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In Firm: Your Strategic Technology Plan

Column: Technology IN Practice

From the Dec. 2006 Issue

Fall is upon us, and this time of year affords firms a prime opportunity to
update their information technology infrastructure and implement new processes
to roll into the 2007 busy season. To optimize this opportunity, it is important
to coordinate the efforts of all the firm’s departments in a methodical
way, and the best way to do this is with the development and implementation
of the firm’s own strategic technology plan that takes into account the
needs of the entire firm and not just one department. The firm’s technology
plan must be developed at an executive level so that the owners and managers
truly understand and agree to the priorities. This allows them to have the right
management resources in place and ensures that they are onboard before starting.

The firm’s technology plan needs to be strategic so that it takes into
account the processes and requirements of all departments, as well as moves
the firm closer to its overall objectives in better servicing clients. The firm
must understand the status of technology in each area of the practice, the next
“natural” steps in the technology progression, as well as future
technology considerations that must be planned for. Finally, the plan must effectively
manage the resources of the firm, taking into account fiscal responsibility
and identifying expected returns on technology investments to ensure owner buy-in.

The first step in the process is to have the right team in place, which must
include a technology leader that has the ear and financial support of the firm’s
Executive Committee. This person should be an owner so that they will have the
clout to determine and push through IT recommendations. The team must include
representation from the firm’s internal or external IT support organization
so they can validate the ability of the firm’s infrastructure to deliver
solutions and to make recommendations as to what needs to be implemented. Departmental
representation from tax, audit, client service, administration and any of the
firm’s niche services should be included to ensure their special application
needs are taken into account. Finally, the firm’s administrator needs
to be involved to make sure the plan is well documented and followed through

The second step, which should not be a shortcut, is to develop a comprehensive
understanding of the firm’s current IT infrastructure. This begins by
inventorying all equipment including the purchase date (to assist with aging)
and all applications to ensure that the firm has adequate licensing, as well
as to help identify any redundant applications that should be eliminated. In
addition, it is important to list all services the firm currently utilizes for
IT support, including equipment maintenance, wireless and Internet broadband
providers, and IT training resources. An additional resource for determining
the current status is to review the work logs of the IT department and any previous
technology committee meeting minutes or firm strategic plans. The purpose of
this step is to get everyone quickly to the same level of knowledge and understanding
so they can better evaluate future recommendations.

The next step in the process is to evaluate the firm’s current client
mix and services, and determine which areas are the most profitable, and those
that should be targeted from a strategic perspective to optimize the firm’s
future. For the firm’s primary services, it is important to document the
current production processes used and to identify today’s best practices,
either through reading publications such as The CPA Technology Advisor, participating
in web-based seminars or attending conferences such as the AICPA TECH, AAA Accounting
Administrator’s Fly-in, or the technology shows put on by the various
state CPA Societies. It can also be very helpful to participate in the IT meetings
for the firm CPA Association, if the firm is a member, or to hire an outside
consultant who specializes in this area. Working with expert resources can reduce
the firm time required to evaluate solutions and provide experience garnered
from other firms.

Develop a Strategic Technology Management Plan for
your Firm

Have the right team in place.

  • Develop a comprehensive understanding of the firm’s current IT
  • Evaluate the firm’s current client mix and services.
  • Create a list of prioritized projects based on fixing short-term issues
    and addressing long-term needs of the firm.
  • Create a technology budget that maps out the implementation of the firm’s
    strategic objectives.

The firm should then be able to create a list of prioritized projects based
on fixing short-term issues and addressing long-term needs of the firm. It is
recommended that firms first create a listing of projects that can solve immediate
problems and be done in a very short time period, such as in the “following
two weeks” and requiring less than four hours from one staff member. These
quick successes provide an immediate return on the firm’s strategic technology
planning process and encourage members to participate in the implementation
of larger projects, which may take weeks or even months to implement. This list
of larger prioritized projects should be broken down into actionable steps,
which can usually be accomplished within one week. Have one person specifically
assigned to the task to promote accountability, which the strategic technology
management team should review on a scheduled basis.

The development of the strategic plan should also include the creation of
a technology budget that maps out the implementation of the firm’s strategic
objectives. I recommend that all firms document their previous year’s
expenditures and drop them into a budget to establish a “baseline”
of current IT spending, which can be itemized by applications, hardware, communications
and services, and then projected into future years. This will allow the firm
to more easily identify and plan for normal replacement cycles, as well as to
break out the cost of individual projects. Please note that in addition to the
current baseline year costs, it is recommended that firms project out at least
two years, but no more than three, as technology opportunities can change significantly
beyond that time. This budget should also take into account peer statistics
to make sure the firm’s spending is in alignment with industry standards.
Today, it is expected that firm’s will spend between $6,500 and $8,000
per workstation each year to stay current. Other statistics point to an average
firm producing $125,000 in production per year to spend 5 percent of its gross
production plus IT salaries each year when averaged over three years. For firms
with multiple offices, the percentage can be slightly higher for redundant infrastructure
and communications costs.

As technology continues to evolve, it is important for firms to identify and
implement best practices to optimize their ability to service their clients
more effectively. By developing and implementing a strategic technology management
plan and budget, firms can be assured that this will be done as efficiently
as possible.


Roman H. Kepczyk, CPA.CITP is president of InfoTech Partners North America,
Inc. and works exclusively with CPA firms to implement today’s leading
best practices and technologies.

See inside DECEMBER 2006