AccountingWEB (AW) recently sat down with Technology Consultant Roman Kepczyk (RK) of InfoTech Partners North America to discuss successful ways that CPA firms can navigate through the confusing waters of technology planning today.
AW: Roman, thank you for joining us today. From your perspective, how does technology planning fit into the overall success of firms today?
RK: Virtually every business today is becoming more dependent on information technology to not only work more efficiently, but more importantly, to remain competitive in an environment of continuous change. Those firms that can envision where they want to be in the next two to three years and make a concerted effort to get there, will find themselves amongst the most successful firms of the next millennium. Technology must be integrated into the firm's overall strategic plan.
AW: How do firms develop a budget for technology? How do those responsible "sell" owners on the need to invest so muuch in invest in technology?
RK: Too often, businesses spend money on technology without understanding what the expenditures are for, what the benefits to be received are, or how that technology will make the business more money-giving "tech" a bad or suspect name. We have found that educating owners on the benefits (and not speaking TECHnize) is the best way to successfully "sell" technology solutions.
AW: Who should be involved in implementing IT decisions?
RK: An integral part of strategic technology management is having the right people in place. We believe you need an owner involved, a technical visionary (usually outsourced to an integrator), your network administrator, and representatives from tax, audit, and administration.
AW: Creating a budget is critical. Is there a "rule of thumb" to help determine how much a firm should spend on technology?
RK: We believe that technology is an ongoing investment (usually 6-7% annually) and found that for owners to see it that way, we have to calculate the costs and pass them on to our clients within our billing rates, but track it separately. Many firms we work with track technology expenditures and either have it built into their billing rates or bill it separately.
AW: Is there any way to prove the value of IT to a firm?
RK: We have found that firms investing in technology and training seem to be the more profitable firms with revenue per full-time equivalent being over $100,000 and some as high as $160,000. We encourage our clients to find the measurable statistics needed to prove the value of IT (effective billing rate, profitability on engagements, etc.)
AW: Cutting costs is always an issue at a firm. How does this culture affect IT investments?
RK: Reducing technology costs should not be done by "thinning" projects or the quality of technologies implemented. Cutting 10% of a project often cuts more than 10% of the value of the project and is almost always counter-productive as bad or under-powered technologies can leave the firm "gun shy" from investing more (not to mention that it makes technology people look incompetent).
AW: Is there any way to "shave" costs of IT?
RK: We are against buying no-name technology or low-budget PCs. While saving money in the short run, it usually costs more in the long haul. There is a statistic used in the PC industry that states companies spend on average between $300-$400 to resolve each individual computer problem. If you have to fix a clone a couple of times more each year you have lost all your cost savings.
AW: Is it better to stick with one brand, or are machines generic enough these days to mix and match?
RK: Implementing and managing standards for hardware and software (such as only buying one brand of desktop and laptop and using the same operating system on all machines) can reduce the total cost of ownership by 26% according to
one Gartner Group study.
AW: Any other thoughts?
RK: Technology is a vital part of business today. Only by constantly analyzing these technologies and how they fit into the overall vision of where our business is going can we successfully implement it. This can best be accomplished by a combined team of management and information technology personnel, creating and implementing an evolving three-year budget that measures the benefits of their plan.
If you would like a sample budget template to help you get started, please email [email protected]