The CPA Firm Management Association (CPAFMA) recently conducted its third comprehensive technology survey tailored specifically to member firms with the goal of identifying the applications, products and processes utilized by peers. Where possible, the survey attempted to identify which applications firms are moving to in the cloud compared to traditionally on-premise managed solutions. The survey was conducted in December 2019 to determine what information technology firms would be utilizing in 2020 and compared to the results from previous surveys where appropriate. This survey further highlighted the unique nature of CPAFMA member firms which tend to be medium and larger sized firms. 178 CPAFMA members participated, 89% of which had 10 or more personnel, and more than half (53%) were multi-office. The findings of the survey are summarized below and were presented by CPAFMA Advisory Board Member Roman Kepczyk via MAPCast on Friday, December 19, 2019 which is available on the CPAFMA.org website.
Server Infrastructure: The 2020 survey was consistent with the 2018 survey where more than half (51%) of responding firms utilize an external cloud provider to host the majority of their applications. This year’s survey also found the number of firms internally managing their own networks dropping from 40% to 38% which highlights the continued trend towards peer firms moving everything towards the cloud. While twelve responding firms utilized CCH Axcess and two selected Thomson Reuters Virtual Office, the majority of participants were utilizing “private” cloud hosting vendors. Right Networks/Xcentric led the private hosting vendors with 73 member firms, followed by Ntiva and NMGI having two respondents each. Of the firms that managed their own networks, seven (4%) utilized a third party “colocation” facility which provided more robust security, power and Internet access than can be found within most firm offices.
Server Virtualization: Virtualization continued as a very strong trend with two-thirds of responding firms adopting this technology either internally or through their cloud vendor. Simply stated, virtualization runs each application in its own “virtual server” providing great stability for accounting applications by minimizing conflicts. While many respondents indicated they were not sure of what their virtualization strategy was, VMware was the preferred choice of 45% respondents, followed by 40% of firms choosing Citrix Xen, 9% selecting Microsoft Hyper V, and 3% selecting VDI (Virtual Desktop Interface), which continues to trend in corporate environments outside of the accounting profession.
IT Staffing: Traditional accounting firm metrics have pointed to firms needing one IT equivalent staff person for every 25 to 32 firm personnel. This year’s survey attempted to verify this number differentiating between firm size and internally managed versus externally managed networks. Respondents from large firms (100+ members) had a 1:36 ratio between IT personnel and total personnel in traditionally networked firms, compared to a 1:53 ratio for those in the cloud, pointing to cloud providers taking on a significant portion of the IT burden. This was also evidenced in firms between 50 and 99 members as traditional firms had a 1:28 ratio compared to cloud hosted firms with a 1:48 ratio. For firms with 20 to 49 members, traditional networks were at a 1:28 ratio compared to cloud firms which surveyed at a 1:32 ratio. The IT Staffing responses for firms with less than 20 members showed a 1:20 staffing ratio in traditional firms compared to 1:22 in the cloud pointing out that cloud adoption reduces internal staffing requirements in all firm sizes.
Significant Downtime: Another new question this year sought to identify what events caused significant downtime in the previous 12 months, with the number one item being Internet outages which impacted 21 firms. Close behind were 20 firms that experienced cloud host outages. This was followed by twelve firms that experienced hardware failures which was up from seven in 2018. Only one firm was impacted by Ransomware (compared to six in 2018) and one impacted by viruses and malware, which was a reduction from the three in 2018 and the 17 firms impacted in the 2016 Survey. While the survey found BitDefender to be the most selected anti-virus application with 37 firms, there were 11 other applications that were utilized by at least two peer respondents, so virus applications have the least amount of consensus of any application in responding firms but appear to be working better across member firms.
Backup Options: For traditional on-premise data backups, eight respondents still utilized tape backups and 38 respondents (269%) backed up to hard disks or solid-state drives, which we have seen to be more reliable and easier to utilize to restore files from than from tape. The bigger trend of member firms backing data up offsite via Internet-based solutions increased to 68% of respondents compared to 64% in 2018, pointing to web-based backups as becoming the overall standard. The survey also asked about backup frequency and 82% of respondents backed up daily, up from 73% in 2018, pointing out the standard. The survey found 7% backed up their data weekly, 5% between two and six times per week, and 6% listed “other.” Once again, the variety of applications utilized by firms was significant with no one application having more than a handful of users.
