2021 Strategic Technology Outlook for Accounting Firms

© 2021 Right Networks • Confidential & Proprietary

1

2021 Strategic Technology Outlook for Accounting Firms

Presented by Roman H. Kepczyk, CPA.CITP, CGMA

Director of Firm Technology Strategy, Right Networks


2

Roman H. Kepczyk, CPA.CITPDirector of Firm Technology Strategy- Right Networks

Top 100 Most Influential People in Accounting

(15 Years)

Most Recommended Consultants(15 Years)

Lean Six Sigma Black Belt

Top Thought Leader 2011-2020

CPAFMA Public Accounting Firm Manager and Advisory Board Member

Strategic IT/Production Partner to more than 425 CPA Firms (24 Years)

IT/Administrative Partner for Regional CPA Firm (10 Years)


3

Agenda 100% accounting focused

Deep industry experience and knowledge required to

provide best-in-class cloud solutions.

Lead the market with 210,000 users.

6,000+ accounting firms trust us to deliver their

applications in the cloud every day.

Strategic partnerships with Intuit, CCH-Wolters Kluwer,

Thomson Reuters, Drake, and others at the executive,

technology, and support levels that are unmatched in the

industry.

Uniquely positioned to deliver the best solution and

service experience.

Right Networks Cloud Premier (formerly Xcentric)

AboutRight Networks

2021 WINNERS: Right Networks

*ASP / Hosted Solution Providers .*Outsourced Technology Solutions


4

Agenda Strategic Technology Outlook

“New” Normal Post COVID

Express IT Update

Remote Work/Collaboration

Process Transformation: LEAN

CAAS Tech Stack Supports Advisory Focus

Changing IT Team Roles

Security Prioritization

Disrupter Awareness

…Provide Resources/Benchmarks


5

"New" Normal Post COVID

When will we be “Post” COVID? …already there! …this fall? ...2022?

Firm view on re-opening

Resurgence in hot spots

Emergence of vaccine-resistant variants

*AAA Interactive COVID Restrictions (May 11, 2021-June 2, 2021)

https://cpafma.org/articles/guide-re-opening-cpa-firm-released


6

"New" Normal Post COVID

When will we be “Post” COVID?

Significant changes driven during COVID: Forced innovation/adaptation

Remote access technology ramped up

Rapid adoption of digital solutions

Acceptance of virtual collaboration

Remote work increased productivity for many

Surge in traditional compliance services

“New” Normal: depends on going BACK or going FORWARD

Technology transformation accelerating towards “Next” Normals

…winners will be those that can identify, adapt, and drive their firms forward!


7

Express IT Update

Migration from On-premise to Cloud: 38% Host the majority of their own servers and

applications within their own firm office(s)(40% in 2018, 77% in 2016)

4% Host the majority of their own servers and applications at an external colocation and do their own maintenance (4% in 2018, 6% in 2016)

7% Utilize an external accounting vendor to host the majority of applications at their vendors facility. (4% in 2018)

51% Utilize an external integrator* to host the majority of firm applications at their facility and do all maintenance (51% in 2018, 18% in 2016)

(*71 of 90 responses: Right Networks)


8

Express IT Update

Migration from On-Premise to Cloud

Workstation Refresh

PC vs. Macintosh

iMAC 24” with 4.5K Display

Apple M1 Chip onboard 16Gb RAM

512GB storage: $1,899


9

Express IT Update


Workstation Refresh

PC vs. Macintosh

Specifications (Processor, RAM, SSD, USB-C)

i7 (58%), i9 (9%) Intel Processor

16Gb RAM (8Gb+ for Cloud*/Audit)

Solid State Drives on ALL workstations

USB-C


10

Express IT Update


Workstation Refresh

PC vs. Macintosh


Desktops vs. Laptops

Disaster Recovery

Managed Remote Workstation

Consulting/Remote Work Mobility

(2020 CPAFMA DDF Survey)

63% 15.6” with built in number pad

21% 17” with built in number pad

13% 14”+ without number pad

2% <14” (Ultrabooks/Microsoft Surface)


11

Express IT Update


Workstation Refresh

PC vs. Macintosh


Desktops vs. Laptops vs. Hybrids

Optimized Displays

53% Triple

27% Dual Oversize (>20”)

13% Dual Standard (<=20’)

5% Quadruple

2% Single Mega-size

(30”or greater!)


