2009 Readers' Choice Awards

From the Jan. 2009 Issue

What a roller coaster 2008 has been! As we prepare to usher in the New Year filled with uncertain possibilities, there are several things we know we can rely on staying the same, and one of them is that technology will continue to play a core role in the modern tax and accounting practice. No longer thought of as only productivity-enhancing amenities, various technologies have taken on such key importance in firms that most simply could not perform their client engagements without it. This rings true for all types of client work, from write-up and trial balance, to tax preparation and planning.

So as we sit on the cusp of what is the busiest season for many professionals, now is the perfect time to announce the results of the 2009 Readers’ Choice Awards, which offer annual insight into the minds of tax and accounting professionals. With results in more than 30 categories of applications, hardware, services and other technologies, the Awards give professionals a way to express appreciation for the systems that help them in their practice. As usual, some of the findings are expected, but others reflect interesting potential trends.

It is important to note that The Readers’ Choice Awards are not a scientific survey, but rather an informal, web-based polling of the readers of the online and print editions of The CPA Technology Advisor and The NSA Technology Advisor. In essence, they amount to somewhat of a popularity contest that lets professionals vote for their favorite programs and other technologies. The vendors of these products and services were encouraged to campaign for votes, often using their own customer contact information to promote get-out-the-vote activities. The results in many cases are remarkable, particularly in the case of Drake Software, whose tax compliance suite continues to be strongly supported by its users.

The active support and voting by Drake users skews the awards noticeably away from actual market share in the areas of tax preparation, document management and website builders (the latter two because Drake includes basic systems with its suite), but that’s okay. That’s what the Readers’ Choice Awards are all about — rallying your base and getting them to vote. Likewise, users of AMS software voted strongly for the company’s W-2/1099 and after-the-fact payroll systems.

But while smaller technology vendors like these performed well in a few categories, the larger ones generally ruled the day, with Intuit’s domination of write-up and client-side SMB accounting systems, and CCH, Thomson Reuters and BNA’s control over areas such as practice management and tax research coming as no surprise. Emerging areas continued to show promise, especially document management, tax document automation and workflow optimization.

In addition to technologies focused on tax and accounting, the 2009 Readers’ Choice Awards also surveyed reader preferences in categories for general business devices and hardware like computers, cell phones, printers and scanners. And it is evident through our questions on post-tax season vacation planning that, despite the current U.S. economic situation, a vast majority of these financial professionals still plan on taking significant vacations later in the year, with upwards of 25 percent even planning to travel abroad. Perhaps they don’t see the gloomy conditions lasting too long, or at least are trying to keep a positive attitude and help “think ourselves out of the recession.”

The CPA Technology Advisor’s 2009 Readers’ Choice Awards are an opportunity for our readers to collectively voice their opinions on technology products and services that help them be more efficient, productive and profitable. Thank you to the thousands of professionals who voted in the 2009 Readers’ Choice Awards. We look forward to hearing from you again next year.

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IN-FIRM TECHNOLOGIES

Federal/State Income Tax Compliance
Insight: As noted in the introduction, Drake Software’s users are ardent supporters of the program and turned up at our online polling booth in record numbers. With an actual market share of about 10 percent, the company is one of the last independent tax preparation system developers. Also of note in this category, however, is that the leading three programs (Drake, the ATX system from CCH Small Firm Services, and Intuit’s ProSeries) combine for more than 62 percent of the total votes. This pointedly demonstrates the prevalence of the small practice in our awards voting, which is reflective of the profession, where approximately 90 percent of tax and accounting practices have fewer than 10 professionals. Among other noteworthy results, Intuit’s Lacerte, CCH’s TaxWise, CCH’s ProSystem fx Tax and UltraTax CS from Thomson Reuters combined received 32 percent of the vote.