Workstations: Dell still leads the pack for desktop brands with 65% of respondents making them the first choice followed 19% by HP and 10% by Lenovo. For laptop brands, Dell was not as dominant with 58%, but continued to be one of the top three brands along with HP at 19% and Lenovo at 17%. Within the remaining “other” computers were three firms selecting Microsoft Surface PCs, which was a slight reduction from 2018. The most popular laptop configuration continued to be a 15.6” with full keyboard (including a ten-key number pad) at 63% of respondents, followed by 21% of firms buying 17” models as their standard, compared to 13% selecting 14”-15” with the standard keyboard and 2% buying 13” or smaller (including Microsoft Surface PCs) without an integrated number pad in the keyboard. The survey also asked what computer processors firms were planning on purchasing in the year ahead and 58% selected Intel’s i7, 30% Intel i5, and 9% adopting the latest i9 processors.
Workstation Software: It comes as no surprise that Microsoft Windows is the dominant operating system with 97% of firms utilizing Windows 10 and only 2% responding with Windows 7. As security support for Windows 7 expired on January 14, 2020 it is anticipated that 100% of member firms will be on Windows 10 for the 2020 tax season. While there were two firms utilizing Apple iOS in 2018, there were no responses for 2020. Regarding Internet Browsers, Google Chrome was utilized by 78% of member firms (up from 65% in 2018), followed by Microsoft Edge/Explorer at 16% (down from 31% in 2018). Five firms stated they utilized Firefox and the remainder stated they utilized a variety of applications.
The 2020 survey found that the majority (77%) of firms had transitioned to Office 365 which was a significant jump from 24% in 2018. While 15% were still on Office 2016 and 4% on older versions, the findings point to firms upgrading to Office 365 when their current licensing/needs expire instead of purchasing “Box” software licenses which was the standard for the previous two decades allowing firm to “skip” one or two upgrades. Adobe 12/DC was the dominant PDF application with 73 firms (51% of respondents) standardizing on it, followed by 29 firms (20%) primarily on Adobe Acrobat 11 and 17 firms (12%) on Adobe Acrobat 2017. 11 firms listed Adobe 10 and 8 firms listed Doc-It’s PDF program. With technical support being discontinued for versions 11 and older we anticipate a push in firms going to the 12/Document Cloud version which is consistent with firms adopting annual cloud subscription pricing for an increasing number of applications.
Monitors: The survey specifically asked for the standard monitor setup which pointed to 80 members (53% of responding firms) utilizing triple monitors as the standard. This was followed by 41 firms (27%) using dual standard monitors greater than 20”, and 19 firms (13%) utilizing traditional monitors less than 20”, which flip-flopped from the 2018 survey findings. Eight firms (5%) utilized quadruple monitors which combined with oversize and triple amounted to 87% of firms using more than dual standard in this year’s survey.
Tablets: The reduction in the number of firms providing tablets to firm members continued in the 2020 survey with 21% of firms providing them to partners (compared to 24% in 2018 and 34% in 2016). Firms that supplied managers with tablets was at 4% in this year’s survey compared to 6% in 2018 and 10% in 2016. Of those firms that provided tablets, 11 were Apple iPads and eight were Microsoft Surface which points to Surface devices gaining popularity.
Phone System: A new question added in 2018 survey asked what type of phone system firms utilized to determine how many were going to the web-based Voice Over IP (VOIP) services. While the majority (55%) continued to use a traditional on-premise phone system, 45% firms responded that they had transitioned to an external VOIP system which was a 10% increase in two years… In our consulting with firms, we have found most firms search out service providers to maintain their existing phone system until the vendor can no longer provide support at which point they transition to external VOIP solutions as a more cost-effective solution (but still a significant capital outlay). The survey asked which vendors peer firms utilized and no individual provider tallied a majority with Cisco, ShoreTel, Avaya, and RingCentral most often listed.
