Is Your Technology Working for You?

A Top Technology Initiative Article

For those in public practice dealing with tax extension season, ask yourself: Did our tax software work correctly and quickly? If not, perhaps you have a software issue, a configuration problem, or something else to resolve. While there used to be over 100 tax software products, there are only around a dozen options today.

For complex returns, there are less than a handful of solutions. Therefore, you may not have many choices. While I know firms only change their tax software as often as they change physicians and major world religions, it may be time for you to change if your tax software is part of the problem and only part of the solution.

I was reflecting on software options for the profession in the context of artificial intelligence (AI) and how AI was being incorporated into almost every title we use. Some areas like research titles such as Wolters Kluwer AnswerConnect and Thomson Reuters Checkpoint Edge CoCounsel have improved these products with thoughtful AI. For others, AI has taken development resources away from the core product.

Most of us want products that are complete, correct, and quick. We track the top products in every category below and discuss them in our weekly podcasts. While I considered naming the top products in every category in this article, I recognized that your needs would dictate the products that fit you best. Obtaining unbiased and valid information is difficult in this market.

So, What Are Other Firms Wanting To Improve?

I have the good fortune of speaking with dozens, perhaps hundreds, of firms yearly. Because of that, I have a good sense of the common pain points and projects that firms believe will improve their situation. Common project initiatives this year include:

1. Practice Management
2. Single portals, including prepared-by-client document gathering
3. Outsourcing options
4. Engagement letters
5. Implementing Teams properly in Microsoft 365
6. Client payment portals

These are the areas that firms would like to improve or are being forced to change but recognize either a lack of modern solutions or the products offered are not mature yet include:

1. Audit guidance
2. Audit platforms
3. Document management
4. Workflow
5. CAS platforms
6. AI platforms (Copilot 365, ChatGPT, Claude 3, Gemini, and others)?

One of my clients has a phrase they overuse, “at the end of the day.” At the end of the day, now that we are 50+ years into improving the practice of accounting with technology, we are better off than we were. However, it is also apparent that the products enabling us to deliver client services can be much better. While public companies and start-ups alike strive to build a better mousetrap (to create a higher quality version of a widely used product), most of us just want a product that works and does most of the job.

As I currently see in the public practice market, the tools available frequently do not scale very well. Products that work for smaller practices do not work sufficiently for medium or large practices. And products that do work for larger practices are unaffordable for small practices. While I understand focus, if your vision as a product designer is so narrow that you cannot serve the extended needs of your buyer, at the end of the day, your product will not truly satisfy your customer.

Is it too much to ask for a trial balance to be at least as good as products offered in the DOS era? Or is it too much to ask for a modern fixed asset product interface with your tax platform?

And what is the root cause of this problem? Insufficient vision? Incomplete design? Inadequate funding? While I could continue looking for a single cause, I believe it is a blend of issues. Motivation to create products that generate substantial annual recurring revenue (ARR) and less focus on product quality certainly comes into play.

Also, creating minimal viable products (MVPs) through sprints and epochs makes us feel good about something that looks pretty but does not have sufficient functionality. Funding to build a complete product is hard to come by. Further, time frames and budgets to develop complete products are highly compressed. Using more and less competent developers and designers on a problem does not solve it well.

Perhaps my expectations are the problem. For decades, I have used the metric that public practice firms will spend 3-7% of their top-line revenue on technology to drive maximum partner profits. Getting quality support within that budget was difficult for small firms, and providers tried to build simple installations and maintain products.

We thought that the world of Software as a Service (SaaS) would allow everyone to run more sophisticated products in a browser, eliminating many of the complications of setup. However, many SaaS products had insufficient features. We note that SaaS products designed 20 years ago are just now working as expected. We see many new products built with modern tools in 18-24 months that are pretty good but are still far from complete.

If you consider that the development of Microsoft Office was started in the 1980s, it has taken around 40 years to have what we have today. For Microsoft’s efforts on this platform, we get to pay from $8.25 to $22 to $57 plus add-ons per user per month to use this platform.

If you consider that Google Docs and Sheets were released in 2006, it has taken nearly 20 years to get what we have today, and we only pay $6-$18 plus add-ons or more for security. A tool we love to hate, Adobe Acrobat was released in June 1993. Today, we pay from $12.99 to 19.99 per month to use this platform.

However, what do all these platforms have in common? They can sell to a mass market. What do public practice applications lack? Volume. What do public practice tools need? Accuracy with changing regulations. That is a tall order in tax and audit.

Will We Get Some Assistance From AI?

Yes. We provided a variety of AI-enabled in last month’s column on Practical AI For You. Product developments are discussed weekly in our Accounting Technology Lab podcasts. We remain optimistic about AI’s ability to assist professionals and reduce routine labor. That is not to say that professional expertise and judgment will disappear. Accounting professionals using AI will get more done with less effort than those who do not use AI. However, AI will become embedded in more and more products. You will just use the AI capabilities without thinking about them much.

In effect, embedded AI has several advantages.

1. Security of the client data is improved
2. The scope of the data used in the AI is likely to be only your clients and your way of doing business
3. Developers will have been thoughtful about how to apply AI to this situation
4. Mundane, repetitive, or complex tasks will be optimized
5. You will notice a reduction in the time required to complete tasks
6. You will also notice that there will be a reduction in effort, too
7. The quality of the output will improve
8. You will have more time to be thoughtful about the clients’ deliverables
9. Transactional data will become more commoditized, providing your firm leverage with technology
10. Surfacing key findings for clients will be AI-assisted

We do not want to sound like Pollyanna (a person characterized by irrepressible optimism and a tendency to find good in everything) on this topic. However, the initial results of AI in applications are promising. We are mindful that the fundamentals must work right before the benefits of AI can be enjoyed.

So, What Are We To Do?

Evaluate your current situation. What tools are working, and which ones are not? Prioritize replacements. For example, I have never seen as much appetite for replacing practice management tools as this year. However, no practice management product has everything that everyone is looking for. What is your most significant pain point? What is next after that? Make a prioritized list of what should be changed.

Remember your team. What would benefit all employees of the firm? Through all of this, you must keep your clients front and center, too. What services would benefit them the most? Choosing the right services delivered by the right people with the right tools is a formula for success. You may be closer than you think, but perhaps a little remodeling is needed to put your house in order.