Adding Value to the
BY WILLIAM L. REEB, CPA AND MICHAELLE CAMERON, PhD
n extraordinary opportunity is before us. We are now considering a credential that adds enormous value to our profession. Its holders can be characterized as rooted in strategy, facilitators of organizational change, savvy in performance measurement systems, entrepreneurial in nature, globally aware and grounded in knowledge integration. They will have the skill and experience to help convert information into knowledge, which in turn will help create wealth for their clients and employers.
The new credential represents a broad range of disciplines, including accounting, law, information technology, consulting, marketing, human resources and several other essential business-support areas. Interdisciplinary in scope, the credentials foundation of integrating systems, processes and knowledge to transform organizational vision into performance is not only highly demanded by the marketplace, but also a compelling distinction for its holders.
The proposed credential has been carefully and intentionally devised as separate from the CPA credential in order to:
Best meet the needs of our diverse profession;
Claim a highly active, lucrative and currently unclaimed market space;
Preserve and protect the integrity and services of the CPA;
Create a credential that can adapt swiftly to global market demand and change;
Allow its holders to move and provide services seamlessly across international borders.
To obtain a clearer perspective on the intent of the credential, we need to understand the visioning process.
A GRASSROOTS VISION FOR THE PROFESSION
Lets start a few years back when an unprecedented, joint project between the AICPA and state CPA societies was conducted to create a new vision for our profession. The Vision project was a grassroots effort to determine what direction CPAs wanted the profession to take, what CPAs of the future would be like and what qualities they needed to successfully compete in the marketplace of tomorrow. This process was all about dreaming, about imagining the future by soliciting ideas from CPAs all over the country. Its important to remember that we, CPAs, created this Vision and the credential is a path to getting there.
The clear message from the visioning experience was that CPAs enthusiastically supported chartering a new direction for our profession; one that continued to increase the value we provide to clients and employers through expanded services and competencies. Our new value chain is outlined in our Vision Statement:
FROM DATA TO KNOWLEDGE
Before we delve into the significance of this mission, we must consider the information value chain. First, business events create raw data; those data must then be organized into information to be useful. Information must be analyzed, then synthesized and managed so that it can be transformed into knowledge. And knowledge is the foundation of good decision-making. This data evolution is in line with our mission statement and defines how our profession aspires to deliver value.
CPAs have been in the data-gathering and presentation business for a long timeand we do it well. But now a new opportunity is before us. We are challenged to push our competencies and services beyond information analysis to help organizations harness knowledge. This means that we need not only to better communicate information, but take it to a higher level by transforming it to knowledge. Then we will be primed to help those we serve by anticipating and creating opportunities and designing pathways that transform vision into reality.
The Vision statement is more than just words. It changes our focus to generate value by leveraging our fact-finding, synthesizing, and analytical abilities. We are challenged as a profession to stop watching from the sidelines, hoping that our employers and clients will know how to best use the information we bring to the table.
The Vision directs us to push our own limits and move from the data-to-information to the information-to-knowledge business. By accomplishing this goal, we not only will remain a premier resource to business, but we dramatically improve the positioning of our profession.
A recent independent research report indicated that knowledge services, such as strategy, commanded the highest average fee/hourly rate ($575 per hour) while financial advisory services garnered the lowest rate ($125 per hour). To be clear, the financial advisory work was defined as budgetary and financial preparation, not performance measurement, analysis and other higher-priced services. This gap in what organizations are willing to pay for information versus knowledge services will continue to expand as technology replaces lower-end services with automated solutions. It is evident that our brave new direction harmonizes well with marketplace values.
ASCENDING THE VALUE CHAIN OF SERVICES
How do we transform ourselves from information to knowledge professionals? We certainly dont just wave a magic wand and declare that our services are of higher value. We must support this value chain with tools, market awareness, education and resources. The new global business credential provides these elements and is in line with the core services identified in the Vision process.
Our members are known for their excellence in delivering the identified financial services. And CPAs own a franchise for certain levels of assurance. It is easy to stretch the CPA brand and sell our positioning as providers of choice for current and new assurance and information integrity services. This continues to be the most active area of service expansion since the Vision was conceptualized.
In the technology arena, Extensible Business Reporting Language, or XBRL, is an example of how CPAs are using technology to facilitate the flow of financial information. In fact, the CPA profession has taken a leadership role in bringing XBRL to the marketplace. Additionally, the Certified Information Technology Professional (CITP) credential also demonstrates the expanding IT competencies of CPAs to employers and clients.
