Technology continues to play an increasingly important role in every aspect of CPA firm production as new tools and technologies evolve and improve the ways that CPAs function.  To optimize the use of technology within a practice, it is imperative that firms have a process in place to identify, plan for, implement, and manage technology which we refer to as the strategic technology management process.  This process consists of five components that firms should consider utilizing: having the right strategic team in place, understanding the current infrastructure, evaluating your current and future client needs, evaluating and prioritizing new and enhanced production processes, and a written plan and budget. 

The first step in the strategic technology management process is to make sure that the firm has the right technology team in place.  Often times, there is a partner assigned the IT responsibility whom does not have the time, training, or resources available to handle this role properly.  While it is imperative that a senior person (owner or manager) be responsible to represent the process at the Executive Committee level, it is more important that the firm make adequate resources available.  Most firms will have an internal IT person that will manage the network on a full or part-time basis, whom must be on the team.  It is also imperative to have the firm’s external integrator involved whom assists with the upper level trouble shooting or “one shot” implementations that the internal network integrator does not have experience with.  This is a very important position as it allows the firm to get current industry recommendations from an organization that has more exposure and depth of experience.  Often times, internal IT departments are understaffed and become so focused on existing maintenance issues that they develop “tunnel vision” in regards to their own network and this outside view and experience is needed to get new technologies implemented.  There will also be a need to include professional staff from the various departments when their applications and processes are discussed, to ensure that departmental needs are met while at the same time making decisions from a firmwide perspective.  Finally, an administrative person needs to be involved in managing all action plans and tracking the budget so surprises are minimized and accountability is tracked. 

The next step which firms often cut short or bypass, is to have a comprehensive understanding of their current applications and network infrastructure.  This begins with identifying all applications which the firm utilizes listed by department.  In addition to allowing firms to capture the ongoing cost of these applications, it allows them to see which services may be redundant or not cost effective compared to the volume of billings for that department.  This step also entails creating a detailed inventory that lists all hardware (workstations, servers, printers, copiers, etc.) and services (outsourced IT services, Internet connectivity, wireless providers, etc).  The implementation date of all hardware should be listed to help determine replacement schedules that will be reflected in future budget years.  This overall listing will help establish a baseline for the standard IT costs the firm will incur each year and make it easier to break out the specific incremental costs for any new projects, so that the owners can evaluate the projected return on the investment.  Another important component of this step is to review minutes of previous IT meetings and have a discussion with any external support providers to determine existing issues or areas where the firm may be at risk of having a hardware or system failure. 

The third step in the process is comprehensively understanding the firm’s current and future clients and the procedures to deliver services to them.  The firm must identify which types of clients and services are the most profitable and develop a program to target those that they want to continue with (as well as culling out clients that they can not profitably service).  The firm will then document the current production processes and then review them with their software vendor, network integrator, and/or an external process consultant to determine which have evolved to the next level.  Using an external resource can significantly cut down the time required to identify and document the firm’s current processes. 

This next step in the process often requires the IT team to get outside help to determine new and evolving production processes.  This usually begins by going to industry conferences such as the AICPA TECH Conference, State Society Technology Shows, the Association for Accounting Administrator’s Technology Fly-In, or a technology program managed by the firms’ CPA Firm Association.  Many of the CPA application vendors also have annual industry User’s Conferences where new features and best practices are touted as well as opportunities for peer members to discuss them.  Finally, there are a significant number of organizations also providing specific web casts and conference calls on technology related topics such as business continuation, paperless office, security, and other best accounting topics.  Again, many firms include their external network integrator in this process or hire consultants that have specific experience with CPA firm applications and procedures. 

The final step in the process is the development of the strategic plan and budget.  The strategic plan will prioritize those items from the previous step that the firm wants to implement and break them down into manageable steps depending on available resources.  For smaller firms, that may only be able to allocate a few hours per week of an individual’s time to development of solutions, the steps should be very concise with a specific person assigned and tasks of two to four hours broken over a longer number of weeks.  In larger firms, personnel can often be allocated to broader tasks and assigned eight or more hours per week to complete these tasks, as well as a budget for external assistance in reviewing information.  Regardless of firm size, it is imperative that the prioritized projects be in writing and broken down into steps that can be reviewed and managed (for which a spreadsheet is an excellent tool).  Written strategic technology plans with proper resources allocated and accountability of personnel will have the greatest chance of success within firms. 

Development of a three year budget is a critical component of the plan as CPAs tend to be more comfortable managing the numbers than the IT components.  This budget should represent the findings of the previous steps and identify those items that are the baseline including all ongoing expenses such as software maintenance, equipment leases, communications contracts, service agreements and IT salaries and training.  The budget should reflect the firm’s equipment replacement cycle which is usually three years for laptops and servers and four years for desktops, if purchased with adequate specifications.  It should also break out any new projects by individual line items such that the owners can match the cost to the specific project. 

The budget can also provide important metrics such as the infrastructure cost per person, which studies point to being between $6,500 and $8,000 per user when all costs are taken into account.  It can also break down the IT cost per production hour, allowing the firm to add this cost to billing rates and track it separately for internal budgeting purposes.  Many firms also track overall production per person to ensure that it is growing consistently.  Implementation of new technologies and processes should improve production per person, so it is important to measure this to validate the investment and make it easier to approve future expenditures. 

Technology and accounting processes will continue to evolve, providing firms with new opportunities and improved production efficiencies if properly implemented.  Having a strategic technology management process in place will ensure that firms identify and effectively implement these solutions. 

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