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Got IT Strategy? “Stunning” survey shows many CPA firms need one

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Once upon a time, the fax machine was considered state of the art in Information Technology.  “IT strategy” meant adding a couple of phone lines.  And a CPA firm’s “IT consultant” was most likely the photocopier repair man.

Today these seem quaint images of an era long since eclipsed.  But a startling new survey indicates that too many executives in our industry – who consider themselves tech-savvy – still think about IT in these antiquated terms.

In a nationwide study by Accounting Today, the majority of CPA firms said they spend up to 10 percent of their operating budget every year on new IT hardware, software and peripherals – and one-third expect that percentage to increase.  Yet less than one in five managers said they’ve ever sat down and formalized an IT strategy for these huge annual expenditures.

Without a defined IT strategy, as one technology consultant said, “In effect you’re really just adding more phone lines.”  And expensive phone lines at that.

As one might expect, most surveyed CPA firms said they employ some type of tax preparation (81%), payroll (70%) and “client write-up” (61%) software.  But fewer than 20% use customer relationship management (CRM) or “business intelligence” software.  Larger firms (25 or more people) generally have an “IT person” on staff.  But at smaller firms, four in five say IT decisions are usually made by a managing partner.

Editors at Accounting Todaycalled these results “stunning.”  We agree.  The survey indicates – no, screams – a widespread misperception of what IT strategy encompasses, how it works, and why it’s vital.  Even in smaller firms with limited IT budgets – perhaps especially there.

Perhaps most surprising:  nearly two-thirds (65%) of surveyed firms say they have no IT partner or outside consultant.  This can means that (often costly) IT decisions are guided by CPA managers simply “doing their own homework” or by off-the-shelf recommendations from salesmen.  It also means many firms are lagging behind new and emerging IT capabilities.   

For example, our own experience has shown that many CPA firms are interested in cost-efficient “all-paperless” technologies.  But without an IT partner or a strategy in place, they’re not sure how to proceed.  Most simply wait to see what other firms do.

What’s your vision:  IT strategy versus tactics

There is no need a high-priced consultant wandering through your offices or rifling through your files to write a basic IT strategy for your firm.  It’s really quite simple: What is your brand?  What is your brand promise?

In other words, what makes your CPA firm different?  Why should new clients choose you – and stay with you?  Try to distill this into one sentence.  Perhaps you want to be known for “better” client service, specialized expertise, or as a comprehensive business partner – but what is your niche in the marketplace?

This might seem a remedial exercise, but it’s the first and most important question any good consultant would ask – and a crucial step many companies overlook.  Or simply assume.  In large part, your brand determines your business strategy and therefore what technologies and systems are right for your CPA firm.  In the simplest terms, if it doesn’t support and extend your core brand, why do you need it?

“Too many managers confuse IT tactics – working ‘smarter,’ working more ‘cost efficiently’ – with IT strategy.  First and foremost the purpose of IT is to support your brand,” said a consultant.  “Otherwise you are just….”  Adding phone lines.   

For example, if your brand promise is to pamper your clients, it makes sense to at least consider a customer relationship management (CRM) system.

“The purpose of an IT strategy is to fulfill your firm’s brand promise.  All the hardware, software and peripherals are enabling tools, tactical support… but not the strategy itself.”

Managing costs versus adding value

Consultants sometimes privately complain that when company managers ask for “IT solutions” they’re really only looking for ways to streamline or cut costs.  But cost  containment seems an admirable, even vital, priority.  So what’s the problem?

“The biggest misconception is that the purpose of IT strategy is to control costs,” said another consultant.  “Controlling costs is great, it’s imperative.  But saving money, cutting your costs, isn’t a business strategy – unless your goal is to be the lowest-cost commodity provider.  I don’t think most CPA firms would want ‘commodity provider’ in their mission statement.  IT should add value for your customers, not just reduce the workflow for your staff.”

“Developing a strong IT strategy comes down to three things:  defining a vision for your firm, seeing the long-term goals… then equipping yourself to get there.”

Which is where an IT partner comes in.

It stands to reason that most CPA-firm managers are adept – even brilliant – in navigating the nuances of our complex and constantly evolving financial-services industry.  But when it comes to IT, most of us are clients, end-users… not gurus.  We don’t spend all day, every day, immersed in the arcane, constantly evolving world of information technologies.

More important, we’re extremely busy running our own companies.  Except for seminars or anecdotal contact, we spend almost no time learning how other CPA firms have met similar challenges, solved problems, added value.  This is what a good industry consultant brings to your table – a deep, practical knowledge of what works best, and what fits your business strategy.

IT represents a tremendous investment for most of us, and it touches every aspect of our operations.  Chatting with a consultant is time and money well spent.

It’s worth at least a phone call to find out.