Smartphones: The 2020 survey found 43% of responding firms provided smartphones to firm personnel. Of those that said they did so, 83% provided them to partners (up from 44% in 2018), 29% to managers (up from 15% in 2016) and 10% to staff. For types of phones, Apple’s iPhone was selected 75% of the time with Android phones accounting for the remainder. Overall, 16% of responding firms provided some kind of stipend for personnel (usually between $30 and $50/month), which was down from 43% in the 2018 survey.
Scanner Technology: The 2020 survey found that 88% of firm utilized centralized scanning which was up from 84% in 2018. The number of firms using distributed or shared scanners dropped from 79% of firms in 2018 to 57% in 2020. There was also a reduction in the number of firms having some users with individual scanners (55% in 2018 and 51% in 2020. Fujitsu continued to be the top production scanner vendor of choice with 64% of respondents followed by Canon at 25%, Ricoh at 4%, Konica and Xerox both at 3% and Kodak and Sharp at 1%.
CPA Practice Applications: Below we summarize the administrative applications which CPAFMA peer firms utilize to run their internal operations. The number of firms selecting either on-premise or cloud applications have been identified where possible and point out a continued transition towards cloud adoption either for the entire firm or individual applications.
- Practice Management: 92 firms (62% of respondents) utilized WoltersKluwer/CCH’s Practice Management, of which 49 were in the cloud either privately or through their Axcess Suite. Thomson Reuters had 49 peer firms using their Practice CS application, of which 28 firms were in the hosted in a private cloud or Thomson’s Virtual Office. OfficeTools (rebranding as WorkSpace) also made a good showing as it was selected by 27 respondents, weighted towards hosted servers.
- Payroll: For producing internal firm payrolls, ADP maintained the lead position with 36 responding firms, but saw Intuit move into the second spot with 35 firms, followed by Paychex with 29. The remaining 53 respondents utilized a wide variety of solutions with a majority of all firms selecting the SaaS/Externally Hosted version, rather than processing with on-premise applications.
- CPE: Practice Management applications are once again the tool of choice for CPE Tracking with 40 responding firms utilizing WoltersKluwer/CCH and 31 utilizing Thomson Reuters’ tools, consisting of Practice CS and Thomson Learning/Virtual Office Not surprising was that a significant number of firms (24) continued to utilize Excel spreadsheets for tracking CPE internally. For standalone CPE applications Prolaera was utilized by five respondents and Micron CE by four firms.
- HR: HR Management continues to be topic area where there was a wide variety of applications with no one product being dominant. ADP’s HRIS was utilized by 13 responding firms, followed by Halogen and Bamboo with ten firms each. No other application received more than three responses showing there is no consensus on what applications firms use to manage their internal HR needs.
- Intranet: Microsoft SharePoint continued to be the most dominant intranet tool used by firms (38 firms with the majority on-premise) but web-based WordPress (14 firms) narrowed the gap from the 2018 survey. Our consulting with CPAs has found that many firms still utilize an administrative drive or their document management application, which was not reflected in the survey question.
- CRM Tools: Practice Management continued to be the most dominant tool utilized for Customer Relationship Management with 59 firms using WoltersKluwer/CCH and eight using Thomson Reuters, the same two products and standing as the 2018 survey. Able for Accountants was next with four users and no other application had more than two responses.
- Website Maintenance: While the majority of respondents (67 firms) maintained their own websites with local providers, CPA Site Solutions led the 2020 survey respondents with ten firms, followed by WoltersKluwer/CCH SiteBuilder utilized by seven firms, three firms utilizing Squarespace (new to the list) and Thomson Web Builder CS selected by two firms.
- Internal Accounting: QuickBooks continues to be the dominant accounting product utilized by participating firms with 66 members utilizing the On-Premise product and 45 members utilizing Online/Cloud hosted versions. Thomson CS, Microsoft Dynamics and Sage 50/100 were tied for the next three spots with seven firms each and Sage Intacct had five users. “Other” included 11 QuickBooks Desktop users hosted by Right Networks which were added to the Online/Cloud hosted numbers.
