InfoTech Partners North America stays on the front edge by attending the leading industry technology shows and the best CPA firm management conferences such as the AICPA Practitioners Symposium, AAA National Conference, and Hudson Sawyer Management Summit.  This year's Management Summit conference in Las Vegas on January 26-27 was once again an exceptional meeting of 125 of the top partners of the leading CPA firms in the country.  One of the most thought provoking sessions was the "Consultants Predictions" sessions facilitated by Bob Bunting of Moss Adams and included notable consultants such as Bob Gallagher, Steve Erikson, Bill Reeb,  Jeff Pawlow, and Marc Rosenberg.  Read our take on what they had to say:

Robert J. Gallagher:

• Learning Culture: Firms will develop a learning culture by creating a learning task force and having a director of learning.  They will be tasked with capturing firm knowledge so that it will have ongoing benefit to the firm.  While CPE budgets for professional staff have been in the $1,200-$2,400 per year for professional staff, Bob suggests this number should be closer to $4,000 per year.

• Succession Dilema: Gallagher estimated that the number of CPA firms in the US would go from 47,000 down to 42,000 in the next five to ten years with the most critical component being the transfer of knowledge from the senior members to the remaining personnel. ITPNA recommends documenting all practices in the firm's intranet to build the firm's "Knowledge Store" to help retain value in the practice rather than letting it slip away with retirement.

• Staff Attraction and Retention: Gallagher suggests creating a "re-recruiting" committee to target individuals that you want to bring back and stay within the profession. This committee would be charged with keeping in touch with those outstanding performers that may take family leave and creating alternate work schedules to keep them connected to the firm. This may include inviting them to firm CPE sessions and work functions.  Bunting added to this in his keynote stating that for your employees that you truly see as having partner potential, that we should make special allowances to keep them.

• Privacy Issues: CPAs will be called on the mat for privacy issues some time in the near future forcing major changes in how we manage confidential client data in our offices.  ITPNA feels that federal legislation (i.e. HIPAA for CPAs) will drive firms to adopt document management applications for all files that will provide access security to each file.

Steve Erickson:

• Leverage: Erickson stated that larger firms have 6.4 person staff leverage and that this number is growing steadily.  He stated that 50% of the work done by owners could be done by someone with less experience.  He also had an interesting observation in that new graduates say they don't get any interesting work.  ITPNA suggests planning meetings at the beginning of each engagement and earmarking specific projects that lower level staff can provide assistance with to give them experience on the issue.

• Efficiency: Erickson felt the real gains in efficiency will occur when the "I'll keep doing it this way 'til I'm gone" old guys retire.  Bunting stated in his keynote that those firms managed by partners in their upper 50's and lower 60's that refuse to update their processes and plan for succession, will see the value of their practice diminish to the point where they will not be attractive for acquisition.  Erickson predicted that there will be organizations that will franchise the back office of CPA firms and oversee the practice management and internal accounting to promote maximum efficiency.  He noted that scheduling is one of the biggest flaws in firms today and that they must learn to "schedule for profitability."  ITPNA predicts that there will be scheduling programs from outside our profession that optimize production and manage calendaring, but they will be two to three years before they are cost-effective enough to see the return on the investment.

• Brain Drain: Erickson also felt that it was critical to capture the "brain share" of the firm's key producers and to have a process to transfer knowledge to the next tier of staff.  Again, ITPNA feels that intranets (and eventually Microsoft's SharePoint Team Server) will be standard tools to capture firm knowledge.

Bill Reeb:

• Retirement Burden: Reeb predicted a major succession crisis in firms where over-generous retirement plans will create a huge burden on the next generation of owners.  He felt that many junior partners will "bail out," rather than "overbuy" a practice.  Firms without a funded retirement will be at particular risk, especially those where the senior attitude is "I'm not paying for my own retirement."

• Equal vs. Unequal Partners: Reeb felt their would be a move towards unequal ownership in firms with more non-equity positions being created.  At the same time, these non-equity positions will have less input in the firm's overall direction and less voting power.

• Oversupply of Firms for Sale: With the upcoming "bubble" of retiring partners, many of whom failed to successfully transition their knowledge or evolve their practices, there will be too many firms up for sale or merger.  This will provide a great opportunity for younger firms to "cherry pick" the best practices or aggressively take away business from firms that can not service their clients.

• Saturation Point for Traditional Services:  Reeb felt that the market of client needs was being met with the existing supply of accountants and that the only way for firms to get more business is to take it away from another firm. ITPNA feels that niche expertise will be key to differentiating firms and taking away business.  Gallagher noted in his presentation that for a niche to be successful you had to have a zealous leader and at least four other people with experience in this niche.

Jeffrey S. Pawlow:

• Real Time Dashboards: Staff will be able to individually look up their own production metrics on personal dashboards that let them know their progress towards goals and other pre-determined criteria.  ITPNA recommends firms re-evaluate the dashboard tools that are integrated into today's practice management applications as the cost has come down significantly in the past few years.

• Pay for Performance: Pawlow predicted that the standard raise system that treats everyone in the same class the same way will give way to the pay for performance model.  Individuals that meet and exceed goals will get a larger piece of the raise pool.  With dashboard tools utilized to measure success, their will be fewer surprises at raise time.

• Leadership Training, Mentoring: Pawlow felt that successful firms in the future will focus training on business skills rather than technical skills (tax and audit).  Leadership training will allow CPAs to retain the "most trusted advisor" status amongst professionals.

• Increasing Mergers and Acquisitions: Their will be many firms sold in the next decade, but they will be far from equal. To drive value within a firm, Pawlow felt the key differentiator will be that firm's integrated systems and processes.  ITPNA agrees and feels firms that transition to today's best practices and standardize them will be more profitable today and valuable in the future.

Marc Rosenberg:

• Part-time Partners: Rosenberg predicted that there would be an increase in the number of female partners entering the CPA firm ranks.  It will take some "cultural reprogramming" of the old guard, but they will realize that these individual's skills are just too valuable to lose and it will take non-traditional contracts to keep them engaged.

• Outsourcing: With 6% of his clients doing a meaningful amount of outsourcing of accounting and tax production in 2006, Rosenberg predicts this number will only increase in the future.

• Franchises: Standardized procedures will fuel the value within firms and partners will finally realize that there is a best way of doing something that will improve their success if everyone will do it the same way.  Firms will move towards paperless best practices to optimize their tax and audit production.