The cloud has changed how firms budget for technology.
By Randy Johnston and Brian Tankersley
The Accounting Firm Operations and Technology Survey
Technology is playing a growing role in the accounting profession, with 57 percent of firms saying they view technology as a competitive differential.
MORE: SURVEY: Firm Size Matters in Tax Software Choice | Top Challenges? Staffing, Staffing, Staffing
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That’s just one of the findings in the new Accounting Firm Operations and Technology Survey. In this post we cover file and data storage management, remote access, internet, telecommunications, technology spending, decision making, annoyances and trends, some of which might be surprising. For example, 35 percent of firms report using software to track the real-time availability of their staff.
File / Data Storage Management
Survey respondents were asked about email archiving practices, document retention policy for purging digital files and what applications firms use for their staff to connect back to the office.
Email is most often being archived to the cloud
Cloud archival at 38.6% is the most common way for firms to archive their messages. When combined with those who use both local and cloud storage (e.g., hybrid) 11.9%, these two categories constitute most firms responding to the survey.
With solutions from Microsoft, Google, Mimecast and many others, it is surprising that 24.8% of firms are still not archiving messages, and this is up from 17.1% in 2019.
Document retention policies are improving, yet lack thereof remains a cause for alarm
It is not good to see that the practice of not having or following a document retention policy has increased this year. The percentage of respondents reporting that their firm does not have a document retention policy is 37.6%, which is a 6.0% increase over 2019. Solo practitioners led those lacking a document retention policy at 53.8% and a significant number of small firms at 50.0%.
The percentage of firms reporting that they have a policy that is not followed crept up slightly, to 23.8% in 2020 versus 23.1% in 2019. Those most likely to have a policy and not follow it were medium-sized firms at 28.6%, large firms at 25.0% and extra-large firms at 28.6%.
Remote access technologies varied widely based on firm size
Overall, Windows Remote Desktop Services (RDS, formerly known as terminal services) was the most popular remote connection technology at 20.4%, followed closely by SSL VPNs at 18.4%. However, the tools used varied widely based on firm size.
- Solo practitioners were most likely not to use any remote access tools at 5% and were most likely to deploy do-it-yourself cloud-hosted solutions like LogMeIn at 15.4%.
- Small firms, like the solo practitioners, seemed to prefer the DIY solutions like TeamViewer at 24.3%, GoToAssist/GoToMeeting/GoToMyPC at 9% and LogMeIn at 16.2%, but were also quite likely to use Remote Desktop Services at 24.3%.
- Midsized firms begin to have the scale to support more sophisticated tools, and this is reflected by the higher percentage using tools like Remote Desktop Services at 0%, SSL VPNs at 21.4% and Citrix Virtual Apps/Virtual Desktop (formerly Citrix XenApp / XenDesktop) at 17.7%. Only 10.7% of firms in this category do not offer any remote access.
- Large firms tended to deploy sophisticated solutions like SSL VPNs at 1%, VPN (other than SSL VPN) at 21.4% and Citrix Virtual Apps/Virtual Desktop at 17.9%. These firms still reported some use of DIY tools, but they were less prevalent than in smaller firms.
- Extra-large firms were the most likely to offer sophisticated solutions like SSL VPNs at 2%. Citrix Virtual Apps/Virtual Desktop, Remote Desktop Services and TeamViewer all at 23.1% were prevalent in this category.
Remote Access / Internet / Telecommunications
Survey respondents were asked to report on technologies and methodologies for a remote connection back to the office. They were also asked to report on the software used to show real-time availability of employees and products or services they use or are considering such as software as a service (SaaS) and application hosting.
What do firms use for wireless access outside the office?
38.8% of firms do not use wireless access outside of the office. If they do, they connect using their phone or iPad as a hotspot at 22.4%. Next is the MiFi device at 17.3% and Wi-Fi with a VPN at 10.2%.
Real-time availability of staff
16.3% of firms show this information via instant messaging software and 11.2% through the software on their phone system. 65.3% of firms do not use software to track the availability of their staff.
Cloud services are being used more; whether they have hit a plateau is yet to be seen
The survey revealed that practitioners are currently using fewer cloud computing services than were being used in prior years. 25.5% of respondents reported that their firms are not using any cloud applications, which is up from 16.5% in 2019. The most popular applications were email hosting at 48.0%, office applications at 40.8%, tax research at 31.6%, workflow management at 29.6% and file storage at 22.4%.
The most popular SaaS applications included QuickBooks Online at 60.2%, XCM at 20.5%, Xero at 12.2% and Bill.com at 11.2%. QuickBooks Online was present in all the grouping categories; 60.2% of solo practitioners, 56.8% of small firms, 60.7% of medium firms, 71.4% of large firms and 53.8% of extra-large firms use this tool.
