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Twinfield: Leading from the Front - Part 2

22nd Oct 2013
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In part 1 of 'Leading from the front' Barbara Kroll, UK managing director of Wolters Kluwer’s online accounting business, began to examine how adopting a proactive attitude to consolidation and best practice allows practices to reduce costs, provide a platform for real time client collaboration and deliver new revenue generating services. In the final part to this article further points are explored.

Transforming Efficiency

Moving from multiple, diverse locally installed solutions to a single, cloud-based book-keeping engine enables accountancy firms to completely eradicate the cost and resources associated with managing an internal IT infrastructure, from day to day support to capacity planning.  There is no need to worry about version control, because under the cloud model the business is automatically upgraded to the latest version. Data is regularly backed up and stored according to the latest European legislation.

There are no concerns regarding updating security, improving resilience or introducing disaster recovery – all is handled by the third party provider across multiple data centre locations. Furthermore, these solutions can be easily integrated with other applications, both cloud based and locally installed, providing an excellent platform for streamlining operations and improving efficiency. The cost benefits are significant. The scalability of the business is transformed – with some firms exploiting the improved efficiency to handle twice as many clients with the same number of employees. The model is clearly compelling.

Evolving Model

Yet there is resistance. How can an accountancy firm make that move when the IT resources required in-house are dictated by the client base? If clients are using a book-keeping package to undertake financials, the accountancy practice must surely do the same? Simply demanding that all clients move to the same software package and version to make life easier for the accounting practice is not going to work.

Indeed, the fact that most clients see little value in upgrading to even the latest version of the book-keeping or financial software continues to add to the problem, creating an ever growing list of packages and versions to support and understand.  But this simply underlines the outdated nature of the current client/accountancy relationship: why should a client spend money on new financial software when there is no additional value? Statutory reports, VAT and audit services will still be delivered as usual – after the fact.

Given the alternatives, the traditional model has huge limitations. Why does the client have to invest in expensive equipment or worry about book-keeping software licences that increase upwards of 7.5% year on year? Especially when there is no year on year additional value on offer?

Frankly, why has the software component of financial management come to dominate rather than the financial information and the way it is used to drive business performance? Effective book-keeping, accountancy and financial management are not about software. They are about real time information. About providing a platform for real time collaboration and enabling the delivery of added value services that will improve revenue streams and rebuild customer relationships.  About using immediate access to client information to flag potential problems before they arise – such as a risk the business will not have the required cash to pay the VAT bill.

Take Control

By continuing to allow clients to dictate software requirements, accountancy firms are effectively closing the door on any opportunity to innovate, collaborate or change the service model. At the same time, innovative new market entrants that adopted the online model from day one are leveraging a vastly reduced cost base, scalable business model and real time information provision to achieve top 100 status within years.

The choice is stark. Continue with the same inefficient IT model with escalating costs and an inability to innovate and slowly watch the customer base decline. Or change. Moving to a single cloud based book-keeping solution that can integrate with other solutions easily enables accountancy practices to consolidate, streamline and eradicate unnecessary IT costs.  But it also provides an opportunity to transform the client relationship and service delivery and emphasise the value of the services, experience and expertise the practice can provide.

These new services are essential; but they cannot be delivered unless firms transform the internal cost base.  Accountants need to take their own advice, lead from the front, adopt good business practice and take a far more proactive approach to IT strategy and innovation.  With the online model set to dominate within three years, don’t wait too long to make the decision

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