do as you tell your clients to do.
by roman h. kepczyk
we have all heard the saying that if you don’t know where you are going, you’ll end up going nowhere (or… you won’t ever get there). unfortunately, many accounting firms do not do a good job of integrating their information technology requirements into the firm’s overall strategic vision.
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information technology impacts virtually every aspect of accounting firm production and is usually the biggest expense after your personnel costs. accordingly, it should be managed as the critically important asset that it is.
this is one case in which firms need to do exactly what they advise their clients to do, and that is to manage information technology with a detailed budget that ties into the firm’s strategic plan.
the most effective budgets actually begin by analyzing last year’s numbers and breaking them down by applications, services, equipment, and any other licenses required and then projecting all recurring items three years into the future. this establishes an it “baseline” that the other owners and managers can understand is required just to keep the doors open.
by running out the budget at least three years, the firm can project when new servers and desktop computers (which have a projected four- to five-year life) will need to be replaced, as well as plan for laptops that must be replaced every three years. this format also allows for new initiatives and “one-shot” items to be broken out and managed separately by individual line items, which is much easier for owners to evaluate the roi (return on investment).
as specific servers reach the end of their functional life, it is imperative that firms also evaluate the cost of moving those applications individually to the cloud, which the budget is helpful for monitoring. for firms where their entire server infrastructure is nearing the end of life, hosted cloud providers should also be considered as they include it staffing, support, updates, backup, and disaster recovery into a fixed monthly fee per user, allowing the firm to focus on the practice of accounting instead of worrying about it.
having a detailed budget will allow the firm to calculate the average cost per workstation, which can then be added into the calculation whenever a new person is hired. industry statistics point to firms spending between $6,500 and $8,500 per seat each year when all costs are taken into account or 5 percent for single-office firms, 6 percent for multi-office firms that average approximately $135,000 net production per person.
recommended actions:
- download/populate budget template for previous year and project forward three years.
- identify and focus on one core initiative in each department through completion.