Manage Your CPA Firm on Purpose: Are You Driving Firm Profitability — or Merely Accepting It?

Would real-time, actionable metrics help you make better decisions? They certainly have in our firm. Like so many other accounting firms, we used to review firm performance metrics a few times a year — usually when we got invitations to participate in MAP surveys.

But now, we have implemented our proprietary performance management system, backed by robust business intelligence, and it has been nothing short of transformative for our firm.

Today, we can quickly analyze productivity and realization numbers by service line, by engagement, even down to the partner level. At any point during an engagement, we can see how profitable it is, so we can do something to turn it around if needed. As soon as billing begins, we have the numbers to tell us how profitable the engagement was, allowing us to make decisions about whether to pursue similar opportunities and how to staff them.

Yet in most firms, performance metrics are used as little more than a history lesson. And there’s a very good reason that most firms don’t review these metrics more frequently. Generating them typically requires pulling data from multiple systems and dumping them into standalone spreadsheets. Not only is this process time-consuming, but it can also be error-prone. The result is often outdated metrics, with different versions of the “truth” being generated by these disparate systems.

If you lack a single version of the truth, you are essentially driving blind. Without the real-time, actionable data you need to make good decisions, you could be heading down the road to an unprofitable outcome. By the time you realize it, it is probably far too late to make course corrections.

What’s Your DTA?

The truth is that any firm can make these performance metrics part of a regular review process. It’s a matter of priority.

Back in the 1980s, when I worked for Coopers & Lybrand, we had something called a Daily Time Analysis (DTA). Every day, each person on the job would post their time on a sheet of 13-column paper. The senior on the job maintained the DTA, spending at least an hour every day tabulating those columns and comparing with the budget. If the senior could not produce an up-to-date DTA upon request, he or she would be taken to task.

The point is that, even without technology, you can choose to make regular profitability analysis part of your expectations and standards.

Luckily, we do have technology today that can quickly and accurately generate performance metrics. Far more than the glorified time and billing systems of the past, today’s practice management systems integrate time tracking, billing, workflow management, customer service, sales and marketing functions into one integrated system. When these solutions are backed by robust business intelligence, they can quickly analyze all this disparate data to produce simple, powerful graphics illustrating the trajectory of the firm.

These practice management systems answer a lot of questions very quickly. How does the tax department realization rate compare to the audit division? How did billable hours compare to budgets on each engagement?

When departments or individuals aren’t performing well, you have the numbers to hold the responsible parties accountable — and to give credit where credit is due. Accountability is key to performance management, and performance management is key to driving a profitable firm.

In a series of upcoming blog posts, we will pose some questions for you to ponder. Among them:

  • Does each division and staff member have a productivity goal? Are you (and they) regularly monitoring their progress compared to those targets?
  • Can your system calculate realization percentages as bills are generated?
  • Can you easily calculate realization for each line of business?
  • Do you know the firm’s unbilled work in progress by billing manager on a daily basis?
  • Can profitability be assessed for each business line and not just firmwide?
  • Do you know realization percentages for each staff member?
  • Assuming that you can generate some or all of these metrics, are they available in real time to allow partners and managers to monitor their people and engagements and make midcourse corrections? Or are they simply a history lesson?

As you begin to discuss these issues with your management team, remember that in today’s competitive environment, the only way to continue growing is to deliberately drive firm profitability with actionable intelligence.

But maybe you’d rather sit back and enjoy the ride, accepting whatever destination you happen to reach. Myself, I prefer to be in the driver’s seat.

 

 

 

Three Basic Models to Navigate the Cloud

In our last conversation we unlocked some of the mysteries of the cloud.  We discovered the cloud is not the data equivalent of a dark alley.  Instead the cloud is made up of secure data centers that are subject to stringent security practices, audit controls, and often represent a level of safety that without proper expertise can be difficult to replicate on premise.  That said if in the market for a new application or reassessing existing systems, it is fair and valid to consider cloud options.  But what exactly does the cloud deliver?

