how the best managing partners stay on top of technology.
by marc rosenberg
quantum of paperless: the partner’s guide to accounting firm optimization
the duties of managing partners encompass a long list of critically important management functions. certainly, one of these is to ensure that technology has an optimal impact on the firm’s success, profitability, and efficiency.
more quantum of paperless: firms need ‘best practices’ manuals | optimize scanning procedures | why a digital tax workflow system is vital | how long do you need that file? | don’t underestimate document management | digital communications unify messaging | hotspots the answer for field access | check your bandwidth | remote access requires planning | proactively manage application updates |
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this can be quite challenging because, unlike most managing partner duties, managing the technology function is a highly technical skill that most managing partners don’t have. so, they need to be smart. they need to know what they don’t know and rely on experts, both inside and outside of the firm, to guide them.
truth be known, i am also not highly skilled in technology. but as someone whose clients expect him to provide advice in all areas of managing a cpa firm, i also need to know what i don’t know. so, what do i do? i survey great managing partners from firms across the country and ask them what they do, at the highest level, to stay on top of technology and use it to make their firm great. we obtained detailed responses from 28 managing partners – six firms with annual revenue of more than $20 million, including four firms with less than $50 million; 10 firms in $10- to $20-million range; and 12 firms with $5 million to $10 million.
we asked five main questions, which yields five key take-aways.
rule 1: know what you don’t know and collaborate
the first question we asked was, “as the managing partner, what do you do to ensure that computers and technology have the most optimal impact on your firm’s success, profitability, and efficiency?”
the main answer was, in a word, collaborate. most managing partners do not have a strong technology background. as the saying goes, “you gotta know what you don’t know.” managing partners frequently collaborate with tech experts, both within and outside of their firms.
the most common forms of collaboration:
- work closely with and listen carefully to our it director.
- attend industry meetings to collaborate with leaders from other firms.
- regularly meet with outside it consultants.
- provide/push for adequate it budget.
other answers, from just a handful of firms, but noteworthy nonetheless, included:
- engage the staff on new ideas where they see technology helping our firm.
- ensure our it director meets with other cpa firms’ it directors.
- include a younger tech-savvy partner on our it committee.
rule 2: don’t get caught in hype
the second question we asked was, “what has your firm done so far to address blockchain, data analytics, and artificial intelligence?”
“we tend to overestimate the effect of a technology change in the short run and underestimate the effect in the long run,” said one managing partner, quoting amara’s law and it is quite apropos for what’s going on in the cpa firm industry. the strong consensus of managing partners is that today and for the next few years, the hype of the new technologies greatly exceeds the extent that typical local cpa firms have access to them. indeed, roughly half of our participants see the full impact of these advanced technologies hitting typical local firms in five to 10 years and the other half sees it in two to five years.
we gathered a few more common responses:
- not much; waiting; seems nothing works with the software our clients use.
- lack of enough sophistication of our client base or simply not applicable to them.
- avoid spending money like “drunken sailors;” roi always needs to be evaluates
- we’re relying on vendors to provide the next steps.
noteworthy remarks made by just one or two managing partners:
- we are evaluating or beginning to use mindbridge.
- implementing data analytics for accounting services.
- we try to answer the question “how do we use our data to help clients meet their needs.”
- we will beta test rpa in accounting services and expect to have no one keying any data in tax or accounting services by the end of the year.
rule 3: listen to your tech experts
then we asked, “how do you involve your it director in the firm’s management?”
we received a mixed response. most of the firms over $10 million have a high-level, internal it director who actively participates in all important management meetings and contributes significantly to the firm’s strategic planning. many smaller firms feel they aren’t large enough to justify having a high-level it director.
- several firms have a firm administrator/coo who supervises the it director.
- many firms that rely primarily on outside it consultants instead of an internal person consult with them on high-level decisions.
two noteworthy remarks made by just one managing partner:
- when he speaks, we listen.
- we would love to have a high-level it director on board, but we can’t find the right person.
rule 4: the cloud and cyber-security emerge as top priorities
the fourth question we posed was, “in the past two to three years, what new things has your firm implemented in the it area?”
two main areas were repeatedly identified by firms:
- the cloud. either an increase in the total use of the cloud or upgrading use of the cloud.
- increasing security. examples: strengthening firewalls and dual factor authentication. one firm said they convene a mandatory web training session on security. another said they increased their cyber insurance coverage.
noteworthy remarks made by just one to three firms:
- paperless workflow.
- convened various technology training sessions for the firm’s software.
- created a short video to train people on new software.
- created a ticketing system for all it issues to build a database of recurring issues.
- working on housing our servers in a data center.
- replaced all our video technology with skype rooms.
- went to a hosted computer environment instead of servers in-house.
- more use of scanning.
- moving away from phones with handsets to computers and mobile devices.
rule 5: the new cool is sensible
we also asked, “what do you tell recruits about how cool your technology is?”
for many years now, cpa firms have been dedicating an enormous amount of resources and brainstorming into how to better attract and retain staff. since the strong use of technology is high on candidates’ lists of desired traits of future employers, it makes sense that it play an important role in firms’ interviewing and recruiting process. this sentiment was expressed by quite a few managing partners.
we had one very insightful and somewhat contrarian view on this question, expressed jointly by the managing partner and his brilliant it director:
“what we see in young people isn’t a love of technology by young staff. we see in them a desire to stay constantly connected, combined with a general technology naivete. the difference matters. we don’t tell young people our technology is cool. instead, we tell them that if they have a problem, we will solve it. if that problem is working from home, so they can spend less time at the office, we have something in place for that. if it’s a problem with exchanging data with a client, we have solutions for that, as well. we must make our staff’s work-life balance better and reduce the friction of getting their work out the door while keeping systems secure and available.”
these are the things mentioned most often by managing partners that their firms stress in recruiting staff:
- great support for working remotely.
- we don’t just talk about technology, we demo it; we show them what we are doing.
- paperless.
noteworthy things mentioned by only one or two firms:
- handing new staff a laptop.
- multiple monitors for all.
- initial interviews are video meetings.
- we are early adopters.
- the use of earbuds is commonplace (even though it gives heartburn to some older partners).
- we buy it products when we need them and are not restricted by a budget.