The Accounting Technology Lab Podcast – Should You Upgrade Your Firm? – Oct. 2023

Transcript (Note: There may be typos due to automated transcription errors. Also, due to the intro to the podcast, add apx. 10 seconds to the time stamps below.)

SPEAKERS

Randy Johnston, Brian F. Tankersley, CPA.CITP, CGMA.

Randy Johnston  00:03

Welcome to the Technology Lab. I’m Randy Johnson, and with my co host, Brian tankers, and we decided it was time to just chat about the topic should your firm upgrade. And we know that you are being faced with all sorts of upgrade opportunities on all sorts of platforms. And it turns out, we recognize full well that, you know, the staffing shortage, which became so severe might be a little lighter. But this is a long term problem for the profession. And our claim for years has been that technology should provide you leverage. So you can do more with fewer people resources. And that was very true for a long time. But it hasn’t been very true over, let’s say, the last decade, however, all of the vendors are going to come at you with a message that says, you know, you’re gonna have whiter teeth and fresher breath if you use our product. And you are crazy if you don’t upgrade. And we wanted to just talk through all of the different areas with you. Just giving you insights with practice management, tax, audit tools, workflow portals, really, I concluded nothing was off topic. And Brian and I would just go back and forth with each other. I had the good pleasure of being in multiple CPA firms in the very, very recent past. And I continue to listen to the questions that they have been asking. And there is so much commonality that I hear repeated, I thought a public conversation might be in order here. So Brian, I’m just gonna go with my favorite topic to start with. And that’s single portal. Because, you know, my my favorite saying last year from a managing partner, for my engagement was, Randy, we brought you in, because we’ve got way too many portals, what happens we had a problem. It was like getting a splinter in your finger, and we put a bandaid on it. And then we got another splinter and another finger and put a bandaid on it. And he said, When everything’s said and done, eight of our fingers have splinters with band aids on it. And your job here is to take all the band aids off and take out all the splinters and give us pair of gloves to work with. And it was fascinating because that firm, in fact had eight different portals that they were using with clients. Now, we really believe that a single portal solution, like liscio likes your link, like smart bolts portal and so forth are the way to go. But boy, it’s culturally hard to bring about that as a starting point.

Brian F. Tankersley, CPA.CITP, CGMA  02:53

Yeah, so the thing, the thing I would suggest to you here with with respect to portals is that everybody loves the portal that they use, okay, and the thing you have to remember with portals is it’s not just you that loves it, okay, and knows how to use it. It’s the client to Okay, so it takes an extreme amount of intestinal fortitude, and resolve and commitment to change out any portal system. Okay, so this is kind of like, you know, you want to, you know, kind of like trying to build a, you know, trying to build a cabin out in the middle of nowhere, you want to make darn sure that you’ve got enough lumber and enough, you know, enough commitment and enough buy in from everybody, in order to do this before you go out in the middle of winter and try to get it done. Because it is going to be disruptive to many parts of your organization and you will be moving the cheese of many people in your organization. Now there are three sales that have to have have to happen for a portal change to happen. Okay, first off the firm’s management and owners have to decide that they want to buy that portal and that they’re going to do this and get rid of the others. Okay. The second sale that has to happen in this one is every bit as important as the first is that the firm’s management has to sell the firm’s staff on this portal and they have to go beyond just having them use it begrudging, okay. They have to get them to buy in and be evangelists for this portal, because they have to sell the clients on using it. And there is nothing in it for the clients in using this, okay? Because you’re going to be asking things like, client, I want you to put a mobile app on your mobile phone. And, you know, that may be something that they either don’t want to do or don’t know how to do or other things like that. So we have to make so the the firm’s top management. You can’t go into this kind of transition without investing resources in handouts for this is how you this Here’s how you work with our portal and having a portal concierge have somebody that will just make the problem go away for somebody that has decided that they’re too old to learn how to use the new portal, and they’re just not going to do it or you know, and if you won’t deal with them, then they’re just not going to deal with your current. So it requires a lot of intestinal fortitude on behalf of management, because everybody is going to hate it at the beginning, okay. And I can tell you that we have near 100% certainty that everybody is going to hate it at the beginning. And then after two weeks, they’re going to say, why didn’t we do this five years ago. So Randy, I’ll kick it back to you now and let you let you kind of clean up the mess messed up statements I’ve