Specialty Systems & Tax Prep Tools
Insight: There are many products on the market that seek to supplement tax preparation systems, either by providing external analysis and review, or by focusing on specific niche taxation issues often omitted by other programs or that would require a small practice to use a much more comprehensive system than they need. Since they provide different solutions, these programs can’t really be compared directly, but the voting shows a continued need for specialty tax tools.
Tax Planning Systems
Insight: More than 36 percent of voters reported using a dedicated tax planning system, and the battle for the market continues to rage on. Voting in this category showed a tie between CCH’s ProSystem fx Planning system and Intuit’s Lacerte Tax Planner, with BNA’s Income Tax Planner very close to these and the Planner CS program from Thomson Reuters not far back. Of significance here is that of the top four, all but one (BNA) are from vendors who also produce income tax preparation programs. The exception for BNA is noteworthy because its users either forgo the tax planner offered by their tax prep vendor or use a tax system without a dedicated tax planner option.
Tax & Accounting Research Systems
Insight: Once again, voting in the awards reflects the dominance of small practices in the profession, with the largest group of professionals selecting the more affordable ATX Total Kleinrock Office from CCH Small Firm Services as their preferred tax research system. Among systems geared for larger practices, the Checkpoint research platform from Thomson Reuters received nearly half more votes than CCH’s Tax Research NetWork (TRN). Many professionals have access to more than one research product, especially considering the availability of a few free services like Intuit’s TaxAlmanac.org, so readers were able to vote for more than one system.
Estate Planning Systems
Insight: While only about a tenth of our voters reported using an estate planning program, the specialized service has grown in popularity with practices seeking additional revenue channels that they perform throughout the year. In this year’s voting, estate planning systems from CCH and BNA clearly led the field, combining for more than 60 percent.
1099/W-2 Compliance
Insight: In another case of a small vendor finding a very successful niche area underserviced by the big guys, AMS’ 1099-Etc is clearly the most popular among our voters. Providing an inexpensive and easy-to-use application that provides accountants with 1099 and W-2 prep, after-the-fact reporting for small clients is greatly simplified. CCH and CFS also performed well in this category.
Sales & Use Tax
Insight: Managing sales and use taxes for small entities used to be easy, but as technologies have eroded geographical barriers to sales (especially e-commerce), small entities are facing increasingly difficult compliance issues. For large organizations, several systems are available, providing wholly comprehensive compliance across all 8,000+ U.S. jurisdictions. But they generally aren’t a viable option to small concerns. This is why tech vendors serving only a few key states or regions tend to fare well in our annual survey. Add to this the many state-run online reporting systems, and you get a large number of voters who chose “other.”
Write-Up
Insight: Professionals may occasionally still vocally criticize the vendor, but when they vote with their pocketbooks long gone are the days when they shunned Intuit’s QuickBooks. Our reader survey greatly mirrors the market trend, showing the professional accountant version of the program ahead of its primary competitor Thomson by nearly an order of magnitude when it comes to write-up. While this may not fully reflect market share, the results are in no small part due to the overwhelming use of the client-side versions of QuickBooks by small businesses, since by using the pro version professionals greatly reduce data transfer and other integration issues. It is noteworthy that PCSAI’s Client Write-Up System continues to have a loyal following, although its actual market share is less than these vote results.
Trial Balance
Insight: With more than a quarter of voters selecting a preference for a trial balance system, the results clearly show that their decision is almost invariably tied to the professional suite they use for tax and accounting applications. One indicator of this is that the two runaway leaders in the trial balance category are also the two largest providers of full suites for tax and accounting practices, CCH and Thomson Reuters.
Engagement Management
Insight: Engagement management systems are increasingly focusing on optimizing workpaper management and workflow functions, and it’s become a battle between best-of-breed solutions. The leader here remains CCH, which was one of the first to market with its acquisition and renaming of ePace a few years ago. Thomson is runner up, while CaseWare, with its prevalence in very large practices, comes in at third.
Audit/Engagement Tools
Insight: Many practices are starting to implement specialized tools that streamline audit and engagement processes. The Smart e-Practice Aids product from Thomson Reuters, which won a 2008 Innovation Award, is the overwhelming favorite in this arena. CaseWare comes in a distant second, and competition is going to increase with the entry of newcomers Capital Confirmation and CPA Service Group, which combined already account for nearly 15 percent of votes.

Payroll
Insight: With nearly 30 different products in this category, AMS was again a standout, likely as a reflection of the need for after-the-fact payroll systems for supporting very small clients. Among the live payroll solutions “duking” it out are Intuit and PayCycle. For next year’s awards, we’ll split these into categories for in-house, web-based and ATF, and see how the numbers pan out that way.

