We’ve been asking, “What’s the best way to economize on technology costs in this economy?” And you’ve been answering…
Kless
Ed Kless Senior Director, Partner Development and Strategy Sage Software
My short answer to questions like this is always the same – concentrate on the R before considering the I. All too often firms look purely at cost cutting or getting it cheaper without first and foremost thinking about what are the perceived benefits in terms of dollars. If necessary, one should prepare a risk (benefit) analysis with anticipated benefit multiplied by probability of occurrence. This will yield an analysis amount that one can compare to costs.
We are seeing many companies cut IT costs by outsourcing IT. Many small and medium sized firms have one or two IT managers on staff at a cost of $60k each on average per year. Organizations like Acumen (www.AcumenIT.com) are providing managed IT services to outsource all or part of this function for a fixed monthly fee that is a fraction of the cost of maintaining a full headcount (or two.) Additionally, Acumen’s consultants are very experienced, having worked in many different customer environments, whereas an IT manager is often very limited in experience having only worked in a single environment. This is a very easy way for businesses to cut IT costs significantly while actually improving the overall IT service/support.
This was the case at SwaimBrown PA. It was very costly to manage and pay for a full headcount for IT. With the recent sale of SwaimBrown Consulting, that IT headcount went away, and SwaimBrown PA is now outsourcing the main IT functions to Acumen.
Many companies are scared and held hostage by one IT manager who they fear controls the IT systems that are critical to the business. It is difficult to manage this person because they are “different,†and it is very costly to maintain the full headcount. In reality, it is quite easy to outsource this to a large IT firm that specializes in IT service and has the knowledge and experience to do a much better job than any one individual can do for a small company.
Both because of the business downturn and despite it, accounting firms are largely resisting the impulse to cut marketing spending and business development activities. And a significant number are even boosting
sales efforts.
Early results from a CPA Trendlines survey for the AICPA show that roughly a third of firms have increased their marketing efforts amidst the recession, a third have reduced their activities and the other third report no change.
Going forward, however, most firms will be hitting the gas pedal to accelerate practice development activities. Indeed, early responses to the survey suggest 70 percent of firms will be expanding their sales efforts.
Many accounting firms are stepping up marketing just to maintain revenue levels. “Clients are closing their doors and we need to replace them to stay in business,” says one small-office owner who is increasing biz-dev efforts just to stay even.
CPA Chad Bordeaux at Beancounter Ramblings has some good answers…
“I do not think that these essential elements change so much depending upon the economy. A truly great leader will possess these qualities regardless of the economy. The differentiating factor is that the poor economy seems to weed out some of the poor leaders that do not possess these leadership qualities.”
He starts with “Vision.”
(Even if he is writing from South Carolina and is illustrating his post with a picture of Abe Lincoln. What, no Jefferson Davis?!)
The best thing is to spend wisely. Technology is an investment which needs to be planned and focused on ROI. Although you can often put off the investment, an organization should understand the lost opportunities they forego.
Initially, an organization should review where they need to make changes in order to be better; more effective and more efficient in solving their customer’s needs. Prioritizing these needs based on the benefits to the organization and their customers provides a road map to success. Cash flow may not allow all changes to be made immediately, but the prioritization shows the organization what benefits they loose by not making a change.
So the decision becomes if I put off the investment for 12 months, what have I cost my firm? Does this make sense based on our vision? Spending wisely, according to a plan with documented benefits will serve the organization not by saving money, but by making the firm better.
One of the best ways to economize on technology, is to train employees on all the possible uses of the existing software and hardware. In a tax and accounting firms, the most important resource are the employees. They will often devise way to keep the technology costs down, while still providing excellent customer service. And they will be the first to tell you if a software or hardware package does not meet the needs of the clients.
We’ve been asking, “What’s the best way to economize on technology costs in this economy?” And you’ve been answering….
Alex Vuchnich, CPA, CFE Owner at Alexander G Vuchnich, CPA
Vuchnich
I was interested to see many of the responses so far started with something like the best way to economize on technology costs is either ‘don’t spend’ or find free solutions. This is an indicator to me that most firms are still stuck in the technology is a ‘cost center’ rather than a strategic resource.
My suggestion is that firms should try spending some of their technology budgets on training in evaluating and using technology so they can maximize the benefit of what they already have and so they can identify the right solutions going forward.
While U.S. economy loses 216,000 jobs and unemployment hits 9.7 percent.
In today’s monthly employment situation data release, the Bureau of Labor Statistics reported that total employment in the nation’s accounting and bookkeeping services sector climbed by a seasonally adjusted 2,300 jobs in August from July, to stand at a head count of 943,900.
CPA Chad Bordeaux at Beancounter Ramblings has some good answers…
