CPA firms rely more than ever on technology to make their practices more efficient and profitable, but with so many new products and technologies constantly evolving, it is not always easy to separate the hype from the reality.  Below, we outline our top predictions for those technologies that will impact your firm in 2006.

 

1-Display Technologies: Most firms have already standardized on dual monitors in the office and have recouped the investment in increased productivity.  We expect to see firms utilizing dual monitors in the field as well as the advent of larger screens in the office.  Imagine a 24” screen in landscape mode with a 19” in portrait mode, or triple screens for those computers that can be expanded with a video card. Firms should be wary of smaller form factor computers that require a special digital video input and monitor for expansion, as these can be significantly more expensive or require emulation to work.

 

2-Handheld Communications: If you take a look at how much capability can be packed into a small form factor such as the Motorola RAZR or their new SLVR, you realize that strong phone capabilities can be built into a very tight package with the trend towards combining PDAs with communications services.  Verizon, Palm and Microsoft have teamed up to roll out the Treo 700w which is a multi-band phone that includes Bluetooth and WiFi capabilities.  This first version has a lower screen resolution than the previous Treo 650, so it may be worthwhile to wait for a later release, to give the combined operating systems time to mature and so that the screen view is better in full sunlight.  Blackberry will continue to be a strong competitor, but their legal woes will cost them dearly in attracting new clients.

 

3-Anywhere Wireless: We predict that 2006 will be the year we begin to see measurable adoption of broadband wireless usage for connecting mobile users to the firm.  Verizon and Sprint both have broadband products that connect to laptops allowing for data transmissions of 100Kbps to 700Kbps, which will have to suffice as we predict fewer clients will be open to provide Internet access to onsite auditors. Some limited markets will also provide wide area WiFi access (WiMax) allowing everyone within that city zone to be securely connected to the firm at all times.

 

4-Knowledge Management:  Tools that allow data from different applications to integrate will become more common place giving firms better information in a real-time format.  Practice Management dashboards will provide live status reports and key performance indicators.   Firms will expand usage of their intranets as a first step towards capturing departmental best practices, which will evolve to better knowledge management utilizing new tools such as Microsoft’s SharePoint Team Servers.

 

5-Workflow Rules: Integrated applications will improve workflow within tax and administration similar to how audit document containers have integrated the audit process.  Tax workflow will encompass due date monitoring, client communications, document management, and provide real time status to all members of the firm.  While many of these tools will be an integral part of document management applications, stand alone tools such as XpiTax XCM and SurePrep Express will find an interested marketplace.  Administration workflow will improve by firms integrating their practice management with their tax application and Outlook for change of contact information, as well as the digital emailing of client invoices and creation of electronic vendor files and payments, eliminating paper in the firm’s back office.

 

6-Outsourced Services: Firms have been successful with outsourcing their banking, payroll and research services and will move more services to an ASP model when it is more cost effective and secure.  The next round will entail managing the firm’s spam and anti-virus with re-mailer services such as Postini and FrontBridge.  In addition, expect to see more high level IT support services to be outsourced, as well as security testing and “hardening” of the firm’s network infrastructure.

 

7-Client Service Heating Up: While many firms are reducing their write-up practices, there have been a number that have successfully transitioned their write-up departments to outsourced controllership services that command a higher billing rate.  While it is expected that QuickBooks will continue to control this market in the short term, everything could change if Microsoft Small Business Accounting were to package their application as an integrated part of Office 12 (to be released this year) or to come to market with an integrated document management capability.  We feel the ability to have a scanned source document attached to the source entry and saved in a digital journal or vendor file will be the defining feature of the top small business accounting product and the first one to market may be the eventual winner.

 

8-Less Paper Transition: We feel that 2006 will mark a strong transition towards firms adopting a document management application to archive final documents.  Concerns about lost and misplaced files, knowing who is accessing files or sending them outside of the firm via email, as well as possible legislation requiring the lock down of client and personnel information will drive this transition.  In addition to experienced vendors that have products that integrate with the firm’s existing accounting applications, expect a slew of new document management vendors from outside our market without the pre-requisite experience and data integration capabilities.

 

9- Information Transport: While many firms today transfer files to and from clients with floppy disks, CDs, or via email, security concerns will cause them to question their data transport methods.  USB memory sticks with integrated passwords and security will be effective for those clients that physically deliver files to the office, but for those that wish to email them, questions about PDF security will arise.  Firms will either use an encrypted email transfer system such as Certified Mail or SmartSoftKey or utilize a file transfer protocol (FTP) site to securely move large files. Virtually all accounting vendors will offer a low cost option to host these files, manage passwords, data security, and redundant IT requirements, providing an effective data transport mechanism.

 

10-Security: As the number one item on the AICPA’s 2006 Top Technologies, it is important that firms verify that their networks are secure from both Internet hackers and internal snoopers.  Firms should consider having an external security audit performed with an independent vendor that is also aware of today’s intrusion detection systems and methods of locking down internal data.  In addition, securing the firm’s longevity with a written and tested disaster response document will be mandatory.

 

We feel that focusing on the above items in 2006 will provide the firm with improved productivity as well as helping to protect it from evolving threats which will be harder to manage internally.  The above listing is the opinion of Roman H. Kepczyk, CPA, CITP and all products mentioned are registered trademarks of their respective companies.