CPAs, whether in public practice or in industry, face a dizzying array of technological choices as 2012 approaches. To help everyone prepare for the year ahead, the JofA gathered the three technology keynote speakers from the AICPA’s 2011 Practitioners Symposium/TECH+ Conference to discuss the hottest tech topics in the accounting industry. The nearly 90-minute conversation covered a wide range of technical issues critical to all CPAs.
Participating in the call were:
David Cieslak, CPA/CITP, aka Inspector Gadget, a principal with Arxis Technology.
Randy Johnston, executive vice president of both Network Management Group Inc. and K2 Enterprises.
Rick Richardson, CPA/CITP, founder and CEO of Richardson Media & Technologies.
Moderating the call were:
J. Carlton Collins, technology and accounting systems consultant and author of the JofA’s monthly Technology Q&A column.
Jeff Drew, senior editor covering technology for the JofA.
Following are edited excerpts of the discussion about software and hardware trends, security issues, social media and video. In the November issue, we excerpted parts of the discussion about mobile technology and cloud computing (see “Technology 2012 Preview: Part 1,” Nov. 2011, page 46). For a longer version of the forum, including an online-only excerpt discussing tech-based revenue streams, and audio clips from the conversation, go to journalofaccountancy.com/tech.
SOFTWARE TRENDS FOR 2012
Drew: Let’s talk about some of the key software opportunities going into 2012. What is available or coming out that the CPA must have or that might be overlooked or underutilized?
Cieslak: The cloud is probably going to heavily influence any of the new software offerings. I think we’re going to find some new vendors popping up on the scene with some innovative stuff, and quite honestly, some of the more long-standing vendors, if they’re not going to be coming out with cloud-based offerings, may very well find themselves at a competitive disadvantage.
The other thing I think we’re going to see, and this will continue to push our imagination and the envelope at least for the near term, (are) the apps for some of these portable devices. So you think about the app stores that have popped up around all the different tablet devices. Literally, most of these applications (and) many of these vendors didn’t exist two years ago, and today they’re moving thousands, if not tens of thousands, of copies of a neat application that they’ve written. And as we see more and more of that that’s being targeted or developed specifically for the financial community, that will continue to help us move on down this road together.
Richardson: The one thing that I think a lot of CPAs don’t think about as much is workflow itself and this tailoring of the workflow to the practice or to a certain CPA practice model. We’re going to see more and more software offerings targeting that specifically. Some have done it in a more traditional way and migrated it to the cloud, in the case of things like Thomson Reuters or CCH, and other companies, like this new Xero, (offer) incredible opportunities to take what we do and get it digitized into a format that provides for easy access anywhere and far more control and basic quality on the data we’re working with.
Having said that, I think the apps are where things are today. One of my absolute all-time favorite apps is called Siri, which was originally developed out of a DARPA (Defense Advanced Research Projects Agency) government research project as an intelligent assistant. [Apple bought Siri in April 2010 and incorporated the technology into the iPhone 4S, released in October.] And while it tends to be used for things like finding the best restaurant close by or ordering a cab in New York, I don’t think it’s going to be too long before we start seeing companies targeting a system-type product that can, in fact, provide us with other types of things that we never thought we’d be able to have at our fingertips, that are professionally based. The ability to have kind of that info guru at your shoulder would be exciting, and I’m hoping we might see some of that in the next year or two.
Drew: Randy, did you want to chime in on the software?
Johnston: Let’s pick on three or four or five different software products. Concur (Breeze) expense reporting (is a) cloud-based mobilized app that runs on an iPad and an Android system and an iPhone and so forth. I think that we’ve got products like Rick cited. The Xero accounting product might be a good one. I think we’ve got to think a little bit here for the coming year about the traditional Windows operating system likely to arise in the new Windows 8. And as I look at how Office 365 extends the way we use Microsoft Office, or in some cases replaces the way we use Office, that’s a pretty interesting one.
Likewise, as Rick cited with workflow, there are not only the traditional ones, but there are the SaaS (software as a service) ones, like XCM. There are the new ones that are evolving, like Workstream, and there are also other products that will be specifically written for certain functions inside the business or the practice, and you need to continue to watch for those as well.