- Website Payment Systems: A new category added in 2018 was the website payment systems which allow clients to pay their invoice directly themselves via credit card without firm administration being involved. CPACharge was being utilized by 25 peer firms followed by 19 using QuickFee and three using PayPal and three using Authorize.net (new to the survey). With rumored integration of website payment systems to firm practice management, this would be a category to watch in the year ahead.
- Accounts Payable Management: QuickBooks was once again the dominant application used for managing payables by 76 respondents (44 on premise users and 32 in the cloud), followed by cloud-based Bill.com with 32 users. The third and fourth most utilized products were Thomson Reuters with five firms and Sage/Peachtree with three firms.
- Expense Reports: Practice Management was the most often cited application for capturing expense reports with fourteen firms responding, followed by five firms that utilized Excel on-premise. The top three cloud-based expense products were Expensify (eleven firms), Concur (five firms) and Tallie (three firms).
- Scheduling: Excel continues to be the dominant tool utilized for scheduling staff with 57 firms reporting they do so. This was followed by firms using Practice Management scheduling components [WoltersKluwer/CCH (20) and Thomson (11)]. XCM Schedule was next with 11 firms, followed by ProStaff which was utilized by nine member firms, Outlook was also listed as being utilized by eight firms.
- Data Visualization: A new question added in 2020 found that 31 firms had selected Microsoft Power BI (Business Intelligence) as their data visualization tool followed by 5 firms selecting Tableau. Other tools listed were Domo, SSRS, and SAP Crystal along with Excel.
- Email/Groupware: Microsoft continues to be the dominant accounting firm groupware product utilized by 150 firms. The 2020 survey found 117 firms using Cloud/Hosted Exchange compared to 89 in 2018. The number of firms maintaining their own Microsoft Exchange servers reduced from 39 in 2018 to 33 in 2020 indicating an ongoing transition of firms to hosted email. Google Gmail was the only other product listed with nine firms (up from three in 2018). This year’s survey also asked if firms set file size limitations on email mailbox sizes and 40% stated they allowed 50Gb or more followed by 20% allowing between 6Gb and 50GB which is evident of the move to hosted Exchange. The number of firms that still had a 1Gb cap was at 6% (down from 23% in 2018) and 14% for firms that limited email size to 2Gb-5Gb (down from 34% in 2018).
Collaboration/Instant Messaging: Microsoft Teams was the most utilized collaboration tool with 68 firms responding followed by 23 firms selecting Skype for Business (formerly Lync and Office Communicator) placing Microsoft in the dominant position (again due to integration with Office 365). This was followed by seven firms utilizing Zoom, four using Slack and three using GoToMeeting.
Video Calling: For video calling, 37 peer firms utilized Zoom followed by 31 using Microsoft Skype for Business and 11 using Microsoft Teams. GoToMeeting also had six users and Lifesize had three.
Document Management (DM): Of the firms that answered the DM question, 43 utilized Thomson products (30 GoFileRoom/13 File Cabinet Solution) and 27 utilized WoltersKluwer/CCH’s Document Management (15 On-premise and 12 in Axcess). Doc-It made significant inroads once again in this year’s survey with 14 member firms utilizing the application (up from seven in 2018). Overall, the majority of firms utilizing document management, utilized applications hosted in the cloud supporting the transition to cloud trend.
Tax Applications: This survey was combined with the previous SaaS/Cloud survey with the intent of identifying which applications are moving to the cloud as there have long been tax, document management portal and research tools available. Below we summarize the tax application trends within CPAFMA peer firms.
- Individual/1040 Production: WoltersKluwer/CCH continued to be the dominant 1040 application used by respondents with 95 firms selecting it (including 51 in the cloud). This was followed by 45 firms Thomson’s UltraTax (of which 30 were in the cloud). Twelve member firms utilized Lacerte, with five being cloud-hosted
- Business/Other Returns: Not surprisingly WoltersKluwer/CCH was again dominant in business tax applications with 93 responses (50 Hosted Cloud/Axcess) followed by Thomson Reuters UltraTax with 47 firms (of which 29 were in the cloud). Also, twelve members selected Lacerte, of which five were in the cloud, pointing to the continued transition towards more cloud/hosted applications over the 2018 findings.