12

Express IT Update


Workstation Refresh

PC vs. Macintosh



Optimized Displays

53% Triple



5% Quadruple

2% Single Mega-size …UBER GINOURMOUS!

(30”or greater! MS PowerToys)


13

Express IT Update


Workstation Refresh PC vs. Macintosh



Optimized Displays

53% Triple



5% Quadruple

2% Single Mega-size (30” or greater!)

Mobile Displays?

ASUS Zen/MB169 B+ $169

HP/Lenovo/GeChic


14

Express IT Update


Workstation Refresh

PC vs. Macintosh



Optimized Displays

53% Triple



5% Quadruple

2% Single Mega-size (30” or greater!)

Mobile Displays

Future???


15

Express IT Update


Workstation Refresh

PC vs. Macintosh



Optimized Displays

Microsoft Windows

97% Windows 10

2% Windows 7

0% Apple iOS


16

Express IT Update


Workstation Refresh

PC vs. Macintosh



Optimized Displays

Microsoft Windows/Office (2020 CPAFMA IT Survey)

77% Office 365 (now Microsoft 365)

4% Office 2019

15% Office 2016

4% Office 2013/2010/2007

2019

Microsoft 365:


17

Express IT Update


Workstation Refresh

PC vs. Macintosh



Optimized Displays

Microsoft Windows/Office/Adobe? (2020 CPAFMA IT Survey)

51% Adobe 12/DC

20% Adobe 11 (exp. 10/20/2017)

8% Adobe 10

21% Other (older Adobe, Doc-It, FoxIT)


18

Express IT Update


Workstation Refresh

Scanning Technology

Scanners vs. Duplicators

Educate Clients on Portal/Secure Email Solutions

% of Tax Scanning done Centrally, Distributed or Individually:

-88% Firms Utilized Centralized Scanning (2018: 84%; 2016: 75%)

-57% Used Distributed/Shared Scanners (2018: 79%)

-51% firms used some Individual Scanners (2018: 55%)

*CPAFMA 2020 DDF Survey


19

Express IT Update


Workstation Refresh

Scanning Technology Scanners vs. Duplicators

Educate Clients on Portal/Secure Email Solutions

79% Tax File Organization Scan (2019: 76% +3%)

69% Utilize OCR into Return (2019: 56% +13%)

Tax File Scan and Import Tools

CCH FxScan/AutoFlow

Thomson Source Document Scanning

SurePrep 1040 Scan and Populate

Drake Gruntworx/Populate *CPAFMA 2021 DDF Survey


20


Ubiquitous Internet (95%+!)

Redundant Firm Internet

Different Backbone Providers

Dual Broadband Router with Automatic Failover

Renegotiate 18-24 months-$$$

CPAFMA 2020: 46 firms experienced significant downtime due to:• 21 Internet Outage• 20 Cloud Host Outage• 12 Hardware Failure• 2 Ransomware/Malware• 1 Power Outage


21




Difficulty with Client WiFi/VPN

Increased security concerns

Caution on “Public/Client” WiFi

Utilize Virtual Private Network: (i.e. Cisco AnyConnect, NordVPN, IPVanish, ExpressVPN)


22





Digital Cellular Options

Smartphone Hotspot

Mobile Hotspot

Recent Renegotiation

Small Office Backup

V1-$399-30 users-5G!