After considering the services targeted by our Vision, the next step is clear. We need to formulate initiatives to take a lead position in claiming the market space surrounding Management Consulting and Performance Management and International Services. And this is what the new credential was designed to do.
THE GLOBAL CREDENTIAL CONCEPT
Key questions influencing the development of the new global credential are:
Do CPAs currently possess the competencies to compete in the global, knowledge- and technology-driven marketplace?
How do the buyers of these services perceive the CPA profession relative to this market space?
Are CPAs the dominant service providers in this market?
Is the profession poised to react quickly enough to the ever-changing market demand this service arena necessitates?
To the first point, CPAs certainly possess the competencies outlined in the global credential as many of our members have been practicing in this market space for years. Consider our industry practitioners. The expanded role of many CFO positions encompasses the space defined by this new credential. Of the roughly 336,000 members in the AICPA, some 160,000 practice in industry. This means that many members already possess the competencies defined by the new credential.
Another way to look at it is that about 40% of AICPA members practice in public accounting, and only about 38% of those firms still perform our franchise service (audit work), which conservatively represents around 15% of the profession. This means that about 85% of our members currently practice in other than our franchise area.
How many CPAs practice in the space defined by the new credential? We estimate several hundred thousand, although we dont know for sure. Regardless, significant numbers of CPAs will benefit from the additional credibility and greater market awareness that the new credential will create in a highly competitive and profitable marketplace.
THE CASE FOR AN INTERDISCIPLINARY, GLOBAL FOUNDATION
One often asked question is, If this new credential earmarks such great opportunity, why not limit it to the accounting profession? While this sounds like a great idea, it is not very realistic. The market space represented by this credential is not barren. Many professionals from different disciplines are currently providing business consulting and strategic advice to their clients and employers. Some of these include CPAs, lawyers, management consultants, IT professionals, human resource consultants and others, each of whom brings valuable skills and experience to the table.
It would not be credible for CPAs to exclusively claim this market space and exclude qualified professionals from other disciplines. If we exclude others, the perceived value and credibility of the credential would be diminished. Individual CPAs, because of their specific skill sets, have been given access to this marketplace. But our profession, as a whole, has no unique claim to it. Therefore, to achieve the Visions directives, it is logical for us to define the competencies, skills, ethical standards, performance standards and ongoing educational requirements of the new credential while welcoming other professionals to join. This makes far better sense than allowing another profession to take this innovative move and siphon off our membersfurther fragmenting our profession.
Another concept related to our image and stretching the CPA brand is one of fiduciary responsibility. While our profession has chosen a clear direction, not all CPAs have individually decided to expand their services in line with the Vision. Even if we could stretch the CPA brand far and fast enough to include the space defined by the new credential, not all CPAs may want to assume a new set of competencies. Therefore a separate credential, where the ground rules and conditions are designed by the accounting profession, works best to meet the diverse needs of all our members.
A logical next response is, If we added this new credential as a CPA specialization, not everyone would have to live up to it. First, this argument easily sends us into a vicious cycle. There also are two other reasons this approach is less than appropriate.
To start, several thousand CPAs hold the specializations we have now. These specializations represent narrow areas of practice in which a small percentage of our professionals participate. We expect tens of thousands of CPAs to participate in the new credential. The scale and scope are different, and therefore the amount of support required is different.
The second reason is based on logic. Business valuation and personal financial planning are examples of accounting specializations. Providing broad-based business strategic advice is not. It would be the equivalent of all doctors becoming radiologists and then specializing as general practitioners. Because our profession has taken a narrow set of competencies (accounting) and successfully expanded into all aspects of business, we have a unique situation. In essence, accounting is logically a specialty area of business management. Using the specialization model currently in place, we would be trying to convince the buying public that business management was a specialty area of accounting, which clearly is a flawed concept.
Introducing the new credential gives additional credibility to CPAs doing nontraditional work without forcing all CPAs to embrace an additional set of skills. By allowing nonCPAs who qualify to participate, we will create the highest probability that this credential will gain the market acceptance necessary to make it truly valued. And the fact that the accounting profession is driving and controlling this initiative should give CPAs a competitive edge as early adopters, and leverage an opportunity to dominate this area of the market.
There are several other important issues driving this concept. All CPAs are intimately familiar with the fact that each state board of accountancy controls the CPA credential. Because of this 54-jurisdiction control rooted in legislation, it is virtually impossible for a stretched CPA brand to be nimble enough to survive in the dynamic marketplace. Just consider the four-year effort (not yet complete) to create uniformity throughout the United States (Uniform Accountancy Act). It is possible that some state boards of accountancy would not consider the education requirements for the new credential as valid CPE. In other words, legislation and bureaucracy would limit the potential success of the credential.