- Tax Bookmarking: With the preponderance of firms using WoltersKluwer/CCH for tax processing, it remained no surprise that WoltersKluwer/CCH Scan was the most dominant bookmarking tool with 67 firms, followed by SurePrep having 20 responses, eight utilizing Thomson Reuters Source Document Scanning, and five firms selecting Gruntworx. According to the 2019 CPAFMA Paperless Benchmark survey, 76% of peer firms were utilizing automated tax bookmarking tools.
- Tax Scanning to OCR: WoltersKluwer/CCH Scan was also selected by the majority of firms (60 of 100 respondents) that were utilizing Optical Character Recognition to import data into their tax programs. WoltersKluwer/CCH was followed by SurePrep with 21 responses and five using Doc.IT. The 2019 CPAFMA Paperless Benchmark survey found that 56% of peer firms were utilizing Scan to OCR applications.
- Client Data Accumulation: A new question in 2018 meant to explore the adoption of client data accumulation applications in lieu of using organizers, found that 16 firms planned on piloting WoltersKluwer/CCH’s My1040 Data application in 2020, followed by nine firms planning to use SurePrep TaxCaddy and six firms targeting Thomson Reuters FileCabinet and Workpapers CS.
- Dedicated Workflow: While we see many firms traditionally utilizing Practice Management Projects to track tax workflow, the trend towards dedicated tools continued from the previous two surveys. The top three products that peer firms have transitioned to were XCM (34 firms), Thomson FirmFlow (22) and WoltersKluwer/CCH Workstream (20), followed by 15 firms utilizing practice management projects (including Wolters Kluwer/CCH, Thomson Reuters, Practice Engine and OfficeTools) and six firms utilizing Doc-It. This is an area we see a continued trend towards firms adopting in the next few years as the efficiency gains within firms are touted by each of the vendors.
- Tax Research/Forms: Thomson’s RIA Checkpoint continued to be the dominant Tax Research tool utilized by 82 responding firms, followed by 63 firms using WoltersKluwer/CCH Intelliconnect, and 15 using BNA (down from 38 in 2018!). For accessing tax forms, 61 respondents stated they used WoltersKluwer/CCH, while 45 utilized Thomson RIA Checkpoint, and 25 had BNA’s SuperForms product.
- Tax Projections: A new question in the 2018 survey asked what firm were utilizing for tax projections. WoltersKluwer/CCH’s Planner product was the top product selected by 58 peer firms, followed by 44 firms utilizing BNA Income Tax Planner and 13 using Thomson’s UltraTax Planner.
- Tax Portals: The most utilized portal product in this year’s survey was WoltersKluwer/CCH’s Portal with 43 firms. This was followed by 18 firms utilizing Citrix ShareFile, 14 on Thomson Reuters GFR/NetClient CS and 6 on Doc.It’s portal.
- Tax Secure Email: The leading secure, encrypted email solution for delivery of tax returns was once again Citrix ShareFile with 76 of 125 firm respondents selecting it. This was followed by 16 cPaperless SafeSend respondents and13 firms utilizing Mimecast. WoltersKluwer/CCH’s Share Safe product also was being utilized by seven firms.
- Digital Signatures: The survey found 36 respondents utilizing Right Signature as their electronic signature application followed by 16 using cPaperless SafeSign, 14 using WoltersKluwer/CCH’s product, 13 using Thomson eSignature and 12 using DocuSign. With these products maturing and firms doing more digitally, we anticipate a noticeable jump in this category in the future.
Audit and Accounting Applications: The survey also asked questions specifically in regards to assurance services to identify adoption of the following applications and utilities:
- Audit Binder: The dominant engagement binder application utilized by firms was WoltersKluwer/CCH Engagement with 87 firms. Within these WoltersKluwer/CCH respondents 31 firms stated they hosted their binder in the cloud, which would point to firms hosting their networks with Citrix or Windows Terminal Server as this is not anticipated to be a completed component of the WoltersKluwer/CCH Axcess suite for another year or two. 21 firms utilized Thomson products (9 Engagement CS firms and12 firms using AdvanceFlow), followed by 18 member firms utilizing CaseWare (which doubled from 2018).
