5 Technology Traps You Should Avoid

5 Technology Traps You Should Avoid

One advantage experience provides is hindsight. With insight and foresight come all the important components of innovation. The Medici family proved this advantage of sharing among disciplines centuries ago during the Renaissance. The accounting profession sits in a unique position to create today’s Medici Effect. I recently attended a meeting with 25 of the top CIOs from firms throughout the country. These are innovative leaders who are consistently being asked to maintain a stable technology infrastructure, while also ensuring their firms are future ready and prepared to address key issues that are impacted by technology, such as the following:

  • A remote workforce who can work from anywhere
  • Just in time training
  • Collaborative workflow
  • Mobility and clients’ demand for timely information
  • Technology’s role in new advisory service offerings
  • Integration of applications (desktop, server, mobile and cloud), along with secure centralized storage of data (private and public clouds)
  • Resource limitations – people and budgets

These issues, along with many other technology strategies, should sound familiar and your firm should currently be addressing them. But, before you develop your strategies and roadmap, perhaps you should think about how you’re thinking. “The problem is never the problem, but how you think about the problem,” said Dan Sullivan, founder of the Strategic Coach. Technology is changing rapidly, and firms can unintentionally and unnecessarily get caught in traps. These are natural traps, often due to the nature of firm governance in the majority of firms (partnerships, committees and multiple service areas). The failure to pay attention to what is occurring in other professions and industries may be the greatest risk.

The five traps can be summarized by the following:

  1. Focusing on what your peers, especially those firms your size or larger, are doing with technology – the me too syndrome. It is not good enough to be average. Average is where the best of the worst meet the worst of the best! Is your goal to be average?
  2. Thinking you are different than your clients and other small businesses due to the fact you are a CPA firm. Most firms are small businesses with annual revenues topping approximately $33 million for the top 100 U.S. firms, and $14 million for the top 200 U.S. firms. Isn’t your firm faced with many of the same technology challenges as your clients? The big difference – most firms run well over 50, and some as many as 100, applications, while most clients run less than 15 applications.
  3. Focusing on maintaining a stable environment, rather than on innovation. Stability in technology is important, but stability, alone, is not enough to compete. The best firms have a passion to get better. What’s your passion, and what are your goals, with regard to technology leadership?
  4. Believing you are ahead of your clients and peers. While you may know who your clients are, do you know your peers and the details of their technology strategy in today’s global environment?
  5. Getting high on your own supply. Partner income has continued to increase over the past five years, but is your firm investing in its future resources – people and technology – or are you simply depreciating the value of your firm by taking more out of it?

Due to experience (hindsight), the changes currently happening in the profession (insight) and access to knowledge with regard to technology (foresight), there are multiple ways firms can avoid the above traps and reduce their pain and implementation times, while increasing their return on investment. Please note: I did not say it is going to be easy for the accounting profession, due to the tendency to avoid risk. Most successful companies will readily admit they have made errors when it comes to technology. The greatest risk is to stay the same and not change. The January 2014 Economist predicted accounting and auditing as having one of the highest job loss rates over the next 20 years, due to computerization. The only job with a higher loss rate was a telemarketer. Technology can no longer be managed as overhead; instead, it must be managed as a strategic asset. This fact, alone, should cause all firms to think differently about their clients, service offerings and the technology needed to remain relevant and successful.

Now for the exciting part and how to differentiate your firm … let’s examine each of the five traps and the strategies to improve innovation. Directional innovation comes when you put people from the same discipline in the room. Intersectional discipline comes when you interact with multiple disciplines. Therefore, I encourage you to think bigger and beyond what you currently know.

Peer Technology

Letting your peers determine your technology strategy may have been a safe approach 10-15 years ago, but in today’s rapidly changing environment, I believe a much better approach is to add the innovation occurring in other industries, as well as the consumer markets. In fact, the consumer markets are impacting your decisions today, with regard to mobile and cloud-based applications.

Other industries, such as banking, legal, insurance and healthcare, are all faced with similar challenges and opportunities. Why not look at solutions that meet a broader spectrum than just the accounting profession? This will result in lower costs and faster development times. Remember, the thinking about your thinking – tax has driven many technology decisions, due to the budget in small- and medium-sized firms. The larger firms have more emphasis on audit, but these compliance services frankly are not growing in most firms and, therefore, firms should expand their scope when evaluating technology for data storage, workflow, accounting, expense reporting, bill payment, CRM and mobile reporting.

Peer spending has been another driver. The better firms are spending just under 6% of revenue on all technology inclusive of support and labor. This includes data and telephone. What if your firm had a plan to spend 1, 1.5 or 2% more on innovation? Would that differentiate you from your peers? The answer depends on whether you are focused on commodity services, or advisory services, that meet the needs of the clients. Doing the wrong things right won’t fix the problem, but approaching commodity services as part of an advisory services package does make sense. It can improve margins and cash flow. The budget is only part of the solution. Having the right people, plan and processes are critical.

