who don't know, I am Chris and I'm the technology editor for Accounting Today. And I got to say there is a lot of accounting technology out there. I think you all know that too, right? I mean, look, how does a firm manage all of it? Well, good thing we've got some great speakers on this exact topic. And so we have ourselves, Seth Feinberg. Why don't you maybe talk a little bit about yourself, introduce yourself here.
Seth Fineberg (00:45):
Sure. For those who don't know me, I'm Seth Feinberg. I've spent 20 plus years covering accounting, accounting technology, the accounting profession as a whole. I was in Chris's shoes at one point. I was Technology Editor for Accounting Today, I was also the head editor for Accounting Web. These days I'm acting more as a consultant to the profession, kind of trying to bridge the gap between, in better relationships between accounting professionals and the technology vendors and service providers therein. So happy to be here.
Chris (01:22):
Alright. And we also have Hitendra Patel, why don't you introduce yourself a little bit too?
Hitendra Patel (01:26):
Thank you. And my name is Hitendra and I've been in the profession just like S 20 plus years. I worked with accounting firms for about 12 years doing actual processing with tech account technology companies, selling software to accounting firms. I've been writing quite a lot on cas and everything. And all my life I worked only with technology and all the companies and I've worked with so many accountants firms, different sizes from from solo practitioners to top 10 firms. So I know what the technology differences can be and hopefully I can share some insights that you can take home.
Chris (02:04):
Alrighty, great. So with that in mind, let's start off with a pretty broad question here. How should firms be thinking about technology?
Seth Fineberg (02:15):
I think that the question that they should be asking is really looking at it from a point of view of what are my biggest pain points? We talked a little bit about this in our automation session yesterday, but specifically when it comes down to the tech, you should kind of have a plan already in mind of like, okay, we're kind of suffering from this, that, or the other thing, whether it's internally or externally, meaning, you know, work with clients and start pretty much from there. I'm sure you probably already have some relationships with some core accounting vendors who are out there. The world today is really all about the add-ons family of things that supposedly integrate with what you have and that can get overwhelming. A lot of us in the room here are not technology experts. It's hard to sort of do a deep dive on things that when there's multiple solutions out there. But I would just say, Chris, start with what you're trying to solve for in your firm. It could be one thing, it could be a group of things and that will kind of set you on your path.
Hitendra Patel (03:29):
Yeah, I think I remember from the IBM days, IBM had an internal unwritten rule called if something works, break it, meaning you must go and try something different all the time. And especially in today's world, technology is moving so fast that if you miss out on those opportunities of enhancing your technology, you are actually doing a disservice to your clients. And secondly, if the clients find out something is better somewhere else, they're always going to be looking for it. And for example, chat GPTs in everybody's face. So clients are very aware of what's happening in accounting technology space. So you got to have that experimentation capital in your budget for technology experimentation. It could be just 1% of your revenue or even the bottom line, but if you do that, there is at least an accountability that okay, somebody's looking at technology, new availability and things like that.
Seth Fineberg (04:25):
All right, we're just getting going. Yep, yep. We're good. Can get him a microphone?
Chris (04:41):
Yeah, actually let me just grab that.
Seth Fineberg (04:50):
So one of the things that Chris had just asked was just kind of about getting how should firms should be thinking about technology. My response was kind of more thinking about it from what is the problem you're trying to solve for? And Hitendra was more about, well you might need to break something.
