Strategic Technology Management
by Roman H. Kepczyk, CPA, CITP (August 20, 2004-reprinted with permission)

Our firms are functioning in a world where they must rely more and more on information technology in every part of the practice to be competitive.  At the same time, the rate of technological change is increasing at an ever quickening pace making technology standards a moving target.  Advances in hardware must be integrated into the existing infrastructure as well as a constant stream of application updates and system patches.  Amidst all of this, firms are facing the transition to a completely digital (often referred to as paperless) environment, where all personnel must evolve their production processes and adapt their systems for handling information in an electronic format.  With all of this happening at once, it is important that firms have a process in place to insure that the strategic benefits of technology are properly managed.  The most effective firms have achieved success by creating a technology management team that systematically analyzes the firm’s infrastructure, the tools and technologies that are evolving, and builds a well integrated technology plan and budget to optimize their implementation.  Below, we describe a five step process used to direct your firm’s strategic technology initiatives. 

The first step in effective technology management is to ensure the right players are involved.  It is imperative that an owner or director oversee the team, so that approval of any initiatives can be addressed at this level rather, than being fought for by a manager or network administrator.  These other personnel should be members of the team, as they have the knowledge and experience to help implement solutions, but they seldom have the approval authority or financial clout to push through major technology initiatives.  In addition, it is important to have an administrative person involved to document decisions and standardize processes, as well as ensure follow through.  Representatives from tax, audit, client services, as well as other niche areas, should be included as their departmental processes are discussed.  The final member of the team is often the firm’s external network integrator that can bring in a depth of current experience from other implementations, which is seldom the case with internal network personnel that tend to get “tunnel vision” of their own networks. 

The next step in strategic technology management is getting a thorough understanding of the firm’s current infrastructure and applications.  It is recommended that firms pull together a comprehensive inventory of all hardware components including the brand, model, processing power, RAM, hard disk capacity, and warranty information.  For each application, the vendor, licenses, support information, as well as annual maintenance costs should be included and placed in a budget spreadsheet.  Lease amounts for items such as copiers, telephone systems, and WAN connectivity must be collected along with IT salaries and any outsourced IT services, to come up with the baseline costs of what the firm is currently spending on technology.  This number becomes important, as firms must have an accurate understanding of what they are currently paying to appreciate the additional cost to get the expanded benefits proposed by the strategic plan.  In most firms, they are spending much more than they think, but less than they should be to stay current. 

The third step in the process is to evaluate current opportunities, which should always begin with the departmental processes most important to the firm (usually tax and audit, followed by practice management).  A good place to become aware of areas of improvement is to review the firm’s helpdesk and support logs to see where current production bottlenecks and network problems reside.  Firm members should attend industry conferences or get current guidance within their specific area of expertise via reading or web-based resources.  In addition to going to User Group conferences, attending a CPA firm association meeting is an excellent way to garner current knowledge in a non-competitive environment.  Solutions for each department should be discussed amongst the team members to develop a “firmwide” solution, rather than what may be what a specific department wants.  These items should then be listed and prioritized by the team, and an estimate of costs added to complete the budget.  An area where CPA firms are adamant is in clearly seeing the return on a technology investment, so the budget step is critical.   

In most firms a budget outlining the previous years expense along with the next two years is adequate as it covers the normal three-year replacement cycle of most computer equipment.  It is recommended that firms take this overall cost and average it out (usually divided by charge hours) to come up with a cost factor.  This cost should then be added to billing rates to recoup the firm’s technology investment.  In most firms, this factor is in the $5 to $7 per charge hour range and is adequate to cover all of the firm’s priority initiatives.  While this charge is seldom split out on the client’s invoice, it is often separated on a monthly basis via a general journal entry and incorporated into the firm’s budget. 

Priority initiatives tend to fall into a few common categories.  In most firms stability of the infrastructure is paramount, so much discussion is centered on firmwide standardization and building an easily supported network.  Remote access capabilities are also a hotly debated item, as today’s communications technologies are such that there should be no excuse for every person in the firm not entering their time and expenses on a daily basis, as well as communicating via the firm’s groupware application.  Internal financial and practice management applications are another area where there are significant opportunities for improvement, as the firm transitions to a digital environment.  Security considerations, disaster recovery plans, document management and a centralized database are also commonly mentioned items.  Finally, documentation of best practices and training on these initiatives can make the strategic plan a success or failure. 

For the strategic technology plan to be effective, it must be written.  The fourth step is then to break down each priority item into a series of “actionable” tasks that can be accomplished in a specified period of time, along with the anticipated benefits.  A timeline set up in Excel can help by creating a visual list of all tasks, with deadlines and follow up tasks.  The firm must assign each task to a specific person and allocate the financial and personnel resources to accomplish the task.  If a person is asked to accomplish the item “when they have spare time,” any chargeable opportunities quickly get in the way and excuses abound, leading to delays, so allocating time is critical.  During this step, it is important that the technology team regularly review the list of tasks and report to the owner group to ensure progress. Budget management and reporting should also be reviewed at each meeting. 

The final step is for the firm to perform an annual review of the strategic management plan and follow up on the success of previous initiatives.  We have all heard it said that success breeds more success, so it is important to celebrate the accomplishment of major milestones.  As mentioned above, technology impacts every part of our practice.  Firms must make a conscientious effort to manage the integration of this technology as part of the overall strategic plan, if they want to survive and thrive in the future.

This article is reprinted with the publisher's permission from the Journal of Tax Practice Management, a journal published by CCH INCORPORATED. Copying or distribution without the publisher's permission is prohibited. To subscribe to the Journal of Tax Practice Management or other CCH Journals please call 800-449-8114 or visit www.tax.cchgroup.com.

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