Randy Johnston  05:42

made there. But well, you know, I’m just thinking about the change management that’s behind this. And frankly, every platform change that you would make has a similar sales cycle, if you will, it’s all of your partners management team, and then all your staff that have to be convinced that it’s a good, good change. And the resistance that we see is pretty stunning, at times, you know, consistent procedures are still going to cover up an awful lot of sins inside firms. And, you know, essentially, we’re talking about building the camp and out in the, in the wild, I got completely distracted about taking enough food to Burning Man, you know, who would think that you’d get swamped with mud and rain, and you know, stranded out there with no communications and so forth. But in effect, some of these upgrades that you’re gonna make, it’s like, you’re out in the wilderness on your own, and you’re wandering around for 40 years before you get out. So anyway, I don’t want to overstate it.

Brian F. Tankersley, CPA.CITP, CGMA  06:45

And I’ll sell a quick personal note here, I actually have a VR that’s off the grid, and I was up in up in Crossville, where my VR is in the middle of nowhere, no cell service. And I had my car key with me and my car is Toyota four runner, and it has this key that has a fob. And then the key, the tip that actually operates the lock on the car, the tip actually fell out in the middle of nowhere in this 275 acre hunting preserve, where I have all where I have my 10 beehives, and I had to get my wife to come out in the middle of the night to bring me my spare key, because the stupid key fell out. So as somebody who has recently lived the situation of oh my god, I’m going to be stuck in the middle of nowhere. Oh, and I had to use my satellite communication device, my spot satellite communication device, instead of my my phone, because the phone didn’t work out there. Okay, so so when I talked about this, I come from an exp recent experience of having experienced one of those moments where I didn’t have what I needed. And I was in a bad spot.

Randy Johnston  07:54

Yeah, and you know, I’m smiling because I was pleased to be with you, and you bought that satellite, you know, unit in New York City. And you were pretty convinced you’d need it. And now you’ve convinced me, you needed it all, the more. The reason for that story, though, friends is, your firm’s situation may be different based on communications, you know, you may have ample communications that run in everything on SAS works. But you may be in the Hawaiian Islands, and the latency from the islands to the mainland is so great that all of these SaaS applications are going to cause permanent productivity delays. On the other hand, as we try to solve security problems, there’s a lot of fear, doubt and worry, you know, that’s been sold the Fudd factor, if you will, hey, if you don’t do all these things, your security is at risk. And, you know, we’ve done another technology lab on the required IRAs, 50 to 9354 47, you know, tech written technology plan required by the IRS, well, you do have to act on security and protect all of your assets and all your clients information. And we find way too many firms that, you know, that’s that’s kind of like business continuity, disaster recovery plans, we’ll get to it someday.

Brian F. Tankersley, CPA.CITP, CGMA  09:21

Yeah, and, and you know, that’s the thing about it is that I was sitting there, and if I hadn’t had that satellite device, I would have had to walk at least a mile and a half in the dark in the woods. And I’m talking about, I’m not even talking about gravel roads, I’m talking about paths that have to be mowed that you drive through for three quarters of a mile, just to get out to the main road and then I would have to go another half mile to get that there. I mentioned that this this extreme example to you though, which may seem somewhat off point is that you have to really think through what the implications are of these changes. As you know, if you’re changing from one tech software to another, you have to ask the question, you know, will my 100 Doctor medical practice? That’s one of my biggest clients? can I generate that many K ones out of this this competing tech software? Or how can I? How is this going to, you know, how can I integrate this into my cast practice? You know, how can I use some tools like the decks prepare tool or other things like that? And is it really ready for me to work with here. So there’s, there’s a lot of gut check to do here. But, but I just want to remind you here that these products have all been implemented successfully, I think you really need to check your intestinal fortitude first. And how willing you are to make these changes happen before you do it. Because it is very much like me being out there in the middle of the woods in the middle of the night, Monday night, trying to try to get my beat, get the mites off my Stupid bees, realizing that I have no way to get home that you got to have a plan B and A Plan C.

