Spotlight on modern tech infrastructure
Ian Vacin kicks off a new series looking at the process of finding the right technology for your accounting firm.
Technology for accounting professionals has radically changed in the last decade with the advent of industry-specific cloud applications for almost everything.
As highlighted in our recent trends report most accounting firms use anywhere from five to 40 applications to serve their clients and run their firms.
The most successful, progressive accounting firms use on average three to six core applications to serve clients and run their practice. So what products do they use? And more importantly, how does it all come together?
Firm infrastructure has evolved
Historically, there have been two major groups of software powering firms: Client service apps and practice management apps. As cloud accounting has grown and evolved, client service apps have moved completely to the cloud, led by cloud accounting (with tax applications lagging behind).
In response, practice management software has also started to evolve. With the movement to the cloud, two additional groups have materialised: Client management and communications. This is demonstrated in the diagram below, with infrastructure components client facing on the left, and those internally facing the firm on the right.
Client services defined
Client service apps simplify and accelerate the various revenue-driving services for the firm. For full-service accounting practices, seven major service offerings exist comprising of audit, advisory, tax, accounting, bookkeeping, payroll and IT consulting (financial wealth management is excluded). The diagram below defines each in more detail. Depending on the size and focus of your firm, you may do some, but not all of the related services. As we’ll highlight in the next article in this series, you should start your technology exploration on the service that is the most important to your firm based on profits, growth potential or most opportunity for improvement.
Private ecosystem v best-of-breed
As for practice management, up until recently, limited options have existed. Most practices, if they could afford it, would use a desktop, on-premise solution to satisfy their needs for CRM, project management, workflow and more. Due to these solutions’ high costs, lack of integration, and desktop nature, this forced them to buy into a single vendor’s private ecosystem.
One of the key benefits of the cloud is the opportunity to build your infrastructure using a best-of-breed set of smaller, cheaper, more purposeful set of products. Your billing app can now be your general ledger. Your document management can be a generic solution like Box or Dropbox. Your time tracking can leverage a process-focused app like TSheets, and your workflow, project and task management could be an industry-specific solution. You can construct what is right for your firm and purchase only what you need.
New categories: Client management and communications
Because of the shift to the cloud, client service apps and practice management apps have been bolstered by the emergence of two new categories of apps that link them better together: Client management and communications.
The client management app category reached full gear with the release of cloud accounting extensions like Intuit’s QuickBooks Online Accountant and Xero’s HQ. Both provide a dashboard of your clients and a view of the associated financial activities within each.
The communication category emerged shortly thereafter with the proliferation of products like Slack, Yammer, and Google Groups, as more firms tried to handle the changing needs of their clients and allow their staff to collaborate on work without being restricted to their inboxes.
A firm’s infrastructure is much more than a given cloud accounting solution, tax product or practice management solution – it is the thoughtful construction of key applications that solve the core processes of the firm both externally and internally while enabling all parties to work collaboratively. While the infrastructure diagram brings it all together, the rest of this content series will provide a framework to narrow the field, choose a winner and provide tips and tricks to elevate your processes and take your practice to the next level.
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With over 25 years of experience in technology and over 15 years of leadership experience in the accounting industry at Karbon, Xero, and Intuit, Ian is passionate about helping accounting professionals be as successful as possible in order to positively impact the small businesses that they serve.