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Practice software falls short on advisory work
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Practice tools fail to meet advisory needs


Specialist developers are struggling to come up with software that supports accountants who want to deliver advisory services, said IRIS North Americas president Jim Dunham.

25th Apr 2023
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Client accounting services (CAS) and companion advisory work are live opportunities in North America, according to Jim Dunham, IRIS North Americas president.“But nobody has cracked the code on it yet from a software service perspective for CPA firms. Many fledgling tools are not profitable and some tools are having trouble gaining a viable foothold in the market.” 

Without mentioning the names of the companies IRIS has reviewed on its recent acquisition spree, Dunham told AccountingWEB, “Some of the smaller players underestimated the integration lift needed to get into existing practices and touch the system of record that drives the analytic value. They’ve underestimated how difficult it is to pull that data together and make it useful for advisory.” 

Challenges of advisory software

This integration and implementation challenge is just as daunting for firms, who often lack the resources or spare cash to do the implementation themselves. 

Part of the problem, he continued, was that the tax and practice software giants Thomson Reuters and Wolters Kluwer “have never had a reputation of being easy to work with from an ecosystem perspective”. Few other players have deep enough pockets to solve that problem.

In the small firm arena, QuickBooks and Xero have the capability and resources to tackle the advisory code vacuum and are both working on dashboards and cashflow reporting tools. But in Dunham’s view, “That’s not what I’d consider expert advisory. They have the ability to show what tax you owe, but not the more complex analysis that CPA firms supporting larger organisations carry out.

“For example, reporting cashflows across entities is a much different problem set,” he said.

Finding a niche

Even though IRIS has a cloud bookkeeping capability through its AccountsWorld subsidiary, Dunham’s strategy is to avoid taking on the bookkeeping giants in the small business and practice market. “Be careful who you pick a fight with. I’m very much a realist to see where we can have the biggest impact for customers,” he said.

Instead, IRIS North America is focusing on practice management and document management solutions for firms with 200+ employees – which still represents a “chunky market”. 

The other avenue IRIS is pursuing is payroll software, at the opposite end of the market where clients can be very small companies with hourly employees. “Payroll players did roll-ups and didn’t do a good job for their customers or CPAs,” said Dunham.

“If we really focus on that value chain and solve those problems, that’s where we see interest in the market and targets for acquisition.”

In addition, CAS has payroll as a component. “You can team up with CPA firms to offer services through that channel that are very sticky and drive all the way down to the end employee,” he said.

The software gaps

Looking at what kind of software is needed to support client advisory work, Dunham saw an opportunity to apply artificial intelligence and machine learning to the global analysis of tax returns and client data. “The big players focus on getting it done, not adding value to what they do,” he said. “There’s a sidecar application that could look at analysis of more complex returns and a couple of players are poking around at that.”

But the biggest need was for applications that supported the actual performance of the CPA firm itself. “I don’t see a lot of tooling around that in the market. I see an opportunity there for helping them to better understand how to build the business – what are the services you could provide, how valuable are they to customers and would it be good business to do that? Some CPA firms are doing it themselves, but there’s an opportunity for industrial-scale software to do that. We’re constantly looking at those opportunities. Maybe a CPA firm is doing it and we can industrialise it.”

Replies (2)

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By Hugo Fair
25th Apr 2023 16:55

That's the potential problem with 'negative marketing' (as most political parties have found to their cost) ... when you've finished pointing out all the disadvantages of the opposition, there is an expectation from your audience that you'll eventually posit a better alternative.

And, whilst I applaud the honesty of Jim Dunham (in admitting that he not only doesn't know the answers but isn't even sure of the correct questions), the net result is to leave a vacuum - and a sense akin to an empty stomach (for this reader at least).

Thanks (1)
By ireallyshouldknowthisbut
26th Apr 2023 12:31

I am staggered that anyone seriously things software can 'do' advisory.

Software is good for adding up volume, and providing records of it, and acting as a tool for analysis (especially excel). Its no good at thinking.

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