Randy Johnston  11:06

Yeah, and at the risk of putting in too many current events, at least you weren’t breaking out of jail and hiding in the woods, or being stranded in a cave, you know, to Empire State Buildings underground, trying to get out, you know, there’s so much of this we take for granted as being simple. And here’s my next major caution. Today, friends, we have been listening to pitches from vendors talking about how simple things are. And my favorite saying from 2016, from a CEO was if you say it real fast, it sounds simple. And you know that that has been such a good learning for me through the years. But you need to have a plan of the projects that you can do, we recommend that you only choose one or two major projects in any given year. And that you lay out a grid of the things that you need to change. Now, let me just reiterate what I started the podcast with today. I believe that you’re going to have to change tack software, audit software, document management software, workflow software. Well, let’s just say it another way, every bloody thing you own is going to get changed over the next three to five years. So I would like for you to be thoughtful about the order in which you change it. And the reason you’re changing it and that you’re thoughtful about the tools that you’re choosing, so that you’re actually doing the right thing. That’s a reason I started with the portals because I think the Portals will have some longevity. And Brian and I are currently tracking 22 Different portal products. And there’s a lot of difference between those 22 portal products. But if you’re using one of the legacy portal products, it’s pretty long in the tooth, and your clients know it, and your team members know it. And it’s costing your productivity, I suspect. So Brian, I know, you know, as we’re thinking about this, we could switch to practice management next, for example, you know, most people, most firms don’t, you know, think about administrative tools as overhead and they just kind of get by with them. They don’t think of the impact of practice management or workflow. But if you’re using a Legacy product, your team is I’ll say constrained by that. And you know, even if you listen to, you know, some of the consultants to the profession, who recommend that you should do value billing and throw away the invoices, and you already know who that is throw away the timesheet, sorry, for your invoices. You know, the way that you manage the work still has to get done. So Brian, what would you give us cautions in the practice management area?

Brian F. Tankersley, CPA.CITP, CGMA  14:07

You know, I, I think the the thing we have to be careful about there is that we can go look at the Pentagon and the military for inspiration as to what the problem is going to be and it is that the generals always buy weapons to fight the last war. They don’t buy the weapons they need to find fight the next war. Okay. And I think the thing that we have to remember here is that we have emerging competitors, you know, in a previous Tech Update grievious tech lab or get another one if it’s as if it’s running later, we will actually discuss how Intuit is working with it with QuickBooks live and TurboTax live and other things to provide professional services with AI so we have new competitors that we didn’t have in the past and so and we have private equity and testers that are forcing some cultural changes inside firms, not the least of which is to use more CRM, like tools, and fewer of the traditional Time and Billing type tools. And even many of them are actually using some of this passive time tracking, you’ve heard me talk about, you know, I’ve used a tool called desk time for a number of years. And it actually goes through and watches what I do I use it, you know, since I’m self employed, and, you know, I’m the president of a private company, I will tell you that one of the things that that I use it for is for self moderation. So I will go through and look at the end of the week, and how many hours I spent working on this, and how many hours is spent working on that. And even though I use some, I use the time data for billing. And the reason I have desk time is so that it will go in and figure out how much time I spent working on X, Y, or Z and even try to write it down on a timely basis. I think it’s, I think it’s healthy, to, to have some of this monitoring, because again, with this, you know, with with remote workers and and other things like that, there can be training issues that can come up. And there’s nobody to go down the hall and ask how do you solve this problem, you know, you can’t just hang your head over the edge of somebody’s cubicle, that’s kind of the expert in this, you have to make an appointment and then they have to be available. And it’s it’s difficult, you know, these these serendipitous problem solving that we had in the past just did isn’t, isn’t there with some of the remote workers. So