Speaker 4 (05:12):
It's kind of hard too. It is a partner in a firm or staff in a firm. There's two different perspectives and I've lived on both sides of that. The partners, when they decide to spend money on technology, they're really deciding on dollars that don't go home with really, it just ends up staying the firm. So their perspective there has got to be something of technology is an investment. It's clearly got to be a good investment, something to increase productivity and either put them in a new market or help them with productivity or help staff have a little better life kind of thing. I mean there's clearly some things you want to accomplish there. And on the staff side of that, it's always frustration that we don't have the newest tech or this is not working so good or what's the deal. And the one thing I need to say, I don't know how far down the road you guys got, I apologize for being late, but plus just left the station. Just get going. The key thing, the key thing that I would say, the number one thing I would say about firms is you need to stay out of if at all possible, the panic catch up, what I call catch 22 thing. And that's when a firm's going to go out and they're going to look around and market and they're going to say, whoa, we're way behind all these other firms are doing all this other stuff. So we got to catch up. So they'll go out in what one year and they'll panic and they'll spend a lot of money and time and catch up in a lot of ways. And then the problem is all that money spent shocks the partners big time. And then often what happens is the next year or two they panic, they don't do anything and that's really not a great approach. You still need to keep doing things. When I caught art little firm up the one time, I made it very clear with my partners, I said, we're in catch up and we're going to do a reasonable spend here. It's going to be hard because it's going to be money we're not taking home. And that's always hard. I don't care who you are, but I think it's going to be good spend. Then next year we're going to plan on spending like this and plan on spending another like this. Now those, and this is the next years I've heard experts and pundits talking all the way from 20, 25% of gross revenue, which is a huge number down to more reasonable numbers. Look, I don't think anybody can give your firm the right number. I think you need to sit down internally and say, what are we willing to for go as partners and try to keep investing?
(07:50)
It is an investment. And I'd say one of the real critical things about this investment in the firm is keeping your staff, I can't even begin to tell you how valuable your staff are. And if you don't believe me, whoa, lose one, good one. And holy cow, back when I was in public practice in my little firm, even back then, we had some partners that didn't quite get that memo. And one particular time we had a young lady that she got pregnant and my one partner wanted to just give her relieved time and leave and he was just like, we don't want to pay her a whole lot. And I don't even know what he was thinking. She, one of our best. And to be honest with you, she ended up being in the firm essentially a partner without a title because she didn't pass a CPA exam and having a accounting degree, she's fantastic. So what I told him, this was back in the day, I mean this was back when we were using discs and computers and all this nonsense and I said, look, I'll take a portable computer over her house, I'll load our tax software on that thing. I will run tax returns back and forth every night if I have to. But we are going to keep that relationship with Janice and we are going to keep that and we're going to keep that going. Now in today's world, you can do that a whole lot easier, but if we had lost her folks, what a huge waste. She is still with the firm, even as I checked a few weeks ago, she's still there and runs a huge clientele, like I say, partner, partner without a title. Absolutely terrific. I got to hang on to those people. So investment in technology is money that doesn't go home. It's an investment in the future of your firm. It's also an investment in keeping the employees.
Seth Fineberg (09:38):
Yeah, excellent. And I think in your words, you said it's an investment, not an expense.
Speaker 4 (09:44):
Oh, No way. Looking that way. I will say one thing though, problem is I have too many opinions on this particular topic. I've been in this industry for a lot of years and I've seen a lot of the pundits and experts and I think some of them are fairly good at what they have to say, but too often what I see is what I call chaos bagger, chaos managers, they run around and all they want to say is, you can't be doing the same thing you've always been doing and you've got to change tomorrow. The first time I heard that folks, I was on an AICPA strategic planning committee, 1999, 2000, 2001 in that timeframe. And back then the AICPA wanted us to really be promoting new services. So even way back then they were saying, okay, taxes going away because everybody's going to be doing their own tax return. Write up, bookkeeping's going away because of all these new automated systems and everything. Consulting's where you got to be. And here, let me give you some of the new services they were promoting and see if any of you're doing any of these web trust, elder care, anybody a cogn store, some of you might remember that mess, right? Alright, lemme ask you a different question. What are your top revenue sources today? Because they're the same ones that the AICPA was going to be disappearing around 1999, 2000. Number one is tax. Am I right? Tax number one, audit accounting write up. Is it still big? It's huge, right? There's so many companies that still need help with their stuff. In fact it's evolved now look, all of these things evolve, right? They transition. The big thing right now, and I do agree with the pundits that run around saying you got to consider this is that outsource CFO stuff, because a lot of businesses can't afford, they can't afford a full-time CFO, but they'll buy a slice of your staff to be able to do certain things.
(11:52)
And there's like three, I see three levels there where they can play, alright? They can be a simple bookkeeper for the south sort stuff or pretty much just like you think scorekeeper, they can also be more of a controller enforce and decide on and manage internal controls, rules, company policy, things like that. Or they can out actually outsource themselves. Your more experienced accountants to do more of the full real CFO look ahead. Do we need a new plant? Do we need to buy our trucks? Do we need to get financing here or there? Do we need to go that step? So yes, your services will change, but I don't want, and I don't like when people step in and say your traditional services are going to be gone tomorrow. They evolve and your opportunities evolve or technology replacing. And that said, that doesn't mean you shouldn't dive into some of the new technology.