The percentage of firms that report that they are “not likely” or “not at all likely” to implement cloud-based versions of their firm’s tax and accounting applications in the next two years rose to a combined 23.5% in 2020. The percentage was up from 17.1% in 2019.
Apps for review
The most common apps for firms to be reviewing this year include CCH Axcess Tax at 15.3%, Bill.com at 8.2% and Intuit QuickBooks Online at 7.1%. Other popular applications include AccountantsWorld and Onvio (Thomson Reuters) at 5.1%, and Accounting CS at 4.1%.
Despite the strong position of Thomson Reuters in the tax and accounting market overall, only 5.1% of respondents reported that they were evaluating the Thomson Reuters Onvio cloud-based applications. Given the number of Onvio applications available and their availability in the market for at least a couple of years, this statistic was surprising.
Technology Spending, Decision Making, Annoyances and Trends
Survey respondents were asked to report on their budgeting practices and whether they have remained the same or changed year over year, and what factors impact their propensity to recommend a vendor’s product or service. They were asked to report on how the primary technology purchasing decision-maker views technology, and how they prefer to learn about technology. Finally, they were asked to report on their biggest technology issue or annoyance.
Most firms do not use technology spending budgets
Only 16.5% of firms reported that they have a technology purchasing budget, up from 11.8% in 2019 and 14.4% in 2018. Only 38.5% of extra-large firms (those with over 100 staff members) had a purchasing budget. This low adoption rate could be because of the increasing use of cloud solutions/hosting as well as hardware leasing, in which the firm does not purchase the technology but instead pays to use it.
The percentage of firms reporting that their technology spending increased over the prior year dropped from 49.8% in 2019 to 42.3% in 2020. Unchanged spending increased from 42.9% to 46.4% in 2020, while a decrease in spending rose to 11.0% from 7.4% year over year. 61.5% of extra-large firms and 85.7% of large firms increased their spending.
Trust and good client service are critical for vendors to be recommended by CPAs
As we have observed over the years, CPAs are very picky about making recommendations to clients, and we asked respondents to select two factors that impact their decision to refer or recommend a vendor’s product or service.
The most common answers were “I know others would benefit from working with this vendor” at 54.6%, “great client service from this vendor” at 52.6% and “I trust this vendor” at 51.6%. The least popular answers included “my clients ask for what this vendor provides,” “price” at 17.5% and “vendor is a technology leader” at 16.5%.
Who makes the final decision for primary technology spending in a firm depends largely on the size of the firm
For medium-sized firms, it is the managing partner or the partner group at 42.9%, followed by the firm administrator at 17.9%. For large firms, it is the partner group or the IT partner at 28.6%, followed by the managing partner or IT director at 14.3%. For extra-large firms, it is the managing partner at 38.5%, followed by the partner group or the firm administrator or the IT partner or the IT director at 15.4%.
All firms are seeing technology as a competitive differential
Most firms, 56.7%, reported that they view technology as a competitive differential. Solo practitioners and small firms reported 61.6% and 61.1%, respectively. With medium, large and extra-large firms, it was 64.3%, 71.4% and 71.6%, respectively. The number of firms that viewed technology as an expense of 26.8% was down from 33.0% in 2019.
The two most preferred ways to learn about technology for your firm
The top two choices were “industry events that I attend in person” at 32.0% and “from my peers” at 29.9%. For solo practitioners, it was an “accounting website” at 46.2% and “industry events that I attend in person” at 30.8%. For small firms, it was “industry events that I attend in person” at 53.6% and “from my peers” at 35.7%. For medium-sized firms, it was “industry events that I attend in person” at 53.6% and “from my peers” at 35.7%. For large firms, it was “industry events that I attend in person” and “searching the internet” at 42.9% while for extra-large firms, it was “from my peers” at 5.8% and “industry events that I attend in person” at 46.2%.
The top three technology challenges or annoyances in firms
The top three challenges or annoyances were “security and risk management” at 49.5%, “change, keeping up with new software” at 29.9%,and “change, user’s adaption and acceptance of change” at 25.8%.
For solo practitioners, it was “security and risk management” and “change, keeping up with new software” at 53.8% and “cost to purchase” at 46.2%.
For medium-sized firms, it was “security and risk management” and “change, user’s adaption and acceptance of change” at 39.3%.
For large firms, it was “security and risk management” at 71.4%, “change, user’s adaption and acceptance of change” at 57.1% and “change, managing expectations” at 42.9%.
For extra-large firms, it was “security and risk management” at 46.2% and “change, keeping up with new software” at 30.8%, “user’s adaption and acceptance of change” at 57.1% and “change, managing expectations” at 42.9%.