Randy Johnston  16:38

as you’re talking about that, thank you for that. And I think we have done another technology lab on this time. But I want to call out that this week of our recording, I had a long term client, a good firm, who is using some Azure hosting, who has done time tracking, which is available inside Azure. So you can see the activities of of a person, this passive time tracking is part of the hosting facility. And they use that to terminate multiple tax people who were not really working. And they had done disciplinary work on him. But notice, it wasn’t even the passive time tracking tool, it was just Microsoft technologies. So you know, I get a little creeped out by some of this big brother stuff. And you know, this, the culture is changing. You know, many of our practitioners don’t want to, you know, work 4060 hours, 80 hours a week, and not have a family life. You know, that’s been an issue for some time. But as owners of our firms and responsibilities to our clients, work has to get done, and it needs to get done in a timely basis. So, practice management, in my mind, helps make those things happen quicker, just like CRM does. And, you know, you’re spot on the private equity conversations I’ve had over the last three weeks prior to our recording today, I was appalled at the expectations. You know, I’ve said it more than once we’re managing out of a spreadsheet, you’re going to hit our numbers. And I’ve had wonderful firms whose culture has been destroyed by private equity acquisition, and others who have been leveraged by it. It’s it times are changing in your firm. And you got to have the tools to fight with, in fact, I am still smiling about your general analogy, because so many of our firms are buying tools to fight yesterday’s technology battles.

Brian F. Tankersley, CPA.CITP, CGMA  18:51

Yeah, and I think that I think that’s something that we have to look at here. You know, again, the, I think, I think we should all effectively pronounced that, you know, with the exception of maybe some of the tech software’s anything that was architected prior to y2k should largely be dead. Unless you are the smallest of practices, you know, so we’re really talking about going you know, when we’re talking about going to these next generation tools, it is going to require some process changes, and I’m gonna be honest with you, a lot of the intellectual property that has to get updated is in between your ears, Mr or MS partner, on how this firm ought to work. And so I encourage you to look at your processes and encourage you to to look at how the process is supposed to work with this product. And you need to need to have a gut check again, are you ready to make changes to your internal processes and if you’re not, you know, if you’re not ready to adopt these tools, then maybe you need to maybe you need to think about am I just going to turn out the light when my firm’s over because nobody’s going to want to buy it if it’s doesn’t have modern tools. In modern processes, so you’ve got some hard decisions to make.

Randy Johnston  20:04

I was very pleased the recent acquisition of one of my clients, they said that the technology tools that they deployed, and increased the valuation on sale, and that the acquiring firm that thought they had a lot of technology prowess, realize they were well behind what this firm had. And so that made me feel good. Not saying that’s a great thing. But it’s just one of those things that does happen. And as I think about our futures, and the deliverables that we need to have, it’s a real big deal to be doing, what your team members need, what your clients need, and what drops the maximum bottom line dollars to you as partners. But to your earlier point, Brian, I have a pretty hard and fast rule. If a technology is 10 years old or older, it almost certainly has to be replaced. And you think about a lot of our tools. And you know, you said y2k, that’s 25 Bloody years ago, friend, I’m thinking,

Brian F. Tankersley, CPA.CITP, CGMA  21:07

but it’s very real. And they’re in use in firms all around the country. And the other problem is that, if you haven’t seen a big firm operate in a long time, I think it’s critical that you do that, you know that because there’s this enterprise architecture thing, where we take all these applications, and we link them together with software tools, so that automation solves problems. And in we really let the technology do the work for us. Okay. And if you haven’t seen one of these well oiled machines work, I encourage you to try to talk to somebody that is a manager or a director at a big four firm are at a top 50 firm, and look at the kinds of things that they’re doing. Now, some of the top 50 firms don’t have great technology, honestly. But they are well ahead of where your average small firm is. And the problem that a lot of us have, that are partners at small midsize firms, is that many of us came to this firm out of school or, you know, after a, you know, maybe I had, I had an experience with the big six back in the 90s. And then now I’m in this firm, and I haven’t been inside enterprises in a while. And so if I hadn’t done work with SAP and Oracle and other folks like that, I wouldn’t know as much as I do about this about enterprise architecture and how these things are all being linked together in the integration that’s expected in the modern economy. Because, you know, again, that’s, that’s something that hasn’t made its way to Main Street. But it is possible today. And it’s something that you really need to be looking at.