- Audit Analytics: Only 34 firms provided a valid answer regarding Audit Analytics tools which was a new question asked in this year’s survey. ProfitCents was the most often selected application with 27 firms utilizing it, followed by RMA with seven firms responding they use it. We anticipate the rollout of artificial intelligence (AI) and big data analytics tools being integrated into accounting products will increase adoption of this type of application.
- Data Extraction: While being touted by digital audit pundits for more than a decade, the majority of this year’s respondents (59 of 93) continued to utilize Excel manually for data extraction. Of the dedicated data extraction tools, IDEA was the leader with 18 firms followed by Active Data (an Excel add-on) with six users, TeamMate Analytics with five, Validis having three and ACL two firms.
- Client Accounting: It comes as no surprise that QuickBooks is the dominant tool for client accounting with 115 using QuickBooks Desktop (45 of which were hosted in the cloud) and 106 utilizing QuickBooks Online. Thomson was next on the list with 32 firms using a combination of their Accounting CS and CSA as well as 32 firms utilizing Sage/Peachtree products, with some firms utilizing more than one application.
- Client Payroll: QuickBooks was once again the dominant application firms utilized for producing client payrolls with 81 of 121 respondents selecting the application. ADP too the second spot with 38 users followed by Thomson Reuters with 29 firms. In addition, 16 firms utilized Paychex, with all vendors having more cloud usage than on-premise.
- Depreciation: This question was added in 2018 with Thomson Reuters Fixed Asset CS once again being the most selected product (68 of 136 firms) followed by WoltersKluwer/CCH Fixed Assets (49 firms). The other products listed by peers were AssetKeeper and BNA FAS with ten firms using each application.
- Working Remotely: Citrix maintained the dominant position from 2018 as it was utilized by 75 firms followed by 46 firms utilizing Microsoft Windows Terminal Server/RDS for remote access. The remainder of firms either did not have a remote access tool or utilized VPN or another of the remote support tools., As expected there was a significant increase in the number of personnel working remotely from the 2018 survey. 14 firms had at least half their personnel work remotely one day per week or more, 21 firms estimated between 20%-49% of their staff worked remotely one day per week or more. 30 firms estimated that between 10%- and 19% of staff worked out of the office at least one day per week and 47 firms estimated it was between 1% and 9% of their staff that did this. With the continued transition to cloud applications, it is expected that the number of firms allowing remote work will only increase
- Remote Access Support: For providing remote support to clients, 30 respondents selected LogMeIn, 15 firms utilized TeamViewer, eight firms selected GoToMyPC and Join.Me followed by six firms selecting GoToAssist/GoToMeeting.
IT Governance: The vast majority of peer firms (96 firms representing 69% of respondents) utilized a technology budget that was reviewed at least annually. Surprisingly, only 59 firms (42%) had a designated IT Committee.
IT Training Resources: The survey once again had respondents list the best training resources with the most firms selecting the accounting vendor user conferences: WoltersKluwer/CCH (20 firms), Thomson Reuters (12), Right Networks/Xcentric Webcasts (10), and XCM (three). This was followed by 18 firms the AICPA ENGAGE (formerly TECH/Practitioners Symposium) conference and 11 listing the CPAFMA National Symposium/Technology Webinars.
Cloud Future: The survey’s final question asked when the respondent believed that the majority of CPA firms will run entirely in the cloud with no local servers. A surprising 30% estimated it would happen between 3 and five years, another 39% thought it would be between five and ten years while 14% believed it would take 10 years or longer. Only 16% estimated that it would be less than three years, which we would agree with by quoting Bill Gates when he was Microsoft’s CEO:
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction! “
Roman H. Kepczyk, CPA.CITP, PAFM is the Director of Firm Technology Strategy for Right Networks and works exclusively with CPA firms to implement today’s leading best practices and technologies incorporating Lean Six Sigma methodologies to optimize firm production workflows. Roman is also the author of “Quantum of Paperless: A Partner’s Guide to Accounting Firm Optimization” which is available at Amazon.com.
This post originally appeared on cpafma.org.