Your Client's CIO - That's You!

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This article is contributed by Kenneth M. McCall, MBA, of Boomer Consulting

If you are a CPA in public practice with a mix of small business clients, you are probably finding a greater portion of your work shifting to consulting services of various kinds. Clients are probably asking you for strategic business planning, succession planning, tax strategy planning, and many other services. Some may have even asked you about information technology issues. With this shift into areas beyond strict compliance services, many CPAs are considering IT consulting as an area of practice growth. As they do, the question often arises, "What does that really mean?" What ARE the areas in which a CPA can add value to a client in the information technology arena?

The typical starting point is the installation, configuration and support of client accounting systems. That's a pretty natural place to begin. After all, clients already trust their data to you for tax and audit work, so it's logical that they would look to you for advice on the transaction and data capture function at their end of the chain. A second area that attracts many CPAs into IT consulting is the hardware and networking function. The desire to deliver a turn-key solution for accounting may lead to upgrades in computers and peripherals, and that in turn leads into networking. The installation, configuration, and support of local area networks has been an area that has attracted the attention of many firms starting out in consulting. Experience has shown that either or both of these can be good revenue producers, but both are actually commodity services in the IT marketplace. Competition is stiff, and price sensitivity is a very real factor. How can you rise above this competition and provide a higher level of value to your client with the resulting command of higher fees?

Begin by asking yourself these questions: "What is the role of information technology in a business? Is it a strategic business asset? Or is it simply an overhead expense?" If it is an expense, then it should be managed like an expense - hold down costs and minimize its impact. But, if you believe that it is an asset, then it should provide a return on investment. It should make the business better. It should leverage the capabilities of other parts of the business process and, in the end, increase profitability. In other words, it should be planned, managed, and integrated into the strategic business planning of the company. This kind of management is generally considered to be the role of the Chief Information Officer, or CIO. This person must understand the vision, goals and business processes of the company as well as know what technologies are available (and at what cost) to help achieve these business goals. He or she is a key member of the management team. The challenge in a small business is, who can provide this function? The business owner is most likely oriented on operations, marketing, and personnel. The company has probably already turned to its CPA for assistance in the financial areas, but that still leaves the CIO role uncovered. Adding that kind of expertise by hiring an executive level person is probably cost prohibitive, so the job becomes a prime candidate for outsourcing. Outsourcing to someone just like YOU!

Filling this role can become the value added IT consulting service you were looking for. It is a natural fit for a CPA with a basic level of technical skills. The client already trusts you and includes you in the strategic planning process. And, as far as the technology goes, you don't have to know how to build the watch, only how to tell time! The way to add value is to look at the client's business processes, determine which ones could benefit by the application of new technology, and ascertain the costs and benefits of those applications. Look for ways to reduce redundant data. Find ways to reduce manual input of data already captured electronically somewhere else. Identify ways to flow existing data from the sales system into the accounting system. Then identify hardware and software combinations that will implement these improvements, and determine the costs involved. Build those costs into the long and short-range budgets for the company, along with specific goals and milestones for achievement and the strategic business objectives they will accomplish. Suddenly, this becomes a high value service, and you can set your fees accordingly.

What would the engagement structure for this kind of service look like? It should include both a one-time and an annuity piece. Each should be marketed, priced, and delivered separately. You would begin with a survey, analysis, and planning engagement. In this role, you would meet with the business owner; review his or her vision, goals and business objectives for the next several years. Determine what plans currently exist for maintaining, upgrading or replacing existing IT systems. Obtain historical spending information for hardware, software, support services and contracts. Note: these costs will likely be spread throughout the chart of accounts. One of your functions will be to give a rollup look at what is already being spent. Your client will be surprised to see how much that turns out to be! Then, do your analysis of process and function, and find the efficiencies alluded to above. Finally, present these in a comprehensive plan, with action steps, milestones, benefits to be achieved and associated costs in a single source budget. Suddenly your client has a clear picture of where the company should go in terms of information technology, and how that plan is integrated with the overall strategic business plan. The annuity engagement comes from a retainer agreement that calls for you to meet periodically with the management team, review progress toward the goals of the plan, and perhaps to manage the further outsourcing of hardware and software installations by third party vendors. This will help ensure that the benefits projected in the plan are in fact attained, and the business owner sees and feels the tangible results of your work.

What are these kinds of planning services worth? Clearly this is a value-billing scenario in which the worth of the product has no direct bearing on your hours of effort. An estimate of your time from a cost accounting standpoint is important, so you don't underbid your service, but you should negotiate a fixed price agreement at the beginning of the engagement for both the initial plan, and separately, the ongoing retainer. By the very nature of value billing and fixed price agreements, it is difficult to say in this forum what the right price should be; you and your client will determine that. But, for comparison purposes, consider this scenario. The Gartner Group, in a recent study, found that small to midsize businesses will spend between five and seven percent of their annual revenue on IT in 2001. Thus, a $2 million dollar business would spend $100,000 or more on information technology. Surely it would be worth five percent of that total to ensure that the other 95% is spent wisely! Thus, a comprehensive initial plan like the one outlined above might easily be a $5,000 consulting engagement. The ongoing retainer should be separately priced depending on what is included, but would be at least equal to the initial plan in value.

How should you prepare yourself to perform this kind of consulting? Some technical understanding is obviously important. You need not be a networking expert with a CNE or MCSE certification, but you should be comfortable with basic local area networking, basic Internet technologies, and security concerns. Most importantly, you must be committed to lifelong learning in the IT field. At a minimum, this means regular reading of trade publications, scanning key Internet sites, and attending IT focused conferences. If you wish a certification to display your expertise, consider the "Certified Information Technology Professional (CITP)" from the AICPA ( This certification is geared toward the management of technology, rather than the more hard skill areas measured in the major vendor programs.

So, in summary, are you interested in IT consulting? You should be. Your clients are asking for it. Is there an alternative to selling hardware, services, and accounting software? Definitely. It's called Strategic IT Planning and is a great fit for a technical minded CPA. There are small businesses out there looking for a CIO just like you. Give it some thought. There just might be a great opportunity waiting for you to take it. Good luck!

By Kenneth M. McCall, MBA, Boomer Consulting

Kenneth M. McCall is a Consultant at Boomer Consulting, Inc., an organization devoted to the application of computer technology and management consulting, located in Manhattan, Kansas.

Mr. McCall has been with Boomer Consulting, Inc. since its formation in 1996. Prior to that, he served as the Firm Administrator for Varney & Associates, PA, Consultants and Certified Public Accountants. He has over 30 years of leadership experience, in both private industry and government, in the areas of training, financial management, and computer system integration.

Mr. McCall has assisted CPA firms of all sizes in strategic planning and budgeting for their technology needs and has worked extensively in the area of training management for CPA firms. In addition to his consulting work, Mr. McCall has developed a wide variety of practice management solutions using Microsoft Excel and Microsoft Access including the "Boomer Budget Builder" planning template used by both clients and his fellow consultants in their work.

His current projects include assisting clients with developing a technology consulting practice through The Consultants Training Program™ and managing their technology and their practice as one of our key facilitators in the Boomer Technology Circles (BTC).

He holds a Bachelor of Arts degree in Economics from Lafayette College in Easton, Pennsylvania and a Master of Business Administration from Creighton University in Omaha, Nebraska. Mr. McCall is also a Microsoft Certified Professional.

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