(12:49)
Let me put it this way, dive into the new technology that works. When I tell firms to look at investments in technology managing the firm's technology, my first advice to them is don't be a pioneer. Alright? There's something new out there. You don't want to be the pioneer. It's okay to be a bit of a follower here because let them work out all the terrible kinks and all that other stuff. Find out if stuff's working, but do stay on the early adopter curve side of that where you're paying attention to what's going on in the industry and you're looking at the costs and things that are coming out. What was the big hype for a number of years here, and I'm going to kind of embarrass some group here, but honestly, how many of you actually have working profitable ongoing blockchain practices? Nobody. It was a giant waste just like it was with old ODBC and a bunch of other stuff that certain groups and people got all hyped up about folks.
(13:51)
That technology is built into tools. There are tools out there with blockchain and Bitcoin, all these other different things. There's technologies out there with that. You're going to use those technologies, you don't need to have a practice in that area, but you do need to be aware of it and understand it. Alright, so there's a lot of that stuff. So investment in these newer technologies where they make sense. I'm sure right now you all found through the pandemic really quality remote access tools are to die for. And very often a lot of firms will have people in their home offices and they have junk to get on these calls with. And so what they need to do is they need to be willing to invest and make sure they have quality microphones, quality cameras, decent place to have calls and do things. That is the future as much as I would, I'm a bit of a traditionalist and I love the idea of people coming back to the office Again, if you can get them back in face to face, I still think is the best way to get all kinds of business done.
(14:53)
Now that said, that's not going to happen completely and the world is good with that and they've kind of expected that of us and our employees and staff. People expect that of us that they want to be able to work from remote at times, but let's make sure when they do that they're not in on a meeting or a call and people are like going, what? Huh? Or later after the call they get together and say, wow, that was terrible. Did you see that stuff in the background? Or I couldn't even hardly hear that person or whatever. So there's a lot of places where you can look at emerging technology.
Chris (15:25):
Actually I'd like to kind of jump in there.
Speaker 4 (15:27):
Please do.
Chris (15:28):
This actually goes into something else that we were thinking about. So I talked about this a little bit yesterday as well. There is accounting technology as it is marketed as it is talked about, and then there is accounting technology as it is actually done as one actually has it, right? And so this leads to questions of how exactly should firms find and evaluate new software? How do they cut through that fog and avoid a situation where they pick up a terrible teleconferencing software?
Hitendra Patel (15:57):
I think one of the approaches is don't think of it like a switch. So you're going to take out one component and put one in that's going to disturb the entire apple cart. So you are looking at things that will fit in your entire tech stack, which means it must have some integration capabilities, APIs if you can use them and things like that. So anything that comes in as a isolated island of a technology piece, that's going to be very difficult for you to pull off because it's not the cost of the software itself, it's the cost of implementation. Your staff learning the new software, your clients getting used to new reports and formats and things like that. If they're collaborating on that particular piece of software, suddenly they see something totally different. Something was there yesterday, today, it disappeared. So you got to be a little careful as to how it's going to fit in into your entire scheme of things in technology.
Seth Fineberg (16:50):
I would say going even broader than that in terms of evaluating new technology, I think that's probably one of the most daunting tasks to think about, but it can actually be enjoyable. I think start with the relationships that you already have with vendors. If you know, don't have one, really reach out to your community, your fellow accountants, start talking to them. Look at blogs and articles, webinars, just get a start of someone's talking about a particular tool set that might be of interest or use to your firm. And then I think you brought up the idea too about the individual at your firm who's maybe tasked with doing that going, okay, let's see the next four to six apps that kind of do this, get back to me in a couple of weeks or a few weeks, whatever it is, and let me know.
Speaker 4 (17:53):
So I would put someone on the case also say you're doing the right thing, you're here and what we have to say is probably good ideas and what not, but what the others in the room, these other firms and people you're talking to at lunch and at dinner or whatever, talking around amongst these other firms, that's golden. That's absolutely golden. When I first started with my little firm and I was just a staff young junior growing up through the firm, I was told to go to this conference and we were a little worried about our tax prep product we were on back in the day and it was a product that was kind of owned by some family members and it was whatever. And I go to this conference and I really thought we were fine, we could stay where we're at, whatever. I spent a lot of time talking to a lot of the other attendees, what do you use for tax prep?