The cloud represents data storage and network infrastructure.  The cloud itself is not a software solution, but a chassis where a solution can reside.  The cloud should be a secondary consideration when shopping for a new ERP, CRM or other system.  In fact, anymore most reputable applications have a cloud based offering or can be “hosted” with a cloud service.  As such the primary concern of any software selection process is to ensure that the needs of the company align with the capabilities of the system.  But a secondary concern is to understand what cloud options are available and there are three basic models when considering the cloud.

SOFTWARE as a SERVICE:  Software as a Service or SaaS is a term coined for a pure internet based software application.  There are numerous applications that follow this model including Quickbooks Online and Dynamics 365.  With software as a service, all that is required is a monthly subscription and internet access.  Typically, the SAAS model provides a basic yet solid solution and is often ideal for smaller businesses that may not require a lot of specialization.  Software updates and upgrades are seamless, done behind the scenes, and there is little to no overhead.  Backups are built into the system and are managed by the software hosting provider.

PRIVATE CLOUD:  With a private cloud, the servers, network and infrastructure that is typically maintained on premise, is now virtualized and maintained in a cloud based data center.  Typically with a private cloud the servers, and related services are leased, and isolated. Monthly subscription fees can vary based on number of servers, volume of data and supporting services.  A private cloud provides the security of an offsite data facility, but still allows the organization to maintain control over its own servers and data.

PUBLIC CLOUD:  A public cloud has some of the same benefits of the private cloud, but instead management of hardware, backups and infrastructure falls under the responsibility of the cloud provider.  As such administrative functions are more restricted.  Yet, applications are still secure and only accessible by authorized users.  Fees may vary based on whether one owns the software license or is using a subscription.  Often providers of public cloud services may specialize in selected applications.

With any cloud offering one should also inquire into audit and security certifications and standard backup offerings.  Likewise business managers should verify contract termination and data transfer procedures as not every relationship is perfect and any organization should have the flexibility to obtain their data and transfer to another provider.

Most dynamics applications are easily accommodated in either a public or private cloud environment.  For more information on cloud services and Microsoft Dynamics products contact Templeton Solutions.

The Recovering Cloud Skeptic

We’ve all met the cloud skeptic.  This is often a long time business owner or manager who is wary entrusting their lifelong work, sensitive data, and livelihood to the ethereal place we call the cloud.  For this manager, the cloud represents risk and loss of control.  Moreover for this person there is a certain comfort in knowing that systems are under one’s own lock and key and premises.  But are they truly safe?

Risk can come from many sources including both natural, as the recent hurricanes have shown or manmade.  In fact in this era systems are under steady assault from viruses, malware, and ransomware, require constant vigilance, and for protection, a level of expertise perhaps not available to the average business.  Faced with these threats managers are reconsidering the cloud.  Security, disaster recovery, efficiency and convenience makes today’s cloud different from just a few years ago.

A significant data migration is occurring today as businesses off load critical systems in exchange for cloud based services.  A better understanding of cloud based offerings makes this possible. The cloud is not a mythical space on the internet.  In reality the cloud is made of secure data facilities specifically engineered for the protection of sensitive information.  These data centers tend to be strategically and geographically dispersed, have built in redundancies, and are designed to provide a very high level of reliability and safety.  In fact in recent years the American Institute of Certified Public Accountants (AICPA) has implemented stringent standards for service providers.  SSAE (Statement on Standards for Attestation Engagements – a fancy word for audit) 16 SOC (Service Organization Control) 2 report is the gold standard for most data facilities.  If considering the cloud, one should verify that the hosting organization has met this requirement.  In fact most adhere to even more stringent standards.