So I think one closing software thought is that simple products, like a Netfira, which automatically does supply chain (management) from QuickBooks or Peachtree all the way up to SAP, could be interesting, because the model is monetized on a very simple basis when an actual transaction occurs, but it gives us exposure to real-time inventory all the way up and down our supply chain. We’ve not had some of these things before, and our rule of thumb is, when the economy is bad, that’s when development occurs; and you’ll see a lot of new innovations, not only from the big players, but from small startups.
Collins: Security continues to rank high in the minds of many CPAs, and most CPAs are running anti-virus software. They have their firewall devices up and running. They enforce password logins everywhere. But yet, they’re still sending their email across the Internet naked and wide open to the public. Randy, what’s the best way for CPAs to lock down their email from prying eyes, and can you recommend a few specific products?
Johnston: I’ll respond to that with three products today that I think are reasonable choices. Probably the most popular is Zix- Corp out of Dallas. They’re certified for use by the FDIC in the banking industry. Another one that I’ve liked is a product called the Secured-Accountant. And a third one that is good is CPA SafeMail. So there are three examples, but let’s give you one more. We can do something a little more complex, like use the secure email on PGP, but that’s more clumsy. We’ve got to have a product that is simple to use not only for the CPAs themselves, but the recipients of these, whether they’re clients from the CPA firm or customers from an industry business. So using encrypted email is really critical, particularly if you can’t get clients to use secure portals.
Collins: Rick, what’s the biggest security threat out there for CPAs?
Richardson: I want to go back to that secure portals comment of Randy’s, because I think a lot of CPAs still think that they can use email, even if it is secured, when they should be thinking far more about the ability to have a secure portal and that their clients begin using that secure portal for both upload and download of sensitive information.
In terms of exposure, I really think the issue’s going to come down to somebody either losing or having a competitive advantage lost as a result of a competitor obtaining data that a CPA just didn’t properly husband. And when that happens ... a lot of people within the profession are going to say, “Gee, we really need to be far more articulate about how important (the) trustworthiness of this data becomes.”
And again, coming back to the portal, it provides not only a solution for the storage side of life, if you tie it into a cloud service, but (it) provides that secure service in terms of its encryption up and down the communications channel.
Collins: Dave, which solution do you recommend for encrypting a hard drive on a laptop?
Cieslak: I say that every business machine today quite honestly should be running Windows 7. I should maybe couch that and say, if you’re running Windows, then Windows 7 should definitely be the version that you should be running. It’s got its own built-in drive encryption technology. It’s important to Microsoft that the data be secure on the system, so they’ve got their BitLocker product, and that’s going to support not only the hard drive, the built-in hard drive, but it even also now supports removable data with their BitLocker to Go. So we like and we use the Windows 7 BitLocker.
But if you’re looking for maybe a free, open-source solution, we’ve got a number of clients using and very happy with the TrueCrypt product. So that’s free, it’s open-source, and it’s going to support Windows. It’s going to work actually in a variety of environments, so we really like that as a good encryption tool as well.
And then, finally, what I would tell you is that some of the new drives that we’re seeing are actually self-encrypting or hardware encrypting. And so if you’ve got that opportunity, you’ve got that option, that may very well be something you’d want to consider directly. That way, you’re not experiencing some of the overhead, some of the drag on the hardware, because the hard drive itself is taking over that task for you.
HARDWARE TRENDS FOR 2012
Drew: What are the key hardware trends CPAs need to watch going into 2012? What should they be looking at buying?
Cieslak: We still think that the notebook computer continues to play a role, especially for those people who have more of a data-entry or a more heavy data-interactive aspect to their job. So we hardly see (notebooks) as dead and gone. We’re suggesting solid-state drives, because they’re definitely fast and less prone to failure. We like not only Windows 7, but Windows 7 64-bit, so we also recommend more RAM to go with that. USB 3.0. So just a number of the newer technologies. There are some real solid devices where that’s starting to show up, all in a nice unit. Things like the Lenovo ThinkPad X220, a great product.
We still are seeing far too many end users who are struggling with single monitors, or maybe even two, and we’re suggesting to most folks now three monitors as a minimum, because as we think about really interacting with our data, a lot of it just comes down to how much can I see at the same time.