(18:40)
What do you think of this product? What do you think's going on? I got enough warnings just from attending the conference and talking to the other attendees. This was in November of that year and I went back home and I said, folks, we've got to move to Lacerte because this other stuff we were on is in trouble and I didn't know that. So we did the panic conversion November December, which was kind of tough, but we were able to dodge it by asking our peers. So asking your peers is really big testing of software. If something's new out there you're hearing about, you think, oh, that's pretty cool. You may want to do your own internal test or pick a client that you think is willing to work with you on a test with a solution or something and spend a little time. And yes, if you're looking to adopt any new technology, it's going to be a bit of a learning curve, it's going to be something new, it's going to have to be a test. So when we would do that with clients we installed back in the day, we did Great Plains Peachtree, QuickBooks, a lot of, and whenever we'd hit a new module or hit a new product, we would always try to find a client that was willing to work with us on it and we'd say, look, just straight up with them, we're new to this so we're going to probably bill you half our time. We're going to spend the other time learning and working and walk through this product, but we really think this product is going to fit your needs and be a great fit. And we had great success with those stories. The only time we really had a real bad experience with something like that was where one of my people were trying, they were kind of trying to force a square peg in a round hole.
(20:15)
In other words, stay with a product. We knew, even though when I got looking at it later, the customer or the client really needed something little different. And that was one of the cases where what we should have done really in that case was reach out and partnered with some other firm that knew that product and they could have come in and solved that for us, that was one that we really did get hurt on. So I'd say new stuff, great ideas, and also experiment with it and be willing to keep looking every year sit down. And right now, right now is a great time to sit down and say what worked well for us last year? What really is working well? But at all times consider even the stuff that's working well. Is there something better or something we can change and talk to everybody. We used to have a little fun with it. I mean we'd often have these little firm meetings where we'd buy pizza, have everybody come in and we'd talk at lunch, what's working, what's not working, you know, having trouble with this or that or with QuickBooks or what's going on. And we moved to a certain network, worked for them for a lot of years. They've recently, that'll form, I'm still very close to them. I give them a lot of advice. And two years ago they transitioned over to Access, which has both its benefits being a powerful Walters core product, but also it's got its challenges coming off the server where they were very comfortable. And so for that first year, by the way, be ready for this on something you do big like that with tax prep, that first year's going to be a little tough. So I talked to them now after their second year this past tax season and they're very happy with it. They've just got a few, every product has a few holes here and there and they're different holes. So access has different holes than Lacert. And so it's just one of those migration things. But they are so thrilled. I'll tell you this particular case, they are just so thrilled to move away from what they kind of perceived as a company trying to compete with them. That was their big thing that bothered them.
Chris (22:14):
Actually, so this actually speaks a lot to just overall nature of the profession as one really about relationships. And so of course we have our relationships with clients, we have relationships with other firms, but there's also relationships that someone might have with their vendor now clearly, you know, buy or subscribe to a product from a vendor that's clearly establishing some sort of relationship and that's kind of what they would really love. But going a little bit beyond that, how exactly does one develop a relationship with a vendor?
Seth Fineberg (22:47):
This is definitely kind of core to something that I believe in strongly. I've seen the profession over my time in it and I've seen how those relationships have become increasingly strained. I think because there are a lot of choices out there and some promises aren't always delivered on, maybe communication falls off, don't sort of give you that kind of roadmap. So as far as establishing that relationship, there's always a rep, there's always someone at the vendor, at the service provider whose job it is to connect with you all with accountants, that's their job. And if they don't have anyone like that, to me, I think that's a red flag. I know Val sitting up here is very, very committed to making sure people know and have a direct line to either him or someone in Zoho who can answer the questions and problems that you have. And you come up when you're with accountants world, yeah, it was the same thing, right? It's like because that relationship is as crucial to them as it is to you.