Disaster recovery is another advantage of the cloud.  As discovered during the recent hurricanes, having applications in the cloud provides a significant advantage when it comes to disaster management.  The cloud allows users to work from almost any location ensuring business continuity.  As a result services can continue while vendors and employees are paid.   When main offices are compromised, users may be able to work from home or managers can easily establish temporary offices from alternate locations.  In most cases the only requirement is a reliable internet connection.  Organizations should strongly consider cloud as part of their disaster strategy.

Economies of scale can also be achieved by moving to the cloud.  Most hosting organizations provide services for a monthly fee.  Fee structure can vary based on software subscription and services provided.  To properly assess an investment in cloud services one has to consider not only the monthly fee, but any cost savings resulting from reduced IT staff and investment and maintenance of on premise technology.  Lastly together with economies of scale, there is a convenience factor to having applications in the cloud.  The burden of backups and routine maintenance fall on the hosting provider.  This allows the business to focus on its key mission rather than administrative tasks.

It’s time for the cloud skeptic to wake up.  The cloud is not the scary wild west of the internet.  Instead it represents disciplined, principled data management practices designed with the utmost security and integrity, and for most is safer than on premise solutions.

For more information on cloud services and Microsoft Dynamics products contact Templeton Solutions.

Jose A. Garcia
Director of ERP Solutions
jgarcia@templetonco.com
561-798-9988 Ext 207

 

Top 5 Reasons CPAs Firms are hesitant to implement a CRM system

5. It’s over my head… I don’t know where to start!!

4. A full CRM system is too much for our firm…What should our requirements be?

3. I don’t have a full IT team to support a CRM system in-house. Too many times a provider installs a CRM
tool and the firm never hears from them again. Where’s the training and support?

2. How much customization is too much? What works best in a CPA firm?

  1. How do I get my firm to use it??!!

For a list of industry specific requirements or to start a conversation around how we are helping CPA firms overcome these and other topics click here or call 866-558-7816

 

Missing dashboards in your firm?

Here are 5 reasons why you should consider making them part of your everyday routine.

1)      Easy to understand graphics – It’s simple – make things easier.

2)      Accessible to everyone in the firm – A global view will keep everyone up to date.

3)      Consolidate data – One screen with all the information you need.

4)      Drill down – Increased efficiency – It’s all in one place with the ability to drill into each column.

5)      Data driven decisions – Intelligent decisions pay dividends.

To learn more about how Templeton Solutions works with our customers on creating personal Dashboards, call (866) 558-7816

Recruit only the Very Best Talent

It’s no secret that your employees are your most important asset. In the professional services industry, your employees must deliver or you won’t be in business for long. Naturally, finding the right talent doesn’t always work in your favor and that’s a risk all professional service organizations face. What if you could take a more strategic approach to finding talent while developing staff skills to ensure higher aptitudes for the future?

Recruiting the right talent and tracking them through the applicant process to capture interview notes, candidate details and hiring decisions helps you strategically plan for the future. Using a tool like CRM for Professionals™ can help you do just that.

Streamline Employee Recruitment, Onboarding and Management

As noted in our infographic, 7 Strategic Advantages Service Organizations Realize with CRM for Professionals™, built on Microsoft Dynamics, you can attract professionals with the skills and experience that differentiate your services by using Applicant Tracking™. Applicant Tracking is a tool within CRM for Professionals that keeps staff connected to coworkers, clients and the information they need to succeed.

In addition to making sure everyone is on the same page during the hiring process, you can better engage your employees with recent assessments and provide tools that help them do their jobs better. According to an Aberdeen Group study, businesses that measure employee engagement are 24% more likely to have employees who rate themselves as highly engaged.

Of course all of this trickles down to ensuring your clients feel they are receiving value from your services by ensuring employees are properly challenged, experiencing educational growth, and can ultimately provide the best customer service around.

Protecting and nurturing your employees goes a long way in running a successful service company. Download 7 Strategic Advantages Service Organizations Realize with CRM for ProfessionalsTM, built on Microsoft Dynamics and contact us at Templeton Solutions at 561-847-7717 to learn more.