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By Roman Kepczyk, CPA.CITP, CGMA on November 10, 2021 minute read

CD Towers to Cloud Hosting: The Evolution of Accounting Technology

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35 Years of Accounting Technology—Times Have Changed!

In recognition of International Accounting Day, I’m sharing a throwback to the “ancient” accounting technology and processes which evolved to where we are today. Let’s jump right in!

Accounting Technology: My Personal Evolution

In January 1986, I joined a regional CPA firm in Arizona as a staff accountant—right in the midst of their transition from manual processing and IBM36/AS400 mainframe computers to personal computers. Using a personal computer for accounting work was on the “bleeding edge” in 1986. Most accountants were still working on multi-column paper pads, totaling numbers with a ten-key and using external data processing centers for tax return and general ledger preparation. I jumped into my first busy season by reconciling bank statements and general ledgers via a standalone spreadsheet program called SuperCalc (precursor to Lotus 123 and today’s Excel).

I joined the firm with a few other newbies. Because I had prior experience with Wang microcomputers (and was the lowest ranking staff member), I was tasked with unboxing and setting up the firm’s new personal computers. That task, of course, led to answering questions about the operating systems and applications and eventually being tagged as “the computer guy” within the firm.

While I started with a full tax and accounting workload, I transitioned more and more of my time to PC hardware and application support. I also became involved in networking computers within the firm, which initially was “peer to peer” to share printers or files. That quickly grew into connecting all the computers in the office utilizing Novell Netware, which led to my becoming certified as a network administrator and helping roll out, then support, networks throughout the firm, eventually centralizing our infrastructure and adding remote access.

Also, since I was helping our accountants utilize the PCs, the natural inclination of the partners was to offer those services to help clients, and “Voila!” the firm’s “Microcomputer Consulting” practice was born. In addition to making equipment recommendations, I supported accounting applications such as CYMA Shoebox, DacEasy, Peachtree, and QuickBooks, along with the necessary support for Lotus 123 spreadsheets and WordPerfect for word processing (applications costing $500 per license back then).

After six years of leading the IT adoption in the firm, it became obvious that networked personal computers and the internet were the future of business, and I was made a partner tasked with overseeing the firm’s IT and administration. As a partner, I participated in IT Director peer group meetings and became known as a “fixer,” helping other firms implement accounting technology.

This opened the doors to my current role as an outsourced IT consultant to accounting firms, which I have focused on for the past 25 years, working with more than 400 CPA firms, including 30 of the AT Top 100.

Traditional vs. Modern Accounting

Accounting technology has changed a lot since that time. Still, I would like to highlight some of the more significant changes that occurred as a retrospective and appreciate how cloud hosting services have dramatically improved modern accounting!

Tax Processing

From Busses to Real-Time Updates via Cloud

35 Years Ago Today
When I started working, we prepared tax returns by completing “input sheets” to be physically bussed to California to be processed at a data center and then returned via bus a few days later as hardcopy printed returns.

Today I cringe to think of all the client personal data stuffed into paper envelopes in a canvas bag and “secured” with all the other baggage making multiple stops on its trip out west.

If there was a significant error in a return, the entire process would have to be repeated, sometimes taking weeks to complete a single return. If the errors were minimal, we utilized “white-out” to paint over the incorrect amounts and pulled out a typewriter to manually fix the return … really!

Cloud hosting solutions create one, live environment for tax, accounting and related applications. This lets accountants and their clients access data in real-time, from anywhere.

All tax applications and data are live and accessible remotely so returns can be processed, reviewed, finalized, and delivered digitally and securely in minutes!

Tax Research

From Libraries to Links in Cloud-Hosted Applications

35 Years Ago Today
Most firms had a physical library to conduct tax guidance and audit research via a wall of physical binders lined up on the shelf.

There was an assigned librarian responsible for taking the monthly packets of updated pages mailed to the firm (which could be in the hundreds) and opening the appropriate binder to remove outdated pages and replace them with the current guidance. Sometimes a partner would take the binders back to their desk (or home), and no one else could access that guidance until the binders were returned!

To alleviate that, we set up dedicated tax research computers in the library that utilized a “CD-tower,” which was eventually networked in the office (and was only as current as of the last time someone remembered to replace the CDs.)

In our remote era, an in-office library would never work. And between modern accounting and tax applications to cloud hosting, there’s no need for it. Most applications these days come standard with helpful links in-product.

The most current and up-to-date tax research and recommendations are available to all firm personnel via the cloud and even from links within the tax application itself!

Get our list of hosted applications, software and tools here.