Hitendra Patel (24:00):
Having spent those six, seven years with a technology vendor, I know that we had always had that aim to get feedback from the users, but at the same time we wanted to involve users into the future roadmap. So you have user forums, you have advisory boards, you always look for firms that can come and talk their mind to us. It's not just big firms that will talk to the big technology vendors. We actually look at even the smallest of the firms. You need the whole sample of the market. So there are always these opportunities to reach out to the technology vendors. Sometimes it's just that you don't know how this operator operates, so you don't know the nuances, you think it's not there. That's where the user forums come in. So okay, now I know what it is, but here is what I think is missing and it might be useful for the entire market. Technology vendors are more than willing to listen. You just need to keep talking to them. You just need to keep sending them emails. Whatever one finder say, wait, you are pretty active in giving up. Say why don't you come and talk to me. And most technology vendors have these customer success teams. I was heading one, so I know that customer's voice is so much important for technology companies. So you'll be surprised how much time they're willing to give you. Don't think they're too big for your firm. Nobody's bigger than the customer.
Speaker 4 (25:21):
Very good point. In fact, if you remember back, some of you got some age on you here maybe, do you remember Great Plains and how well they treated their partners and everything they did, they were one of the real champs in the industry with that.
Seth Fineberg (25:33):
Doug Bergham would talk to you directly.
Speaker 4 (25:37):
Yeah, Absolutely. Doug would and kind of sad they sold to Microsoft because Microsoft has been more of a closed door for their partners. Some of these tech vendors are that way. And I would say to Contender's point, if the company is more of a closed door and is not willing to reach back out to you and is not willing to talk with you, that ought to be a little bit of a warning sign because one that has been and can't, I'm not going to use the name because I helped them devise their accounts program 20 plus years ago and for many years it was top shelf and they cherished accountants, they cherished accounting firms. Now it seems like they've kind of closed the door, they're not listening and they've kind of turned their back on our profession. I'm very upset about that.
Seth Fineberg (26:21):
Perception is everything.
Speaker 4 (26:23):
I'm very upset about that and I think that that's a huge mistake on their part. It's going to cost them. Alright now in my new role at Zoho, that helps me because we're very open and looking for accounts and doing things. So yes, talk to your vendors. There should be some kind of relationship that can be had there and if they're very good they will listen to you, which they should. They don't always, but they should. And like I say, if they don't then that, like we say, that might be a warning, like a warning flag.
Hitendra Patel (26:59):
Quickly to share one statistics, very interesting one. And being a technology company, obviously you're always changing the software and on an average our enhancements in a year, 70% of them were triggered by the user requirements, user feedbacks and people asking us to do things. 30%. I leave it to the technologists because for example, IBM Watson and do a chat bot, which is artificially intelligent. Those things came from the technology guys, but 70% is what the market wanted and I'm sure that's the average almost everywhere.
Speaker 4 (27:35):
By the way, the feedback you have for these tech companies, if they're smart, is terribly valuable. I mean terribly valuable. Often you'll find stuff wrong or you'll find stuff where you might even find great. So solution, case studies and things where they didn't even think about their solution working that way. It's like holy cow, that's great. And you can also find the holes for them and help them find where, hey, it drops off here, this doesn't work. And like I say, they, a smart company's going to just value all that terribly. Well.
Chris (28:05):
Alright, so moving on. This is more of a philosophical question I suppose. So I hope you'll forgive me. But look, obviously we all want our software to do every single thing very, very well, but we don't always have that luxury. So all other things being equaled, is it better to invest in software that does one or two things very well, even if you'll need to get several different packages? Or is it better to get one that does all things good enough again, assuming all of the things are equal?
Hitendra Patel (28:37):
Yeah, I think I will relate that to your car. So you see on the speedometer that it can go up to 140 miles an hour, but you're never driving more than a hundred. So treat it like that. Okay, you extract like 70, 80%, that's pretty fast. That's more than enough, right? It's pretty fast. That's pretty fast. So let's say 70, 50%, okay, not accounting software, payroll software, you have to run a hundred percent. You can't miss out anything. So depending upon what you're doing in terms of selling a particular segment of your service, you might temperate your expectations a bit. And as long as you can manage the rest, 15, 20%, somehow maybe write your macros with Excel, whatever you should be. Okay? Because there's no software in the world that will do a hundred percent exactly what you need.
