Has the IT role within CPA firms finally come full circle? I began the IT portion of my career providing support for IBM XT personal computers that were used by accountants to produce spreadsheets and word processing, while all the “real” data processing was on an IBM 36 and AS400 mini-computer running accounting applications in a central data center. With the expansion of PCs, printers, and the evolution of Novell and Microsoft networks came the need for firms to hire internal IT personnel.
While smaller firms outsourced their IT support to external integrators, we saw firm staffing counts increase with help desk/support personnel, network administrators and IT Directors (in those firms that were large enough to warrant them). Various IT staffing benchmarks have supported the maintenance of internal IT staffing for the past three decades, but with the adoption of an increasing number of cloud applications and many firms experiencing internal IT stagnation, firm IT roles appear to be reverting back to their roles from the old mainframe days.
While some very large firms and those with successful IT Consulting teams will continue to maintain their own networks, the writing on the wall is pointing towards a reduction in internal networks. This article will discuss the factors we are seeing support this trend as well as opportunities for existing IT personnel to retool themselves for the anticipated CPA firm of the future.
Specialized Skills Outsourced
An increasing number of firms have outsourced the design and implementation of complex, rapidly evolving technologies to external parties with specialized IT skill sets. Whether it is the design of a storage area network, VPN security, VOIP communications or a real-time disaster recovery solution, there are specialized vendors that are taking over the responsibilities once expected to be taken on by internal IT personnel. We have seen an increase in firm budget amounts for the use of external IT resources, which has had the impact of reducing the IT staffing count and budget for internal personnel.
Firms only need to peruse their list of applications managed internally versus externally to see the impact of cloud transitions. While virtually every application was installed, updated and internally supported on the firm’s own servers a decade ago, there is virtually no firm today that does not utilize cloud applications in some way, with an increasing number moving their entire operations to the cloud. Each application that transitions from an internal server to the cloud has a corresponding negative impact on internal hardware, overall update requirements, and maintenance that was performed by internal IT personnel, disintermediating them further with each transition.
IT Budget Pressure
Since the economic downturn of 2008, we have seen consistent pressure on firm IT spend, which permeates in underspending in many firms still to this day! Not only were those IT personnel constantly battered to justify any expenditure; many were pushed to extend the life of equipment beyond recommended lives (which inadvertently increased IT maintenance and stability), while at the same time delaying the purchase of needed technologies and applications that would have made the firm operate more effectively, but instead put the firm behind.
During our accounting firm consultations, we automatically ask IT personnel what firm-supported training they had attended in the past three years and the most consistent response unfortunately is “none.” With the tightening of IT budgets, IT specific training was amongst the first items cut and many IT staff became reluctant to ask. Without ongoing IT training and interactions with IT peers, those IT personnel experienced limited exposure to evolving IT trends and debate on what the firm should be implementing.
Another impact of cutting the IT budget for equipment and training was that many firms fell further behind on overall technology adoption. The response of many partners towards exploring and implementing individual technologies was to maintain the status quo and while some firms did make efforts to optimize the tools they had, a significant number resisted any discussion of change, which further atrophied the firm’s IT adoption and negatively impacted the skill set of internal personnel.
Another unfortunate realization occurring in some firms is that when a highly skilled IT Director or network administrator left the firm, they were often replaced with an existing internal IT person that may have had very good technical skills for their previous role, but did not have the necessary technical or managerial training to take on those additional responsibilities of their predecessor, in essence being promoted beyond their level of competency. This inability to take on the new role had the propensity to create frustration within the IT person particular in regards to creating budgets and being strategic, limiting progress for the firm.
Over the past five years, we have seen each of the six factors listed above impact our accounting firm clients in one way or another. As more applications and the corresponding IT responsibilities continue to be outsourced to the cloud, we see a time in the near future where servers could disappear entirely from firms along with the corresponding network personnel support requirements. We anticipate this will result in firms reverting back to the previous IT staffing model with an emphasis on strategic direction, project management, training and individual support.
Existing internal technology personnel have a variety of opportunities to retool their skillset while optimizing their institutional knowledge within the firm. We constantly hear from partners that strategic initiatives are not getting implemented, which is an opportunity for IT personnel to pivot more towards taking on the management of such projects. Lean Six Sigma Green Belt programs can provide IT personnel with the necessary skillset to effectively evaluate firm processes and use their technical experience to see that they are implemented. Those IT personnel with solid communication and writing skills may also find they can transition to a training role to promote firm-wide learning. These project management and training skills can also translate to supporting clients’ adoptions of new processes and cloud technologies. While there are firms that have been successful in creating IT Consulting services that focused on building traditional networks, those IT “technical” skills will need to expand to include a managerial/consultative role as well, since internal networks are being disintermediated by cloud providers in every industry as well as our accounting profession. The writing is on the wall; it is up to each of us to read it and transition our IT people into the roles that best serve the firm.
This article was originally published in The CPA Practice Advisor’s Accounting & Audit blog. Copying or distribution without the publisher’s permission is prohibited.