And then finally, I know I’ve been beating the drum pretty hard on tablets today, but I would say that if you don’t own a tablet, get your hands on one, start to understand it, start to interact with it.
Drew: Rick, do you have anything to add?
Richardson: Now is certainly the time to get into the mobile market, if you haven’t been in it, whether it’s (a) smartphone or tablet. And while you’re talking about $400 or $500 or $600 for a device, the amount of personal interaction, the value that that has in terms of understanding how that might be used in the practice, is invaluable.
Secondly, I would use the next two years as a time frame to really get current on my desktops and laptops. When I say get current, there’s still a bunch of us out there using XP, and everybody needs to be on Windows 7. And I suspect that when Windows 8 comes, you won’t even be able to get to it if you aren’t at 7 to start with. So that also becomes a point at which getting to Windows 7 makes more sense when you buy the new box anyway.
But if you’ve got a number of laptops that are already running Windows 7, get some more life out of what you already have rather than looking to buy a lot more in the way of hardware. This next two-year time frame is going to be just an absolutely incredible watershed of change, and if you’re ready for what’s going to be offered by the market, I think you may be in better shape than if you just say, “Well, let’s go out and get those other 40 machines now,” when it might be a little early to do that.
Drew: Randy, any hardware you’ve got your eyes on heading into next year?
Johnston: Things to watch for are smaller, lighter. So that could mean tablets. That could mean a mobile computer. And unfortunately, cheaper and lower quality is also pretty high on my radar. We’re seeing exceptionally large numbers of hard drive failures, so that’s something you have to protect yourself on. We’re seeing reduced quality in some of the monitors that are being sold. The other hardware trend to really watch is (to) think real carefully before you replace your infrastructure, your servers and your SANs (storage area networks). Some of you need to do that because you’re going to wind up with a private or hybrid cloud. Some of you need to really push the envelope a little further into the cloud-computing model because that’s the right solution for you. But don’t just do what you’ve done. If you keep doing what you’ve always done, you’re going to keep getting what you’ve always got. And I believe that this is a pretty radical time period of business strategy shift, and you need to think about business goals that you’re trying to accomplish before you purchase that next round of technology, because this is a great time to make the shift.
Collins: Dave, what recommendations would you offer CPAs who are not active with social media, and what compelling reasons can you offer for giving it a try?
Cieslak: My answer is quite simply: jump in. I think a lot of traditional and longtime CPAs don’t really understand (social media). You know, we’re in a relationship business, and we want to be able to shake hands and look people eye to eye.
But really, social media’s just one more way that we’re able to connect and to uncover opportunities. So I think it’s not a replacement, I think it’s in addition to the rest of our marketing efforts. So I really do look at social media and say it’s a key piece. And honestly, it’s the way that the next generation is already not only comfortable, but the way they want to do a lot of that initial discovery work, a lot of that initial awareness and information and fact gathering.
Social media does a lot of things for us. It gives us an opportunity to distinguish ourselves as subject matter experts. So I always tell folks, if you’re going to set up a Twitter account, then make sure you Tweet. Don’t just set it up and kind of poke at it for a little bit and then abandon it. Do it, and do it with an active strategy to Tweet regularly and distinguish yourself as someone who is a subject matter expert. People want to hear from you. And along those same lines, don’t set up an account and just regurgitate what someone else has to say. If I want to hear what someone else has to say, I’ll subscribe to their Tweets, to their Twitter account. I’m subscribing to yours because I want to hear what you have to say.
And I know I’ve picked on Twitter, but LinkedIn, I think, is a key part of this. Google+ is a brand-new offering, and it looks like it’s got some real potential. So before you just dismiss social media as nothing more than Facebook and a waste of time and something you do personally, I think, again, you need to look at it in a new way and look at it as something that supports or complements your existing marketing strategy.
Collins: Rick, which social media solutions do you actually use, and can you give me one example of how it’s benefited your organization?
Richardson: I’m on LinkedIn, Plaxo, Facebook and Google+. I’m not on Twitter, and I tell people that I just don’t like being followed.