23






Transition to 5G

4G=30Mbps HD Streaming

5G=60-1,000Mbps GB Streaming

Will handle VPN/Security


24






Transition to 5G

Collaborative Future

Skype/Zoom to Microsoft Teams

Slack/SocialCast to Microsoft Yammer


25






Transition to 5G

Collaborative Future

Skype/Zoom to Microsoft Teams

Slack/SocialCast to Microsoft YammerBlue Yeti Microphone

Logitech 1080p Camera

Adjustable DesktopClamp Stand

Light Box

MeetingOwl


26

Lean Accounting Process Solutions

LEAN SIX SIGMA Overview

Targets Improvement of WORKFLOW

Structured Process (DMAIC)

Consulting Skills/Tools that Accountants can utilize

Visual Flowcharting with focus on end client

Individual/Group Accumulation (Facilitation Skills)

How to measure anything (KPIs*)

*KPIs-Key Performance Indicators


27


LEAN SIX SIGMA Overview

Internal: KPIs* Direct Efficiency

Total Days in Firm

Profit Margin

Return Completed Without Rework

Audit PBC Complete Before Going Onsite

Digital Delivery (Return, Engagement Letter, Invoice)

Continuous vs. Discreet

Lean Tax Process Opportunities

*KPIs-Key Performance Indicators

Continuous (Measure):-8 Days in Production-4 Days in Scanning-$750 Margin-43% Profit-$187 Realized Rate

Discreet (Y/N):YES-Digital DeliveryNO-Sent Back Twice for Rework


28


LEAN Tax Process Opportunities Contact Management Tax Projections Engagement Letter Due Date Tracking Organizer Production Data Accumulation Digital Workflow Scanning Technology Organize/Bookmark Tax Data Import Annotation Preparation/Workstation Research/Forms Review/Collaboration Return Processing/Delivery eSignature/extension

Goal? …capture data at its root source with quality control,

in a format that is accessible securely by everyone that needs

it, in a digital format regardless of their location!


29


Contact Management: Solution

Identify Contact Databases/Locations

Practice Management

Outlook

Tax Program

Workflow/Due Date Tool

Engagement Binders

Engagement Letters

Marketing Lists

…hopefully not a Rolodex!

Digital Change of Address Form/Email Address

Centrally Updated by Trained Administrative Personnel

CPA CRM=Good List Management

Ask Firm Personnel: Where do they look for client contactInformation?


30


Quality Control Opportunities:

QC at ingress/engagement letters

Optimized scanning process

Complexity stratification (in workflow)

“Mini” review at preparation (stratified checklist)

“Push Forward” return review with collaboration


31


LEAN Resources/Articles:

Lean Tax Production

Identifying LEAN Waste-MUDA

Lean Audit Production

LEAN Consulting Skills

Right Networks BLOG

RN LEAN Firm Series: LEAN Essentials – June 11

Tax Optimization – June 21

Assurance/Accounting – June 28

Firm Administration – July 6


32


Advisory has driven profitable growth

Client ACCOUNTING and ADVISORY Services

Big Firm CAS vs. Small Firm CAS

Outsourced Controllership/Fractional CFO

Business Process Improvement (LEAN)

Business Information Automation…..


33




Technology disintermediating traditional services

APIs, Data Transfer, Machine Learning….AI!

Source: ADP accounting profession survey


34





APIs, Data Transfer, Machine Learning

Automation Factories


35





APIs, Data Transfer, Machine Learning

Automation Factories

Big Four Entrants

YOUR Advantage?

…client relationship!


36





CAAS built upon accounting information systems

CAAS Cloud Tech Stack

Core Accounting App:


37





CAAS built upon accounting information systems

Decision support dashboards

Tableau

Domo

Microsoft Power BI


38

Changing IT Roles

Internal Technology Management

Sobering Impact since 2008 …COVID repeat???

Tight Training Budgets/Investment-Limited Conference Access

One Shot Experience Outsourced (Exchange, Security, Remote, DR)

More Applications Pushed to Cloud/CAAS Adoption

Reduced Internal Technical/Support Requirements

Traditional Network IT Personnel at Top of Pay Grade

Most Partners Don’t Know How To or Want To Deal with IT Issues

CPAFMA 2020:Cloud Impacts


39

Changing IT Roles

Internal Technology Management

IT Opportunities/Department Evolution

Internal Project Management

Ongoing Troubleshooting

New Process Adoption

Standardize Mobile Capabilities

Application Integration (Programming Skills)

Transition to Advisory Role

Cybersecurity Services/Training

Cloud Transition Assistance

Client Data Manipulation (Extraction/Programming,

Dashboards-Microsoft Power BI)


40


Current Accounting Threats


41




42


Current Accounting Threats: Ransomware as a Service

Municipalities

Medical

Legal

Accounting


43


Current Accounting Threats IRS Security Summit Response: It’s the law!

