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IT in Practice: The singer, not the sewing machine

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22nd Oct 2005
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Simon HurstSimon Hurst, current chairman of the ICAEW IT Faculty, specialises in helping accountancy firms make the most of their technology investment. Here he considers the state of play in the practice management technology and argues that getting familiar with these tools is a matter of professional survival in the digital age.

A few years ago, when Windows was exerting its hold on the accounting ledger software, people began to comment that the packages all looked the same and pretty well worked in the same way.

The same comment could now be made about many of the tools we use in practice management. Accountancy practices remain a niche market for software systems. In the past, this meant accountants often had to pay a lot of money for specialist software that was expensive, unreliable and functionally inadequate.

While the prices may still be high compared to some commodity applications (like accounting ledger software), the functionality and connectivity have made the choice of practice automation less important.

Most systems now allow you access to their data. For example there are tax, accounts production and practice management packages, all based on Microsoft Access formats. Other packages may not use a standard data structure but do provide ODBC (Open Database Connectivity) drivers to allow other packages to access the data. What you can get out of a package is now likely to be limited by your own abilities rather than the capabilities of the packaged software itself.

Effective use of IT is now so crucial to ensuring internal efficiency, and an appropriate level of client service. A firm that doesn't have a sensible strategy backed up by an adequate budget may struggle to survive. Even if technology changes rapidly you will be better placed to respond to the change if you have some idea of where you are heading and what you seek to achieve.

Setting the strategy
One of the structural problems facing many partnerships is the inverse relationship between executive seniority and IT understanding. Because computers are such a comparatively recent phenomenon it is often the youngest members of staff who have the most confidence and apparent ability. However there is a great deal of difference between the ability to fire a gun, and the skill to point it in the right direction.

It is not enough for senior partners to assume they don't need to worry too much about IT because the new trainees will have learnt it all at school and university.

At the very least, senior managers need to understand enough about IT to control and direct it. It helps if they can be efficient users themselves. It is a rare accountant that couldn't benefit greatly from the use of IT in some form or another.

The sections that follow cover some of the potential avenues your IT strategy could explore. How you get there, and understanding the technologies that will get you there will require more research and effort on your part. If there is one lesson to be drawn from this article, it should be to understand the importance of technology skills as a core part of your future professional development.

IT as fee earner
Until the early 1990s, IT was very much an internal issue for most firms. effective use of IT could have a substantial impact on the efficiency of a firm of accountants, but it often had little effect on the perceived product the firm provided to its clients. To take the example of final accounts, the most sophisticated accounts production package was incapable of producing accounts that looked much different to those produced on a typewriter, and in many cases looked worse than those produced manually using a word processor.

Some firms did offer IT consultancy services, mainly covering selection and implementation of business accounts systems, but few used IT to differentiate their standard products in any way.

The past 10 years have changed all that. IT can drastically improve the 'products' of any firm of accountants, and in addition should be seen as a valuable source of income in its own right. More graphical software systems and improved hardware performance mean you no longer need exceptional IT technical skills to control the presentation of your documentation. And with the prevalence of the internet, you can now access the data in your client's accounting system from your desktop.

The differentiating factor is now the judgement and analytical skill required to use and present the data effectively.

IT as marketing tool
IT will enable you to radically change what you provide to your clients ' anything from a full colour set of graphs with the monthly management accounts, to providing information as electronic rather than paper documents.

Some accountants have reorganised their business in order to provide their services over the internet and by email. Others are considering giving clients access to the information that they hold on the client's behalf, in the same way that many computer suppliers let you check the progress of your order on-line.

Consider equipping your boardroom with a screen and data projector so that all your client meetings can include interactive presentations of key information, such as the trends the accounts reveal, or cash flow forecast information or what-if scenarios.

IT as product
As well as being used to enhance existing services, IT advice and help should be a service in its own right. One of the major aims of your IT strategy should be to attain such a level of confidence within your firm that you see yourselves, and are seen by your clients, as a primary source of IT help and advice.

If you are able to maintain the profitability of all your existing services, additional IT services can serve to add to the firm's fee earning potential. Perhaps more importantly (and indeed worryingly) they may be essential as replacements for existing services. IT has the potential to destroy existing forms of income as much as to provide new ones. Any reasonably mechanical activity could well be automated ' how many people still produce manual extended trial balances for example? This could lead to substantial elements of some accountants' work being made unprofitable through competition from technology itself or from less skilled and cheaper alternatives, aided by technology.

Some of the IT services you might consider providing might include:

  • Provision of IT training ' some firms have equipped training rooms for staff training that they use for training clients, using either in-house experts or external trainers
  • Provision of IT consultancy services ' ranging from the 'traditional' help with setting up and managing computerised accounting systems to automating Microsoft Word
  • Help with the wonderful world of the Internet ' where else can clients go for impartial advice on what's hype and what's essential for survival?
  • Help with information strategies in general. Why shouldn't accountants help small businesses install and manage an intranet for example?

    Why me?
    Why should accountants be in a position to provide these sorts of services? Well someone has to. There is a well publicised IT skills shortage. It is not just the IT skills that are the problem, it is the skills required to apply IT sensibly and judge what to do and what not to do that are lacking. These are exactly the type of skills that accountants possess. Often a firm may require to work with specialists in certain areas but the accountant's involvement should still be vital in helping businesses specify and control IT projects.

    About the author
    Simon Hurst is chairman of the ICAEW IT Faculty and runs The Knowledge Base in Horsham. The Knowledge Base specialises in helping accountants realise the full potential of their IT investments. Simon is also the author of the Office ProductivITy Kit, a training suite for accountants with 26 separate modules focused on common accounting tasks carried out with Micrsoft Word, Excel, PowerPoint and the rest of the Office suite. The full kit costs £180+VAT, a saving of £120 on buying the modules separately.

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