I got my first engagement six months ago from LinkedIn. I think the company that hired me knew of me before that, but they actually found me using LinkedIn. I was quite flattered when they did contact me, and it turned into a nice engagement.
Collins: Randy, do you think that a CPA firm, or a CPA in a company, for that matter, should create its own social media page for its organization, or should it just rely on the social media pages created by the individuals within the organization?
Johnston: I have a pretty strong opinion on this, having been coaching people through the process for some years. I believe it is wise for all individuals to have their own pages, and I believe it’s also wise for businesses, whether it’s a CPA firm or an industry business, to have their own page, often monitored and maintained by the marketing department. There are a number of tools that we believe should be used together, and you do need social media content on your Web page to do the best possible placement with search engine optimization. So having RSS feeds and YouTube videos, just to name two, on your Web page can make a huge difference with search results. But we’re equally as concerned about having a social media policy. So just like we want an Internet policy or a mobile phone policy or records retention policy, we’d like to have a social media policy as well.
Drew: What’s new or will be new next year in the area of video technology?
Richardson: Two things. One, I think we’re going to see a lot more use of videoconferencing than we have in the past, and I don’t think it’s going to be limited to talking heads. What do I mean by that? Given the fact that we now have the ability to, in most of our smartphones, have two cameras, an outward-facing camera with a pretty high resolution and an inward-facing camera with a smaller resolution, imagine the ability of a senior that’s out in the field doing a video call with a manager in the office or at another client wanting to go over either electronic workpapers—or maybe it’s an inventory issue—and he just takes the phone out to the warehouse and shows the manager what he wants to show him. I think that ability is going to create marvelous opportunities to collaborate person to person in ways we haven’t been able to do in the past.
The second thing is at home, and I think within 18 months we’ll see large-screen televisions with the smarts of today’s tablets or super-thin notebooks plugged directly into the Internet, and maybe even operated with the same operating system that the tablet has, either iOS or Android, and really get us to the stage where everybody’s been talking in the past about plugging something into the local TV. I think we’re just going to find the TV itself is going to gain its smarts, maybe even to the extent that you don’t touch the TV at all. You (would) actually do this much like you can do with Kinect or with the Wii and be able to have a gesture recognition from a camera that sits at the base of the television.
Johnston: I agree with Rick in terms of the increased use of video. We’re already seeing it in our consulting practice this year. There’s an interest in more desktop conferencing, and we think higher definition, even on the desktop, will get a little more play. Additionally, the quality of the video seems to be moving up, and our expectation is that 4X (or 4K, which refers to a resolution of 4,096 x 3,072 pixels, or about four times the quality of today’s high definition) will begin to arrive across both the Windows and the Mac platforms, and we suspect it’ll come across on the Linux platform as well. Probably the best way I can help position this is, just think about your cinema experience of attending an IMAX theater in 3-D, how that movie market is maturing. The 3-D experience is not as hokey as it was. It’s more realistic. And I think we’ll start seeing a lot more realistic use of this type of 3-D technology.
Cieslak: Another trend that we’re seeing—and I think video definitely is going to be a part of this, too—is persistence across units. I think what we’re going to see more and more going forward is, if I’m on a call and I want to flip over to video, then there’s enough smarts in the television that it’ll say, “Oh, wait a minute. I see that you’re on this call on your cellphone. Let me go ahead and let you continue that conversation and bring video into the mix.” Or if I’m moving from my phone to my tablet or my tablet to my PC and so forth.
So I just really look at video as just another piece of that puzzle, and I’m looking for this kind of ability to move between devices with some kind of awareness between the devices of what we’re doing and then really allowing us to do even more grab and go than we’re already doing today, with some consistency in the user experience across these devices.
As we’ve kind of looked at technology, even in the last 12 to 24 months, I think we’ve all kind of universally agreed that it’s as much fun, if not more fun, today to be in the technology space than it’s ever been. So I’m really excited to see what still lies ahead.
Jeff Drew is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact him at firstname.lastname@example.org or 919-402-4056.
For a longer version of the transcript, including an online-only excerpt discussing tech-based new revenue streams, and audio clips of the conversation, go to journalofaccountancy.com/tech.
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