Seth Fineberg (29:22):
I mean I'm going to go back to my original point of, you know, have to really, technology is there to solve a problem. It might solve all of the things fairly well. It might do a couple of things extremely well. But you have to go into your evaluation, go into even you kind of dive in and doing any evaluation at all. You have to know what it's going to solve for and what matters to you. Does it matter that it does one or two things extremely well and that's good enough for me? Or it actually does all these things pretty well and that's going to be good for my firm? It's very hard to think go into something like, okay, well yeah, I guess this is going to get me from point A to point B and we'll reevaluate in another year. I mean, as Val said, it's an advanced an investment and you have to look at it in that frame of mind and not necessarily an expense. But yeah, bottom line is it has to be what matters to you most. So it could be either or both of those things.
Speaker 4 (30:39):
This kind of gets back to the best of breed versus best of sweet argument. And first let me apologize to everyone in the room because we were promised years ago with the promise of windows, we were promised a one database concept. We were promised that all of our practicing practition tools, our tax prep, our everything, our office, our mail, everything was supposed to, our customer relationship management, everything with Windows and the promise the vendors were making to us back then you go from Doss to Windows on the big advantages, we're going to have one firm database and all your apps and all your needs are going to come off this one database. And that just really never did materialize because we didn't hold their feet to the fire and these vendors decided they're going to do their own thing instead of trying to cooperate with each other.
(31:31)
Okay, could they have done it? Yeah, standards were there folks, ODBC, Oli, all the standards were there to build this one database. But you could not get CCH and Thompson to work together. There's just not a chance Intuit add that to the mix, there's going to be a huge fight in there. So it comes back to is it better to be best of breed or is it better to be best of sweet? Alright, that depends what you're looking at. Lemme explain. Tax prep is its own animal to firms. It's everything that is the big app now. So you choose what you're going to be, right? Are you going to be a Walters Courthouse? You're going to be a Thompson house, you're going to be an Intuit house Now around that as best you can, you try to build, in my opinion, best of suite from around that. So within their suite, what do they have to offer you, right? Within that whole area. Why? Because then you don't have to do migrations or integrations or other stuff when you've got two different products, two different companies and something goes wrong, I guarantee you they're going to do this thing point at each other every time. And it's, let me just tell you, that was probably one of my most frustrating things as a technician running our whole firm as a small firm there and trying to keep everything running was when something would go wrong and I'd have Lacerte pointing at these guys and these guys pointing at Lacerte or whatever. We were going back and forth and all around and that's very frustrating. So if you can cut down on the number of integrations and things and best of sweet, you're still better off there. And as time goes on, what I see as a vision, now remember I've got a little different position here.
(33:23)
I'm being biased on what I'm going to tell you next with the exception of tax prep. Everything else you can find in a best of sweet, okay, you just need to look now that's where I think we're going to go and where we're going to win this thing in a few years. I predict there'll be a tip over point where we do become the player and that's why I joined Zoho. Okay? If you don't understand what I just said, come by the booth, we'll show you what we mean, okay? But tax prep in itself, I don't think you're going to see any players enter, unfortunately for all of us, it's a bit of a locked game. Why you're not going to use a tax prep product. You maybe try a practice management product, maybe even a writeup product, but you're not going to try a tax prep product until for sure it's really working, right?
(34:19)
And you see a lot of other firms using it, correct? A new product coming into the market then has a real catch 22 to overcome. Because to be able to get to where a lot of firms are using it, they have to have the firms trust them. But those firms aren't going to trust them to get there. So they're never going to have the user base to brag on to get there no matter how good they are. And that means they're not going to sell who tried to come in the market, by the way, anybody know this Canopy? Canopy spent a lot of money going after they were going legitimately after federal state everything. And back when I was giving advice to companies, my prior company, we warned them, we said, you know what, your tax resolution is second to none, it's fantastic. Your practice management is doing good and it's got a good chance to sell pretty well, but all this money you're pouring to tax prep is wasted money because of this Catch 22, you're not going to get in there. There was one particular key meeting where they finally did listen to us. So the bad news for us on that side is for firms, you're kind of locked into the choices that are there for tax prep. However, everything else I think is fair game to look out there and I predict going forward, you're better off with a sweet approach than you are with best of break.