Randy Johnston  22:45

Yeah, so you know, in our technology lab, a lot of time we’ve tried to identify a single product and talk about it at some depth. And I was thinking about, you know, our exposure for you in audit tools, and in text tools and in document management tools, and in many other platforms. And each one of those areas, takes some focus. And Brian and I had the good fortune of doing extensive extensive document management research this year. And it was really stunning how much the document management tools had changed, and how much they hadn’t changed. So that sounds like a contrarian statement. But both extremes exist. And if you’ve been using a document management tool for 10 years, there are some better ways to do things out there. And if you’ve been using your practice management for 10 years or more, there’s some better ways to do things out there. And so

Brian F. Tankersley, CPA.CITP, CGMA  23:47

software should be like your car that gets replaced periodically, and not like your spouse that doesn’t get replaced periodically, okay? It should be like your car, okay? We don’t want to, you know, we we need to replace it periodically, when it doesn’t work, you know, that, that situation that I had in the middle of the woods, where my key fell off the end of my, the end of my key, my key my key fobs, somewhere in the middle of nowhere, would have been, you know, that could have that kind of situation could have happened much more often if I wasn’t driving a fairly new car. You know, so it’s the the thing we have to remember here is that just like we trade out our cars when they get when they become less reliable. We’ve got products that are not solving things at the level that they need to in the modern economy. Okay. And if you don’t see that, then I think it’s important that you go see a modern business that has all this integration and some of these big companies and sometimes they’ll show it to you and sometimes they won’t. But you need to understand that this is happening in accounting firms and if you want the right valuation when you exit, and Alan Colton would tell you the same thing and I’ve had this conversation with Alan multiple Times and many other people that sell practices that I think it’s important that you understand that your technology is not just going to impact your earnings, it’s also going to impact your exit. And so we need to, we need to make sure that you’re you’re solving for that exit where you can get the optimal bump, both in the short term and your earnings, and in the long term in your buyout.

Randy Johnston  25:26

Yeah, so as I’m thinking about our, you know, exit statements to you for this podcast, I’m really reflecting that there is almost nothing that you’re using today that’s going to stay your hardware, all the way up from the firewall switches, in computers and monitors, I mean, big monitors are so much better than they were to the operating systems, you know, Windows 10, is pretty much near end of life. So Windows 11 coming along, and all of the remote technologies that are use are morphing very rapidly. And then we go to the practitioner tools, including the accounting platforms, like into its QuickBooks, or Xero, or Cgn, tact or accounting power, all of those are morphine, so doggone much, you’re going to have to set your own course, because the vendors, there is no one vendor to buy everything from that solves your problem, I don’t believe and, you know, 10 and 15. And 20 years ago, we could solve most of our problems by buying from a single vendor, and some of you are still trying to solve the problem with a single vendor. And that kind of works out. But I’m going to violate my rule just a little bit, Brian, you know, I, I try not to use foul language publicly. But, you know, you’re if you’re, you know, not being thoughtful about your solutions, they’re probably average. And average definition is cream of the crap. And, you know, I’m really thinking that you might think you got a great solution. And you may or may not have such a great solution. So I’m not trying to make you think, make you uncomfortable, make you feel like you’ve not got the right stuff. But the probability of having the right stuff is actually pretty thin. And we’re seeing a lot of consultants, the profession, promoting a lot of stuff that isn’t ready for primetime. You know, we, one of the tools that I’m very excited about is a new artificial intelligence tool that will do a complete 1040 workpaper replacing cch scan and auto flow or Grunt works or sure prep, and will give you a review tax return completely on shore. Well, it sounds great. We’ll do another podcast about that in the not so distant future. But the question is, Is it ready for primetime? And there’s a number of products that have very respected names that I still don’t consider ready for primetime? And that’s a problem. And how do you as a consumer, this know, when the sales teams are very polished, saying, Oh, you’re going to have whiter teeth and fresher breath? So Brian, closing thoughts?