Analytical/Forecasting/Budgeting
Insight: This is another category generally dominated by best-of-breed programs that were first to market and continue to hold the major share, as well as receiving the most votes. SageWorks’ ProfitCents is clearly the leader, with CCH’s ProfitDriver, Sage’s Active Planner and Financial Analysis CS from Thomson Reuters each coming in with less than half of SageWorks’ tally.
Business Valuation
Insight: With nearly 10 percent of voters selecting a business valuation system, the small market continues to be led by a core group of technology vendors, including Thomson Reuters, ValuSource, NACVA and MoneySoft.

Practice Management/Time & Billing Systems
Insight: A rather remarkable stat here is that more than half of our readers claim not to use a practice management or time and billing system, leaving us to wonder how they know if they’re optimizing their profitability. Leading the vote tally among the time and billing programs is Sage’s Timeslips. The practice management side is led by suite vendors CCH and Thomson Reuters, with CCH’s system holding a two-to-one margin over Thomson Reuters.

Document Management & Document Storage
Insight: This was the largest category, with nearly 40 products included. Although Drake’s product far outpaced others in the voting, this is because the system is included free as a part of its suite. The rest of the field more closely resembles likely market share and is dominated again by best-of-breed solutions that have controlled this relatively new market since inception. Although, with the hoards of new competition coming in, the category has the potential for dramatic change over the coming years.
Tax Document Automation
Insight: Last year, we introduced this new category (and new technology) as “Scan & Fill/Organize,” and it was strongly dominated by an application from Intuit. The vendor then proceeded to remove that product from the market (a new system is to be available this tax season), and in its absence virtually all of the other major tax preparation vendors have developed their own systems. Among these tax vendors, CCH’s ProSystem fx Scan leads the way followed by Thomson. But among non-tax preparation vendors, SurePrep and first-year newcomer Copanion are battling, with the latter already jumping to an 8% share of reader votes. Also noteworthy is the number of “other” votes in the results.
Workflow
Insight: Although perhaps a vaguely termed category that can include facets of practice management, time and billing, and document management, Workflow systems help unite many of these processes to provide optimization across firm processes. Doc.It won out with voters, followed by Office Tools Pro, while relative newcomer XCM (which won a 2008 Innovation Award) is gaining traction.
Website Builders for Accounting Firms
Insight: If you bundle in something for free, it’ll often be popular, especially when users get the chance to vote. Such is the case with Drake’s offering in this field, although it is quite basic and limited in content. CCH’s Small Firm Services also offers its TaxWise users free websites, while the add-on versions from suite makers CCH (for its ProSystem fx line) and Thomson Reuters (for the CS line) offer a bit more features. Among non-tax preparation vendors, AccountantsWorld, CPASiteSolutions and E.Mochila had the best vote returns.

CLIENT-SIDE ACCOUNTING SYSTEMS

Insight: Intuit continues to dominate the client-side accounting market for small and mid-sized businesses and nonprofits, both in terms of market share and in our awards voting. This is largely due to the decision makers at these entities embracing the marketing and media love of QuickBooks, which has led to the program (in its various industry-specific versions) being the most widely used business management system.

But remember, the votes in our Readers’ Choice Awards come from practicing tax and accounting professionals, who have apparently embraced QuickBooks for their clients, as well. And for this, there are a few key reasons. First, since it has such a large market share, there is a wealth of training resources available to help clients learn and improve their QuickBooks usage (like The Sleeter Group’s network of advisors). It is also fairly simple to learn basic proficiency. The first two factors also lead to a large base of experienced workers in the market who are adept at using the system, which makes replacing client-side bookkeeping staff less daunting when the need arises.

But also of key consideration is that, since the bulk of their clients already use QuickBooks and most firms consequently started using the professional version of QuickBooks for write-up and other services, it is in the firms’ best interest to further promote use of the system by its smaller-entity clients, especially considering the inherently total integration features that streamline and simplify data exchange between client and firm. Also noteworthy here is that Sage continues to maintain a healthy relationship with professionals and, as such, is the preferred system for larger entity clients and leads all other contenders in each of the categories won by Intuit. Meanwhile, Microsoft has managed to gain little foothold, if any, for its small business accounting system (at least in the minds of our voters).

