PracticeConsultingTechnology drives the modern practice

Technology drives the modern practice

A joint survey by Sage and Accountancy Age shows big firms are setting the pace when it comes to exploiting the commercial potential of technology

The late 1990s have been a watershed for IT in the accountancy profession. A survey of 1,000 accountants carried out by Sage and Accountancy Age has confirmed that IT usage is now a given. Only 7% of those questioned claimed not to use a PC in their daily work.

Sage, the leading supplier of PC accounts software, is known for its brand-led marketing strategy. To understand its customers better, the company puts a lot of effort into market research. The results provide the most detailed picture yet of how the profession uses IT.

Questionnaires circulated in March aimed to measure how far IT has penetrated the profession and to explore accountants’ attitudes, particularly the extent to which they are exploiting new commercial opportunities made possible by technology.

The key question for Sage – and many accountants – was whether there was a correlation between IT knowledge and the success of the practice.

On average, accountants spent half their working day – 3.5 hours – in front of their computer screens. In a pattern repeated throughout the results, familiarity with IT is greater in the larger firms. Staff at practices with 11 or more partners, for example, averaged over four hours’ usage a day. There was, however, a secondary peak of 3.7 hours among sole practitioners.

The survey confirmed that the internet wave has swept through the profession, but there were signs that accountants were not exploiting it fully as a commercial weapon. Overall, 69% have access to the Net, 45% from their office desks. ‘This is in line with the market data for the entire small business community, which shows that over the two-year period 1997 to 1999, internet access doubled from 22% to 45%,’ says Gavin May, general manager of Sage’s professional accountants division.

‘This uptake is not expected to taper off, with around 20%, or one in five small businesses currently planning to get connected in the near future.’

But the main activities accountants turned to the internet for were email (82%), personal use (51%) and general browsing (46%).

The bigger firms were more professional about their Net access: 55% of the 11-plus partner firms said they used the internet to obtain industry information, 30% for IT advice, 27% for background research on clients and 15% for marketing the practice. The wider profession put less emphasis on these activities, with 44% going online for industry information, 16% for client research and 9% each for competitive intelligence and marketing the practice.

Sage could take some comfort from the broader picture of the tasks to which IT was applied – 80% of respondents used accounting software, 64% ran payroll programs and 58% final accounts preparation software – all of which Sage supplies. Once again, the small firms lagged behind larger rivals in the use of specialist applications. Whereas 69% of sole practitioners used accounting software, 95% did so in the larger firms.

May joined the company last year when it bought out his company PACS, which developed the Audit 2000 account-preparation program. With a salesman’s instincts, May sees the lower levels of accounts preparation use (37% in one-partner firms, 87% in 11-plus practices) as an opportunity.

‘A couple of years ago, the price of accounts production software was much higher, meaning a lot of accountants would have opted for Word or Excel instead,’ says May. ‘With the continued growth in accounts disclosure and legislation, the fact that the software market for accountants has changed and prices are coming down, accountants are looking for better ways to keep up to date and make the final accounts process more efficient. I anticipate that, in the next few years, the number of practices using final accounts production software will increase significantly.’

Sage has long recognised the pivotal role accountants play in influencing client IT buying decisions. The survey numbers confirmed more and more firms were moving from just offering advice – for example, on what accountancy (82%) or payroll (64%) software to buy – to offering hands-on installation services (29%). The larger the firm, the more importance its staff placed on being able to help clients with IT advice: remember too that all top-flight firms have specialist IT consultancy operations.

As well as more IT awareness, the survey identified stronger commercial tendencies in big firms, 61% of which endorsed the view ‘you need to be a sales person to succeed in business.’ Larger firms were also growing faster than the rest of the profession.

Of the survey sample, 57% agreed that IT would provide new revenue streams for accountants; 30% of respondents were undecided and 11% disagreed with the proposition, but that did not stop 71% from planning to offer full IT advice services in the future.

But there were some worries that firms lacked the necessary manpower to support their clients’ IT systems: 48% mentioned this as a concern. Few firms had an opinion on whether they would be exposed to liability risks from providing such support. One- and two-partner firms were slightly more worried about liability issues – probably because the onus falls on their shoulders.

The profession gave another collective shrug of its shoulders when the researchers asked if providing IT advice was a unique selling point for the firm: only 7% of firms that provided IT advice said yes – ‘an indication that either they lack confidence, or take it as a given’, says May.

Sage has a vested interest in nurturing the legions of accountants/IT advisers. The company set up its Accountants Club to encourage this trend. The survey sample was weighted to reflect the club’s membership profile within the profession, and provided Sage with plenty of material to assess the return on its investment.

The Accountants Club appears to be paying off, with member firms showing commendable loyalty to the Newcastle-based software house – 96% of the club’s members recommended its accounting software.

But the statistics also showed that members benefited from the Accountant Club: they were more likely to provide IT advice (81% versus a 59% average) and were more confident that IT could help them provide a more efficient service to clients (95% versus 88% average). More impressively, 74% of club members increased their turnover compared to the norm of 63%, and 37% of the Accountants Club member firms increased staff numbers, compared to 22% among the rest.

‘If an accountant has become a member of the Sage Accountants Club, it means they have recognised the need to offer value-added services to their clients, so you could argue that they are more responsive to the changes currently impacting their industry,’ suggests May.

The underlying correlation between IT awareness and the success of the practice was supported by these findings, and the accountants themselves appeared to be aware of this. Faced with the proposal that accountants who did not embrace technology would be left behind, 85% agreed.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

10m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

1y Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

1y Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

1y Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

1y Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

2y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

2y Stephanie Wix, Writer