Avoiding the Reactionary Technology Trap
There is a significant difference in the leadership of firms that strategically research and plan for their technology purchases in comparison to those that spend their technology dollars on an “as-needed” basis. The latter firms are usually in a crisis mode and have fallen into what we call, “the Reactionary Technology Trap”. In this situation, the firm is making purchases in reaction to a problem rather than purchasing technology as a solution. Systems are seen as “good enough” and many opportunities for increased efficiencies are passed by.
If your firm has fallen into the Reactionary Technology Trap you are potentially facing three different scenarios: Loss of revenue, loss of clients and quality staff and loss of business growth. Just like an investor who puts his money in a savings account during a bull market, you will be passing up huge potential for growth. Unlike that investor, you will not be “safe” because your competitors are ready to steal your clients. Let’s walk through some examples of how falling into the Reactionary Technology Trap can affect your firm:
Loss of Revenue - The Reactionary Technology Trap is costing you money:
- With reactionary spending, most systems end up with software that does not integrate well with each other. As a result, lack of integration leads to duplication of data entry and increased labor costs.
- Also, with reactionary spending, there is little planning. As a result, firms end up replacing equipment and software more often than necessary.
- Most firms that do not plan their technology spending also lack a strategic plan and budget. This inevitably leads to spending on projects with lower rates of return.
- Technology should be making you more efficient. However, if you do not capture the costs of your investment and pass those costs on to your clients, you are losing money. In many firms, true costs of technology are hidden in accounting systems, which leads to improper pricing of services. Billing by the hour does not produce the desired results in a “results economy”.
- The Reactionary Technology Trap finds many firms with the wrong people managing their technology spending. Who is ultimately in charge of your technology budget? Mismanagement of these expenditures leads to inefficiencies and unnecessary costs.
- Ignorance is not bliss. It is what you don’t know “you don’t know” that will hurt you. Who is in charge of making sure you are in compliance with software licensing? Non-compliance can lead to significant fines and other penalties.
- The firms that are in the Reactionary Technology Trap also do not value the time taken to train their individuals on the many pieces of hardware and software that they are asking them to use. Inadequate training programs lead to wasted time. According to the Gartner Group, you gain 5 hours of capacity for every hour of training. Training is a key factor in recruiting and retaining personnel.
Loss of Clients and Staff – The Reactionary Technology Trap is costing you clients and staff:
- Firms should be using technology as a strategic asset against your competitors. You must be prepared to provide better customer service than your best competitor.
- As the overall business advisor, clients expect their CPA firm to be a leader in the industry. If you are in the Reactionary Technology Trap, you will fail to meet the expectations of your clients.
- Without integration comes data re-entry. With data re-entry, or complicated conversion steps, comes errors and omissions. We all know that errors cause lack of confidence and unsatisfied customers. In addition, lack of integration leads to a stressful working environment for your staff.
- Experienced personnel are a firm’s most valuable asset. Just like a client, it costs less to keep a good person than find another. If training is not a priority, you will lose prospective and current staff. Young people expect training!
- The younger generation will be looking for firms who utilize current technologies. Working with outdated technology will cause you to lose prospective and current staff.
Loss of Business Growth – The Reactionary Technology Trap is costing you business growth:
- We all know that without a strategy, you don’t get very far. Do you know what your goals are? More important, do your partners agree and are staff informed of those goals? Technology should be treated with respect in your overall business plan. The lack of a strategy will hamper your growth if you fail to use technology as a tool to grow business!
- Losing clients through the lack of confidence (as described above) and maintaining mediocre staff without a training directive, makes it hard to attract new clients and grow your business.
- A firm who is in the Reactionary Technology Trap is always following, never leading.
- Also, “trapped” firms are unable to create new technology-based value-added services when appropriate.
- Finally, too many firms focus on purchasing computers and software, and not on strategy, processes and training.
As you can see, there is a lot to lose if you fall into the Reactionary Technology Trap. It is imperative that you look at technology as a strategic asset to avoid this trap. In doing so, you will be well on your way of making more money, gaining quality clients and staff and growing your business!
In summary, take this test to see if you are avoiding The Reactionary Technology Trap:
- Do you have a clear vision and technology strategy? Yes No
- Do you have a road map to take you where you want to be? Yes No
- Do you have a budget to operate from? Yes No
- Do you have someone responsible for training and a plan? Yes No
- Do you have a consensus among the owner group? Yes No
- Do you have well-trained staff and management? Yes No
- Are your staff and management receptive to change? Yes No
- Do you have a knowledgeable person in charge of technology? Yes No
- Do you have a professional IT department (or staff)? Yes No
- Are you associated with a peer group that help the best get better? Yes No
- Are you getting an adequate return on your technology investment? Yes No
- Do you have integrated databases and up-to-date systems? Yes No
- Are you gaining and retaining good clients and staff? Yes No
- Are you making more money and growing your business? Yes No
If you are looking for strategies and tools to improve, you should visit www.boomer.com and see how you can become more profitable, retain clients, retain staff, and grow your firm.