Why is the global aspect so important? Consider the findings of the Vision project. Providing International Services was deemed one of the top five core services required by our profession in the next decade. Additionally, one of the top five issues facing our profession was that, The marketplace demands that CPAs be conversant in global business practices and strategies. As business transforms into e-business, todaysand especially tomorrowsclients and employers will likely hail from all over the globe.
A COMPLEMENTARY AND VALUE-ENHANCING CREDENTIAL
How will this new credential coexist with the CPA credential? Simply stated, CPAs will be the first to have access to this credential, which should translate to expanded opportunity. Regardless, the CPA will continue as the premier accounting credential and retain significant value in the marketplace. We are not talking about co-branding. We are talking about each brand, both the CPA and the new credential, having its own unique value and perception in the marketplace.
The new credential is not meant to diminish the value of the CPA, but to enhance and expand on it. And it wont compromise the high ethical standards of the CPA profession because: 1) those same standards will be the foundation for the new credential, and 2) as a CPA and holder of the new credential, you will have to uphold the ethics of both.
Another issue to consider in creating a new credential is brand failure. Although no one wants to dwell on the fact that this effort can fail, the reality is, it might. If failure means market rejection (the market places no value on the credential), then the credential would just die a slow, obscure death, with virtually no implications. If the credential fails because of the quality of service deliverythe marketplace embraced the credential, but was disappointed in its valuethen we have a different problem. In either case, the answer is still the samethe credential fails; but in the latter it goes down with higher visibility.
This possibility actually gives weight to the strategy being used, which is to create a separate interdisciplinary professional credential. Conversely, if you stretched the CPA brand into this same credential space, and our profession couldnt deliver, the credibility of the CPA would suffer. However, in this scenario, the fact that numerous professions couldnt combine to deliver value in this new market space would be a disappointment, but likely have little impact on the separate and uniquely distinct CPA credential.
Research has shown that brand extension does not create high risk for the original brand. Here is an example similar enough to provide insight. Sears Roebuck & Co. has a long history of creating separate and highly successful brands. Consider the companys launch of Allstate Insurance Co. back in 1931. Sears leveraged its successful brand, which was synonymous with quality and trust, to expand into the burgeoning insurance industry. In fact, the name Allstate was taken from a Sears line of automobile tires. By placing Allstate sales locations inside Sears stores, the company showed its belief and endorsement of this new insurance product, while remaining separate in the minds of consumers. Sears was happy to leverage a shoppers positive experience to offer another service, knowing that a negative experience with Allstate would result in the users attributing the experience to that specific brand and not to Sears. Had Allstate failed, it would have had virtually no impact on shoppers loyalty to the Sears brand.
THE RIGHT DIRECTION AT THE RIGHT TIME
To summarize, the new credential is not an independent, disconnected initiative. When the Vision Project was created and adopted by our profession, the AICPA and every state CPA society faced the same dilemma: How can our profession get from where it is now to where we identified we need to be? The new credential is an initiative to quickly brand and leverage unclaimed market space in which many CPAs are currently operating.
Obviously, we dont want to, and cant afford to, jeopardize the services delivered by those who practice in the CPA franchise area. However, we also cant afford for the franchise area to limit our ability as a profession to attain the aspirations inherent in the Vision. The solution, which has been absolutely supported by unbiased research, is to stretch and enhance the image of the CPA while simultaneously branding a market space with a footprint broad enough to fill the shoes of the Vision-identified competencies.
The new credential will create market opportunities, complementing and reinforcing the CPA credential. A body of knowledge not traditionally associated with CPAs will be brought more securely and clearly into our professional domain. Supporting this new credential will be a bold and innovative response to a new world of opportunity. By transforming our Vision into this reality, we can embrace the past, create synergy for those currently within the profession, provide an avenue to attract the best and the brightest to our profession, and demonstrate the value we provide by delivering more wealth creation services.
WILLIAM L. REEB, CPA, is a shareholder in the CPA and consulting firm of Winters, Winters and Reeb. An award-winning author and lecturer, he is also VP, CPA Network at CPA2biz, chairman of the AICPAs Consulting Services Team, a member of the AICPAs Strategic Planning committee, chairman of the TSCPAs Technology Oversight committee and a member of its Strategic Planning committee. MICHAELLE CAMERON, PhD, is the chairman of marketing at the Graduate School of Management at Saint Edwards University in Austin, Texas. She earned her PhD in marketing from the University of Texas, Arlington, and her MBA in accounting from the University of Texas, Austin.