CPA Firms are Different

The technology requirements are not that different, excluding the core applications, such tax and accounting. What is different is how most accounting firms make technology decisions. In other industries, the CEO and CIO generally drive technology governance with the board’s approval. In too many CPA firms, technology decisions are often made in silos, and primarily based upon cost. This can be dangerous, costly and create a culture that resists change in a rapidly changing environment.

Here are some common examples that all industries must tailor for their processes:

  • Document/Content management
  • Email and scheduling
  • Workflow
  • Expense reporting
  • Bill payment
  • Billing and collections – ACH
  • Payroll
  • Human resources and fringe benefits
  • Customer relationship management
  • Project management
  • Real time reporting
  • Mobile reporting

Firms should look to their own back office and see if they are efficiently managing these areas. Excellent tools are available that can reduce time and costs, but processes will need to change in order to take advantage of the available technology. Who is responsible for these areas in your firm, do they know what is available and are they willing to change? This often requires someone from outside the process to evaluate the processes, using the principles of Six Sigma.


Stability is too often confused with efficiency. Every firm wants their technology to work and be available 24/7. Change requires disruption. You must give up something from the past in order to leverage future technology. Technology is disrupting several areas (other than tax and accounting) that impact firm management. Some of the more notable areas are learning, bandwidth, mobile, real-time information and process improvement. Disruption causes change, and along with change comes opportunity. Seizing these opportunities means thinking differently. If you decide to think differently, the results can positively impact your firm and ensure future readiness.

  1. Reduce work in process and accounts receivable by packaging and pricing services differently.
  2. Provide your staff with the mobile tools and access to work from anywhere at anytime.
  3. Automate your expense reporting via a mobile application that’s integrated with time & billing, bill payment, and your general ledger.
  4. Provide a collaborative project management system that integrates with email, document management, calendars and scheduling.
  5. Provide your staff with real-time, online learning capabilities.

These five examples will ensure disruption, but in the long run, the firm will be more successful and future ready.

Believing you are a Leader

Confidence is a powerful attribute and, definitely, required for learning. The dangers are complacency and feeling you are ahead of your peers and even your clients. I am confident, that you may be ahead of clients in some areas of technology, and remember, 50% of the firms are below average. I have never had a partner in a firm tell me they wanted their firm to be average. The confidence that your firm can and will change is powerful. Just execute and monitor progress.

The best strategy is to start with an IT plan or roadmap that prioritizes initiatives, and defines responsibilities and holds people accountable. This is an ongoing process, and the biggest mistake firms make is in the area of accountability and by not making the process ongoing. The tendency is to develop a plan and then wait several years to review and update. Your technology roadmap should integrate with your firm’s strategic plan, so if you don’t have a strategic plan, you are increasing the risk of making technology decisions that may be short lived.

There are some characteristics that we see in leading firms that can be emulated. Again, it takes resources and time, but, in general, here are the key differentiators that separate the best from the rest:

  • Leadership: Strong firm and technology leadership.
  • Talent Development: The firm invests talent.
  • Technology: The firm has a plan and everyone knows the plan, and the plan integrates with the firm’s strategic plan.
  • Client Development: The firm has target clients and a defined profile of the idea client – they filter clients who do not meet their criteria.
  • Compensation: Their system is relatively fair, the people administering the system are trusted and the system rewards people for executing the strategic plan.

Getting High on Your Own Supply

This trap relates to several of the others, as well as complacency. When firms are successful, it is easy to get caught up in the success and not focus enough on the future. This has happened in the area of talent development. Technology is a key component to solving or reducing the talent issues, which are directly related to succession. Firms must do more with fewer people. Training and leveraging technology in both the back office and in client services can only do this.

Much of the time spent in compliance work has been in the aggregation of data for tax or accounting and auditing. The majority of this data is now digital, and firms should be looking for ways to go directly from books (accounting systems) into tax preparation systems, without having to transfer data into traditional trial balance packages for adjustment and storage of work papers. This can be done seamlessly with many cloud-based accounting systems. Don’t be overly confident that your current system or processes are the most efficient.

The same holds for the back office of the firm. Are your own processes efficient, and can technology be implemented to save significant time in paying bills, recording time and expenses and invoicing clients, including collections via ACH versus credit cards?

The key is to think beyond these compliance services, and more toward the higher value performance and strategic services. This is difficult if you can’t get out of the compliance mode, and above the line, into higher value advisory services.


Each firm is different and starts with a different hand of cards (existing technology and people); therefore, a roadmap or technology plan is important to identify priorities with the highest potential for return, responsible parties and due dates. The process of developing a roadmap is as important as the roadmap, due to the need for consensus, commitment and accountability. The traps are real, yet avoidable with proper leadership, relationships and creativity. The leadership will provide direction, the relationships will provide confidence and the creativity will provide new capabilities. All are required for a successful and future-ready firm.

Don’t be afraid to include those from outside your firm, and even outside your profession, in the process. Much like during the Renaissance, innovation is accelerated by bringing together the best thinkers that are willing to share.