A technology partner at a large accounting firm recently expressed concern about his firm's ongoing commitment to technology or, rather, the lack of it. Several of his firm's partners who will retire in the next few years are "friends of technology" who have supported investments in tools and new processes that have benefited the firm. This partner, however, is concerned that some of the younger partners "just don't get it" and won't support implementing new applications and technology processes.
This concern runs counter to our assumption that younger partners are experienced users of technology tools who are inclined to embrace technology that improves efficiency and effectiveness.
The Root of the Paradox? Money.
The diminishing resource in accounting firms is people. The cost of that resource is skyrocketing, and the trend is expected to accelerate in the next 18 months. While many firms have been able to pass along cost increases in the form of higher per-hour billing rates, this action typically lags behind cost increases. There also is the belief that clients will resist substantial increases in fees for traditional and recurring services.
So for the first time in their careers, younger partners face the prospect of reduced compensation. Since their perception is that they can neither raise process significantly nor sell the services of people they do not have (even though there is plenty of opportunity to do this), their response is to "save themselves to prosperity," a euphemism for cutting or delaying expenditures, especially technology expenditures that can represent 10 to 15 percent of a firm's revenues.
Measuring the Benefits: Difficult but Possible
Perhaps one of the most significant roadblocks to ongoing technology expenditures is how difficult it is to identify the benefits of a specific expenditure. There is very little argument that technology improves efficiency. However, for many firms, that newfound efficiency just doesn't appear to contribute to bottom-line profits.
Instead, most efficiency-related benefits of using technology are incremental. Many...