Imagine you’re a CPA from 100 years ago who’s just been zapped into 2005. Would you understand even half of the technology the profession now uses to conduct business? Probably not. But that’s just a fantasy, you might say.
Well, think again. Today’s lightning-quick rate of technological innovation could turn you into a dinosaur in no time. That’s because the interval between once-new technologies and their more advanced successors has been shrinking rapidly (see “ Sooner Than You Think ”). As a result it’s easy to fall out of touch. This article will show you what to focus on today and in the near future.
“While technology’s impact on the profession has been considerable, it doesn’t come close to what’s ahead,” says Dana R. (Rick) Richardson, CPA/CITP, president of Richardson Media & Technologies LLC and former national director of technology for Ernst & Young. “CPAs must be technologically proactive so they can help their clients anticipate change and manage technology to their advantage.”
Note that being up to date doesn’t mean you reflexively implement new products as soon as they’re released. Aim instead to develop a clear understanding of whether the latest developments can satisfy the business needs of your clients, your firm or your employer. A tech-savvy, discriminating CPA can be a client’s most valuable adviser.
WHAT SHOULD YOU BE USING NOW?
The following products are reliable, affordable and available. CPAs should consider what these technologies have to offer.
Voice over Internet Protocol (VoIP) and other new telephony services are catching on as companies see the benefits of switching their telephone systems from wired to wireless. By transmitting calls via the Internet rather than phone lines, VoIP offers two advantages: low cost and high efficiency. VoIP call charges are a result of open-market competition, unlike the higher, heavily regulated rates for traditional phone services. And new products, such as computer telephony integration, boost efficiency by passing information seamlessly from a telephone to a customer service representative’s computer. Regardless of whether you’re planning a smaller phone system for an office or a larger one for an entire organization, a VoIP system will cut per-call costs and reduce reliance on hardware that must be replaced periodically.
Paperless technologies are an increasingly common feature of every accounting system. Some applications eliminate data entry by scanning invoices. Others reduce dependence on paper in public accounting firms’ tax and audit operations. And many paperless systems are inexpensive enough to be deployed in small or home offices. The cost benefits and speed and ease of retrieving, storing and backing up critical data and documents will ensure the continued growth of this technological trend.
Videoconferencing disappointed many organizations in the past because it was complicated to use and expensive. But today’s systems are user-friendly and have convenient tools. They’re economical, too, because they communicate inexpensively over the Internet instead of over costly dedicated phone lines. If you’re looking for an effective way to minimize staff travel without impairing teamwork, the expected reductions in the cost of this technology may move you to implement it sooner rather than later.
XBRL is coming of age. The eXtensible Business Reporting Language makes it possible to collect and exchange data between systems over the Internet without rekeying. Many products, such as Microsoft Office and much accounting software, already are XBRL-compatible. Also, there are several software applications designed specifically for creating and using XBRL-formatted documents ( www.xbrl.org/productsandservices ). CPAs should encourage and help their employers and clients to implement XBRL if they frequently exchange data among multiple systems.
Storage area networks , or SANs, are high-speed networks that connect large-capacity data storage devices with powerful computers serving communities of users. Companies are rapidly implementing SANs to ensure they have enough storage to support their video- and audio-recording processes, paperless initiatives and the vast quantities of electronic files they often produce. CPAs will find that as business-related use of scanners and digital cameras proliferates, their employers’ and clients’ need for SANs also will grow rapidly.
High-definition digital video disks and Blu-Ray disks make up the latest generation of rewritable optical media. The former, also known as HD-DVDs, hold 15 gigabytes of data—more than three times as much as regular DVDs. One HD-DVD can store the complete text of nearly 8,000 novels the length of War and Peace. And Blu-Ray disks, which are read by a colored laser beam, have a capacity of 25 gigabytes. “Double-layer” versions of each format hold twice as much data.
Wireless technology has improved with the near elimination of former problems such as static interference and security gaps. Worldwide Interoperability for Microwave Access (WiMAX) and Ultra-Wide Bandwidth (UWB), new data transmission protocols, make online connections so much cheaper, faster and easier to use that it’s possible to simultaneously cut costs and improve employee productivity by converting offices to wireless connectivity.
THINGS TO COME
Good as each is, every current technology will be supplanted by its successor in a surprisingly short time—and these changes in turn will engender entirely new technologies. Consider the following works in progress that likely will make it to market sooner than you think.
RFID, or radio frequency identification, tags contain important tracking and descriptive information about the objects—for example, freight packages, vehicles or pieces of luggage—to which they are attached. This helps companies and government agencies better perform a broad range of functions, from shipping and inventory management to highway toll collection and passenger baggage tracking. Word of these advantages has encouraged a bevy of organizations to emulate Wal-Mart’s well-publicized RFID implementation. And now that EPCglobal, the RFID industry trade group, has updated its electronic product code (EPC) standard—the RFID version of the bar code—software developers are working on more powerful applications. Nearly every CPA will need to understand this important technology.
Broadband over power lines (BPL) may bring high-speed Internet access to every home. This new communications technology was approved by the FCC late in 2004. It offers ultrafast Internet services that outperform current wire-based links by using modems that plug into any electrical outlet. As new participants in the broadband communications market, BPL companies will help telephone and cable-TV companies improve communications in many underserved U.S. markets.
Stratellites are high-altitude, lighter-than-air ships being developed to provide a variety of communications services. Floating in the stratosphere at about 13 miles above the earth, they hover over a particular location and relay radio signals to and from the ground. Each airship typically covers an area the size of Texas. Stratellites can outperform satellites and are cheaper to launch and maintain. Among other things, they’ll offer telephone, paging and wireless broadband services over large areas.
Grid computing soon will become a reality. It consists of linking the processing power and data storage resources of many computers in networks dedicated to fulfilling joint goals such as serving a community of users. Grid computing will offer secure, reliable access to huge quantities of shared computer power, much as electrical utilities operate today. As a result businesses and individuals will find owning computer servers to be no more necessary than having their own power generators.
System security will vastly improve over the next decade. Security tokens—small, key-like devices that fit into a computer port—will replace passwords as the means by which users identify themselves to a system. Improvements in other areas—such as virus prevention and antihacker measures—also are in the works. The result will be simultaneous advances in safety and convenience.
A BRIGHT FUTURE
I continue to be excited about what technology can do to help people and businesses, and I hope all CPAs will view the coming changes as the true opportunities they are—for personal and professional fulfillment and improved service to clients.
Randolph P. Johnston, executive vice-president of K2 Enterprises in Hutchinson, Kan., is a technology consultant.