Brian F. Tankersley, CPA.CITP, CGMA  28:33

Well, you know, the thing I would suggest to you is that I think that it is important that you get your hands dirty, and that you try out some of this stuff and your demos, is not enough to look at the demo data with the demo stuff that the salespeople have, I think you actually need to you know, if you’re looking at a new tax platform or new document management platform, I think you need to put some of your own documents in it on a test basis on a few engagements and see how it works out. And it’s going to be painful for the realization on that job, because you’re going to be learning a lot of a lot of lessons, but you will also learn a lot of lessons that that and you make those mistakes on one engagement instead of making them simultaneously on all your engagements as we’re rolling out. You know, it’s a it’s an exciting time in the profession. And it is it is changing, you know, with the globalization of it with outsourcing, kind of hitting the small and mid sized firms today and the Enterprise Architecture integration and the, you know, the cloudification of of a lot of these things and the advent of artificial at the dawn of artificial intelligence in the profession, you know, time you know, the time, you know, I guess the way I would look at it here is it’s, I can think of it like Dickens introduction to the tale. It’s the tale of two cities. It was the best of times and it was the worst of times. And the question is are you going to take the steps it takes to make it the best of times for your firm. Are you going to continue doing Nothing and let it turn into the worst of times.

Randy Johnston  30:03

Yeah, wonderful. Well, I almost don’t want to say anything more, Brian. But I am going to say that making no decision is a decision. And part of the reason Brian and I buy and try so much technology is so we can speak from the voice of experience. You know, my latest laptop is an HP dragonfly Gen four. And that machine is lighter than my iPad Pro and radically more powerful, and half the price. Well, I can tell you, my touchscreen Dragonfly is going to make me set aside that iPad Pro again, which by the way, it was a pretty good iPad Pro is only three or three or 3000 to $3,500 for that iPad Pro, not worth it. Okay. And many of you are may be using iPhones and iPads thinking this is the greatest thing since sliced bread. Well, I can tell you since we bought bread at Panera last week, and the lady apologized for slicing it wrong, sometimes the slices don’t fit.

Brian F. Tankersley, CPA.CITP, CGMA  31:08

And I will say this that Randy and I have attended. Randy’s attended ces longer than I have. But we first attended the Consumer Electronics Show in 2011. Together and he he’s been doing these shows since the 80s, I will tell you that we work very hard to try to try out some of these technologies to tell you whether they’re ready for primetime, simply because we know that all of you can’t go to CES because that’s you know, in the middle of a W two season and it’s just not not possible. But I will say this that we struggle sometimes to keep up and to get the vision of what’s happening. And I think anybody does, and the thing that’s changing as fast as technology. So I encourage you, if you’re not throwing some time at just learning what’s going on, maybe you read Wired magazine, or you read, you know, the the tech columns in the Wall Street Journal or you go to other websites out there that are devoted to technology. I think it’s important that you try to do some research to keep up on this just like you keep up with where the stock market is and to keep up with with where the dollar is and what inflation rates are and what the tax changes are. I think it’s just as critical if not more so that you keep up with the technology and work on your business, as opposed to spending all your time working in business.

Randy Johnston  32:29

Yeah. And you know, when you’re thinking about all this experience that we’re asking you to get, it is hard to have the right references in a prior tech lab, we gave you references to a lot of the things that we follow. But I can tell you with days, ease of technology, content creation, there’s a lot of digital drivel out there stuff that is just awful. And I watch and attend a lot of things because I pick up an idea to from almost everybody, but some of it is so wrong. It’s just like, I want to come right through the wire or the screen and say no, no, no, you’re telling people the wrong thing. And you should know better. And you don’t what is wrong with you stop it, stop it. But I don’t get to do that. And you know, I tell people I’m not always right. But I do bat above 400. And so I may get a play in the big leagues someday. All right. It’s been a pleasure being with you. I hope that you have enjoyed our conversation. We’ll try to give you some very specific product information and other podcasts in the technology lab. Do look at the library and if you haven’t listened to them all, pick out ones that fit you because we have you in mind when we record these sessions. All the best. Good day.