In Firm: 2011 IT Predictions and 2010 Results

Column: Technology in Practice

From the December 2010 Issue

It’s that time of year again, when we are asked to gaze into our crystal balls and share the trends that we feel will impact your firms in the year ahead with the intent of assisting you in making more effective IT decisions in 2011. The rough economy the past two years had many firms managing IT conservatively with a focus on maintaining their existing infrastructure instead of aggressively pursuing the latest applications and hardware, which could improve production. In some ways, this was a good thing because it allowed firms to better utilize what they had in place, and it afforded the application vendors additional time to refine their programs, a number of which were pushed into the sales cycle before they were really ready for actual use in firms. However, with two years of conservative adoption, we are seeing that firms have pushed their hardware to the limit, so we anticipate firms immediately investing in necessary hardware prior to busy season and then re-evaluating their applications after April 15 to implement those “less paper” tools that have proven themselves in the firms of their peers.

Accordingly, here is a summary of how we faired with our 2010 predictions, as well as our best guesses on 2011.

1. Cloud Computing Grows (WIN): This past year, we expanded the SaaS (Software as a Service) definition to include any application that is hosted outside of the firm by a third party. This would include firms outsourcing their IT infrastructure to a network integrator in addition to SaaS applications hosted by the larger providers. We saw an increase in the use of web-based workflow tools, portals, document management and tax applications from Thomson Reuters, CCH, a Wolters Kluwer business, and Xpitax, so we will take a WIN on this one.

Prediction 1 – Secure Data Transfer: For 2011, we expect a significant increase in the number of firms using portals and third-party email for secure data transfer of tax returns, financial statements and even organizers for early adopters.

2. Windows 7 Success (WIN): This was an easy WIN in that early adopters found success with the 32-bit version replacing Microsoft Vista and Windows XP, and later adopters found that the 64-bit version could be just as stable, which firms are acquiring as they buy new machines.

Prediction 2 – 64-Bit Windows 7 Standard: The majority of tax workstations purchased by firms in 2011 will be Windows 7 64-bit with at least 6GB of RAM to take advantage of the multiple monitor environment, since we have heard from four of the major accounting application vendors that virtually all of their applications work in this environment.

3. Office 2007 Standard (CHEAP WIN): We bet last year that most firms would stick with Office 2007 because of incompatibilities between Office 2010 and their audit engagement applications, and we were wrong on that reasoning. While the audit engagement programs had a fairly smooth transition to working with Office 2010, we only saw firms go to Office 2010 32-bit version with new machines, along with those that were previously on Office 2003 or XP that wanted to make a quantum jump as a firm. The majority of firms on Office 2007 stayed with it instead of jumping to Office 2010 because they did not see enough new features to warrant the significant cost to switch, so our prediction was a WIN, but for a different reason. We predict that this year Office 2010 will clearly dominate the groupware implementations in tax & accounting firms, but this one is so easy that we can’t count it as a prediction!

4. Google Continues Being a Thorn for Microsoft (WIN): This was an easy WIN as Google owns the lucrative and profitable SEARCH space and has been on an impressive buying spree of technologies that compete with many of Microsoft’s future directions. While utilization of Google’s Apps, Postini and other competing Business Solutions products will continue to expand in industry and startups, accounting firms will stick with Microsoft Office because we know the products and the makers of our tax and audit software only link to Microsoft. While Microsoft will lose various market share to Apple, Google, Android and VMWare, the accounting profession will not really take notice until the tax and accounting vendors promote something else.