Insight: IT skills survey – Looking beyond the hype.

The fallout from a number of high-profile dotcom crashes, coupled with a feeling the millennium bug was an anti-climax, risks making accounting firms complacent in their attitudes towards implementing technology.

Findings from the third Sage/Accountancy Age IT skills survey show a marked slowdown in the number of firms looking to invest in IT and computerisation in the future.

The slowdown in take-up of new technology is also being driven by the fact that only 14% of accountants questioned believed their clients expected them to deliver services electronically.

Only 19% of those questioned strongly agreed they would be looking to provide IT and computerisation advice in the future – down 9% on last year’s results.

Meanwhile, 14% said they did not believe they would be providing the advice in the future, up from 6% last year.

And yet this result from smaller firms flies in the face of the perception of bigger firms. Larger firms’ IT strategies are not marked by slowdown: in fact, they perceive a growing need from clients for IT strategy advice and a greater desire to move transactions online.

But what, meanwhile, is the reason for the slowdown on the part of smaller firms when it comes to embracing e-business and IT advice as a service area?

It may in part be down to the fact that the e-business and IT markets are maturing and finding a more realistic level.

In recent years, firms have been influenced by the hype surrounding start-ups and that accompanying the countdown to the new millennium.

However, with it widely regarded that the bubble has burst in the dotcom sector, and with many believing Y2K was a non-event, many accountants appear to be taking their foot off the accelerator when it comes to considering new technology.

This is particularly apparent in the attitudes emanating from the smaller practices, where attitudes towards technology were found, in general, to be less positive than that of their larger rivals. But Adrian Grace, general manager of Sage’s professional accountants division, warns: ‘Dotcom fallout is evidenced by a softening of general attitudes held by the industry, but smaller practices should not become too complacent as the survey suggests they may be doing.

‘Smaller practices should also be aware that large practices perceive a stronger demand for delivery of online client services. However the majority in the industry see future online applications.’

Meanwhile, the number of practices that strongly believe IT and computerisation will provide new and lucrative revenue streams also fell – by 50%.

At the same time, accountants’ perceptions of whether they are expected by their clients to offer IT and computerisation has also fallen, as has the belief that they will be left behind if they do not embrace these facets.

More encouragingly, the survey of 1,000 accountants found internet access increased, with the percentage of accountants with access to the web at work increasing from 69% to 84%. Strange then that accountants in practice are adopting the internet – perhaps for research and information purposes – into their own working lives, but not translating that to a need to drive internet advice as a service area. Sage believes accountants have not been slow in taking up and implementing e-based software and are keeping up with other business communities. This belief was supported after it was found 39% surveyed say they have a website, with 35% of those who don’t saying they are planning to build one. Last year just 35% of firms had a web presence. This year, of those who had not set up a website, 35% said they were planning to launch one – despite 54% of respondents suggesting the web was of limited value to them. Communication continues to be the main use for the net, with 86% of those questioned citing email as a reason for using the internet, up 10% on last year. And there was also a marked increase in the number of accountants who visit sites to obtain industry information, with the figure rising from 46% to 61%. Grace adds: ‘The results of the survey prove again that accountants remain a key group that will play a major role in shaping the future e-business success of UK business. ‘Larger firms in particular have recognised the role e-business will play in the future success of their own and their clients’ business. They are forging ahead, taking the necessary steps to make sure they are well-equipped to advise businesses on all aspects of IT and the internet. He adds: ‘Smaller practices seem more complacent in comparison as far as their attitudes towards IT and e-business are concerned, and will need to become more proactive to ensure they can advise their IT-savvy clients sufficiently and don’t run the risk of losing out to their more forward-thinking, larger rivals. ‘Attitudes of accountants towards IT and e-business in previous surveys was very much influenced by a sense of urgency and the enthusiasm generated by the Y2K effect in 1999 followed closely by the dotcom mania in early 2000.’ This year’s survey reveals that while the majority of accountants continue to adopt a positive approach to new technology, they now have a more realistic viewpoint on how they adopt and apply it to the benefit of their practices and clients.’ The number of hours accountants spend a day using their computer has risen. Last year 29% spent four to six hours using a computer, while this year that figure had reached 34%. The number of accountants accessing the internet on their office PC has also risen by 15% to 84%. Although yet to fully penetrate the profession, Sage believes the internet will play a big part in the future of accounting. This is in spite of the fact that fewer accountants this year ‘strongly believe’ that if they do not embrace technology they will be left behind: the figure fell from 45% to 28% – although another 48% agreed with the statement – up 5% on last year. Again, the results are the mark of a maturing marketplace and imply that responses are more measured and less driven by the hype and enthusiasm of last year’s start-up culture. But it seems the possibility of an e-commerce ‘seal of approval’ does little to make accountants believe their e-business revenue opportunities will increase, with just 6% having adopted a seal to signify knowledge and understanding of the application of e-commerce to the practice. And this figure can only add fuel to the view that, far from being early adopters, accountants can be slow to embrace new technology and the opportunities it can bring. Sage believes that for many small and medium-sized enterprises it may be expensive to gain the seal, so there are inbuilt barriers to its widespread adoption. Also, there is the issue of whether the seal would be widely accepted. The number of practices that recommend accounting software has increased from 70% to 85% in the last two years. In the past, accountants have been accused about the level of relationship they have built up with their clients and the regularity of communications with them. But Grace believes there is grounds for optimism. ‘The internet will help to improve the levels and regularity of information which flows from the accountant to the client,’ he argues. The main type of IT advice offered is accounting which has fallen from 96% to 92%, payroll which is up 2% to 66% and software selection at 50%. Sage suggests the role accountants play in influencing client IT-buying decisions is actually increasing. The company believes the number of practices offering IT advice now is phenomenal. Some 83% offered the service, up 10% on last year. But there were signs that accountants were not exploiting it fully as a commercial weapon, especially the smaller firms. Of the survey sample, 44% agree that IT will provide new revenue streams for accountants, down 5% on the same question last year. Some 38% of respondents are undecided and 18% disagree with the proposition. But with the pace of technology relentless, firms – especially smaller practices – cannot afford to take their eye off the ball. Should they do so, they will be left behind. ?:

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