IRS Security Six: Anti-virus/Malware Application Firewalls Multi-Factor Authentication Backup Software Drive Encryption Virtual Private Network


44


Current Accounting Threats IRS Security Summit Response: It’s the law!

IRS Security Six Phishing Training Security Awareness Training Written Plan: “Appropriate to your Circumstances”

Designate an employee to coordinate Security Plan development

Identify and assess risks to client information Evaluate effectiveness of current safeguards and adjust

as necessary Design, implement and monitor a safeguards program Select service providers than can maintain appropriate

safeguards


45



Reality: YOU are responsible!

...and will be financially impacted if your firm is breached!


46




Firm Security: IT Responsibilities

Firewall Configurations

Security Patches

Windows/Server Updates

Antivirus/Malware

Daily Backups (Verified) (Ransomware)

Secure Access to Resources (Passwords)

End User Policies/Threat Awareness (Phishing)

Consistent Deficiencies:

* 2021 Verizon DBIR: Data Breach Investigative Report


47





Security Solutions/Recommendations

Password Wallets

New Password Rules: at least 12 characters, no derivatives: Passphrase

Data Blue 1040 SundayNotHackedOnMyWatch

4Sc0re&7YEARSag0

~PhX!cc01, PhX!cc02, PhX!cc03…


48






Password Wallets

Multi-Factor Authentication

Software: DUO, Okta

Key Fob/RFID, Biometric

Disable USB:


49






Password Wallets


Employee Education

Updated IT Policies-Remote work/BYOD/Cell plans

Security Education


50






Password Wallets


Employee Education

Updated IT Policies

Security Education

Current Treat Awareness/Testing

KnowBe4

PhishMe>Cofense

Wombat Security>Proofpoint

Phishing:*Organized crime responsible for 89% of phishing schemes*70%-90% of attacks “unique” to that company


51






Password Wallets


Employee Education

Proactive Security Program

Internal IT Staff Training

Third Party Integrators/Security Specialists

Cloud Solution Providers

19 Security Steps to Consider:

https://info.rightnetworks.com/cpa-cybersecurity-checklist-ty

https://info.rightnetworks.com/cpa-cybersecurity-checklist-ty


52

Disrupter Awareness

Competitive Application Influx

Accounting

Practice Management

Data Extraction-ActiveData


53

Disrupter Awareness


Automated Data Ingestion

Tax Source Data

Audit Extraction Tools

New Audit “Suites”


54

Disrupter Awareness



Robotic Process Automation (Evolution)

Rise of the Apps (APIs) (CAAS “Tech Stack”)

Data Transfer Utilities

Machine Learning

Automation Anywhere-UIPath/BluePrism

Human Verification/Oversight

*API: Application Program Interface

Need to

know:

API*


55

Disrupter Awareness



Robotic Process Automation

AI/Cognitive Computing

Accounting Adoption

IBM Watson-H&R Block

Mindbridge

Thomson InFlo


56

Disrupter Awareness





Blockchain and the “Future of the Audit”

Distributed Ledgers

Financial Sector Support

Accounting Application Support


57

Disrupter Awareness



Big Data Analytics-Predictive



Blockchain and the “Future of the Audit”

Distributed Ledgers

Financial Sector Support

Accounting Application Support


58

THANK YOU!Right Networks helps my clients connect their accounting platform to other applications that will

help them with important functions of their business.

Presented by Roman H. Kepczyk, CPA.CITP, PAFM

Director of Firm Technology Strategy

[email protected]

2021 Strategic Technology Outlook for Accounting Firms

Documents