Chris (35:43):
Alright, so we've got about five minutes left and so I'm going to have to challenge your parsimony on this final question here. So every single one of us in a lot of different areas at some point have been Pennywise pound foolish right? Now, here's the thing, and not every firm has the resources to invest in the best technology. Is the bargain basement a place to avoid at all cost? Is cheap tech better than no tech Overall, how should we be thinking about this? Hitendra Would you like to start off?
Hitendra Patel (36:10):
Yeah, I don't know if anybody wants to use the paper ledger anymore. So tech is required for sure, but then again, depending upon the stage, a lifecycle stage in your firm's journey, you're looking at your mature, you are growing, you are new, depending on all of that. You got to look at what technology best suits your current operation and business model, that's for sure. And otherwise you're going to be too expensive to operate and you won't be able to compete in the marketplace. So you're always going to evolve. But the baseline, the foundational takes stack. You got to think ahead in terms of what am I going to look like as a firm three years down the line provided all my marketing and business development plans come true. So you actually got to be prepared for the best, not for the worst. Because suddenly if the growth comes in and which I've seen multiple times across many years when growth hits, most firms are not able to handle that. You have a lot of capacity, you're underutilized, you can still manage it, but otherwise everything starts breaking up. So you got to have that resilience built in your technology roadmap for sure. So you're going to look at things like, you know, might do a lot of work in Excel to avoid investing in let's say a subscription priced software. One fine day, you got to go there, you got to move out Excel except for some analytics work that you want to do ad hoc. But other than that you need a system. So don't look at a tool or a software just as a piece of software. It's your system. And on top of that, you're applying your education, experience, expertise, and knowledge. And combined together is your marketable IPR, right? So that's where you need to look at. So technology is your component of what you're going to sell, but not purely as technology. How have you used technology for the benefit of your clients? And that's where you are looking at, okay, here is what I can do with technology two years down the line, this is what I want to do. And prepare your roadmap towards that.
Chris (38:16):
Seth, some thoughts?
Seth Fineberg (38:17):
Thoughts, I'm going to say that, and I mentioned at the beginning about your decisions with technology. I wouldn't look at it from a, can I afford this or not? I would look at it from a can I afford to not do this? And it's just like with your clients, you're all hopefully charging a good amount for what you do. There's value in what you do and that client's going to stay with you for what it delivers to you because you're solving problems for them, you're delivering on service. I think looking at tech the same way as not a oh, cheap is better than nothing or nothing is better. Sure, I mean I get it, you know all have budgets here in and year out. But I would still look at it from a can I afford not to do this?
Chris (39:09):
Alright, Why don't you close this out?
Speaker 4 (39:10):
Well, part of your annual evaluation or how often you evaluate technology, you ought to sit down and say, is there an area where I can get a cheaper product? And I'll give you example here that I've seen some firms do. Instead of having a full Microsoft Office 365 license or whatever, they looked down and said, mail word processing, other little communication tools, things, we can go with Google or something cheaper, we can go there, but let's keep our full Excel licenses because our people still need Excel. So they've dropped off office of 65 licenses and gone to single Excel like desktop licenses and that's worked fine because these other products had worked well for them. The key to that is make sure if you're going cheaper for a product, I don't want to say cheap, but cheaper, trying to take some money and get a product, make sure it still does everything your professionals need to do.
(40:05)
And I could tell you that's why I've seen those firms clinged also to those Excel licenses. Because right now, even as much as we have at Zoho sheet, we have our own spreadsheet, it's good. Your accounts are beyond what it does and you really still need that Excel license for a lot of the things, the deeper pivot tables and deeper things and other capabilities that happens there. So you could evaluate a category, just make sure, I think Seth's points right on. Are you really sure that you're going to not be creating a bigger deal or a bigger cost by moving the stretch?
Seth Fineberg (40:40):
Putting a price tag on it.
Chris (40:42):
And it is exactly 12:20 right now and that's fantastic. So that's about all the time we've got. But I do want to thank our distinguished speakers over here and thank everyone for their patience. And of course you the audience who have been fantastic now. Thank you. We got another session right here moderated by me. I'm not going anywhere.
Seth Fineberg (41:03):
Thank you very much and we're obviously here to talk to you guys. Thank you.
Track 3: Managing your firm's technology
June 19, 2023 6:30 PM
41:13