Monthly Accounting

From Delivering Floppy Disks to Live Collaboration in the Cloud

35 Years Ago Today
Clients would deliver manual check registers and bank statements to be “keypunched,” or if they were using accounting software (i.e., QuickBooks), they would bring in floppy disks for CPA staff to access and do bookkeeping with.

Monthly work was manually prepared and returned to the client a few weeks later with all of their source documents.

While clients evolved to using flash drives and even digitally sending the “Accountant’s Copy” of their file to the firm, both could not work on the file at the same time.

Cloud hosting allows for real-time access to the data securely from any authorized user. Accountant and client can collaborate live, making the entire process more efficient (and leaving less room for error.)

Accounting Report Output

From Dot Matrix Printing and Mailing to File Sharing in the Cloud

35 Years Ago Today
Everything was delivered on paper, and dot matrix printers were the standard, with most reports printed on wide “green bar” paper with perforated lead holes that could also be used to bind them.

During that time, I served on the AICPA’s Top Ten Technologies Task Force, where we listed “Laser Printers” as the #1 technology that would most significantly impact firms as it would allow the delivery of “client-ready” documents.

There is still a significant amount of printing occurring in firms for legacy reasons.

However, the built-in efficiency and cost savings of publishing documents digitally or allowing direct access to the information via the cloud application has become the profession’s standard, saving significant time and money.

See how much money your firm could be saving using our cloud ROI calculator.

Workstation Setup and Support

From Manual Software Installation via Floppy Disk to Automatic Software Updates in the Cloud

35 Years Ago Today
Whenever a new computer was purchased (and we often bought ten at a time), they would have to be lined up in a room and stack 15-20 floppy disks with all the various software applications manually loaded in an assembly line fashion.

If one of the disks failed, we would have to restart the loading or, in the worst case, get new disks. When we received updated versions of software, the process had to be repeated, and if people had different versions within an office, there were incompatibility issues and sometimes the corruption of files.

The majority of application upgrades happen in the cloud, so when firm personnel connects in the morning, they access the most current version.

Let me repeat: Those application updates that are often ignored (even though they contain critical security patches and bug fixes) become automated in the cloud. No more in-product update pop-ups. Cloud users simply log into their software, then get going.

Any local workstation updates happen in the background or automatically when shutting down.

IT Strategy and Budgeting

From “Guess-timate” Projections to Fixed Cost Budgeting with Cloud Hosting

35 Years Ago Today
When I first started doing IT consulting with accounting firms, the majority of time was spent putting together network design specifications capable of accommodating the growth the firm was projecting over the next five to six years.

This included detailed design proposals and budgets, which could quickly become obsolete when there was a surge in growth or a new technology required that required technical skills that we did not have internally.

From an IT strategy planning perspective, the cloud has been phenomenal as the number of users can be easily scaled up or down as needed at a fixed cost. There is no longer a need to have an internal network administrator as all the network support.

Maintenance is included with most reputable cloud hosting services, as well as 24/7/365 security monitoring, which most firms could never afford doing on their own.

Accountant Mobility

From Car Phones for Calls Only to Smartphones for Accessing Cloud-Hosted Software

35 Years Ago Today
The first mobile phones arrived during that time and had to be installed within your car to take advantage of the larger battery and a hard-wired antenna. Many accountants also carried pagers so they could be reached when not in the car.

For remote access to the firm’s network, computers could be equipped with dial-up modems. I actually utilized a Konnexx Konnector and services such as AOL and CompuServe for remote access and had a US Robotics Palm Pilot for my calendar and task list!

Internet connectivity is ubiquitous. Phones don’t just make calls; computers aren’t just internet-connected word processors.

Today’s 4G and 5G smartphones have the capability to access virtually all data that is in the cloud and to provide secure internet connectivity for accountant’s remote workstation. And when using cloud hosting services, traditional desktop applications can also be accessed via cell phone, with no change to your experience.

For example: Let’s say you need to make an update to a QuickBooks file ASAP (but you just stepped away from the office for another meeting.) With QuickBooks hosted in the cloud, you can log into QuickBooks Desktop via Right Networks on your cell phone, then make the file edit. The updated file is now ready for review. Simple as that.

Celebrate Your Staff on International Accounting Day

In many respects, accounting technology has gone full circle in that the external data centers that many firms utilized for complex volume processing thirty years ago have been replaced with today’s cloud environment that takes full advantage of current technological opportunities.

Cloud hosting services that focus exclusively on the accounting market provide superior support, accounting application performance, accessibility, and security over the internal infrastructures that firms had utilized during those middle decades.

Celebrate your staff this international accounting day by making their (and your) jobs a lot easier. Review our QuickBooks hosting packages, our Drake and PCG cloud hosting plans, or our fully outsourced IT solutions today.

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