Small Business Accounting
Mid-Range Accounting
Construction Accounting
Retail Accounting
Not-for-Profit
QuickBooks Paperless
Insight: The paperless office movement is finally reaching downstream into small businesses, with a recently emerged genre for systems that integrate with QuickBooks to provide a paperless document management solution to these entities. Several systems have appeared on the market, but newcomer SmartVault, which debuted in 2008, has already claimed the title of most popular in our voting.
Fixed Asset Management
Insight: While the ProSeries Fixed Asset Manager from Intuit is the leader here, there is a pretty strong battle between Thomson Reuters and Sage. Many fixed asset management systems are used in-house by clients, so direct integration with a professional’s tax package appears to be of less significance than in other areas.
Outsourced Technology Services
Insight: While the term outsourcing may still have a less-than-savory taste, accounting practices are joining the general business trend of increasingly turning to third parties (mostly U.S.-based) to perform many of the administrative functions they used to manage themselves. These include web-based fax services, hosted solutions, server maintenance, integrated voice-data systems, VPNs, and messaging and desktop security. The only two vendors in this category that are currently widely used in the profession, according to our voters, are Xcentric and eFax. (Readers were able to vote for more than one product.)

GENERAL BUSINESS TECHNOLOGIES

Laptop & Desktop Computers
For most professionals, the key driving factor in computer preference seems to be brand loyalty, with Dell and HP far outpacing others in this field. Of note is that the two are essentially tied in the overall U.S. computer sales market, but in our Readers’ Choice Awards, voting tax and accounting professionals prefer Dell by more than two to one. This may be a result of the vendor’s heightened outreach to our particular market over the past several years.

Smart Phone
The smart phone has finally nailed the coffin shut on the PDA, and a select few companies own the market: BlackBerry, Treo/Palm, Apple and Motorola. It’s amazing to watch the iPhone’s progress in the general market and the accounting profession, with the slightly more than one year-old gadget now the best-selling mobile phone in the United States and attaining 20 percent in the accounting profession represented by our voters. The overall U.S. market for smart phones (Internet-enabled with full e-mail capabilities) is still led by BlackBerry, which doubled the nearest products in our voting.

Printers & Scanners
While all-in-one devices are popular, many firms still maintain separate print-ers and scanners, so we’ve allowed voters to select more than one choice in this category. HP far outpaces the rest of the field, although Brother does make it into double digits.

Office Supply Store
Well, it’s probably a good thing we didn’t list Circuit City here, since they’ve recently filed for bankruptcy, but in the age of Wal-Mart, the specialty office supply and technology stores are still the preferred location for tax and accounting firms.

OUT-OF-OFFICE

Favorite Form of Physical Exercise
If you’re trying to keep up with your peers, you’d better put on your run-ning shoes. Among those who get off their you-know-what’s to exercise, running leads the pack, although there is a surprising number of aerobics participants and weightlifting buffs out there, as well.

The Economy & Your Vacation?
This year, we decided to gather some insight on our readers’ vacation plans for post tax season, a time when many in the tax and accounting profession use to reconnect with family (and regain a bit of sanity) after an often hectic few months.

Then the financial crisis/recession (pick your term) intervened a short while before we launched the online voting site for the Readers’ Choice Awards. We stuck with our intended questions about travel, but also added a particularly topical one regarding the influence that the recession might have on the vacation plans of these professionals.

The results were surprisingly upbeat. Perhaps it’s that these professionals have a ground-up view of the business economy in the United States, or maybe it’s just an optimistic hope that we can “think ourselves out of the financial crisis,” but nearly 80 percent of this year’s 4,000+ voters said they had vacation plans, and more than 60 percent said the economy hadn’t affected those plans. Most plan on air or car-based travel within the United States, but more than 25 percent planned to vacation abroad.

The year certainly brought some surprising change, along with continuing innovation in the technologies available to tax and accounting professionals. Thanks to the thousands of professionals who, by voting in the Readers’ Choice Awards, give us all better insight into the technologies that help the profession be more productive, efficient and profitable. Voting for next year’s Awards will start in the late fall. If you know of products or questions that should be included next year, please let us know.

Here’s wishing you a prosperous 2009!


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