By Ken McCall, MBA, MCP, CDIA+, Senior Consultant, Boomer Consulting, Inc.
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| Ken M. McCall, MBA, MCP, CDIA+, Senior Consultant, Boomer Consulting, Inc. |
One of the most common technology questions asked by smaller firms is: “When should I consider hiring a full time IT person?” It’s an important question and one that a group of small firms addressed at a recent gathering of the Boomer Technology Circles. The correct answer for your firm can be found when you understand the environment, requirements and options for this important initiative.
The Environment
Many owners, particularly in smaller firms, don’t fully grasp the complexity
of today’s IT environment. Compared to similarly sized businesses in many
other industries, CPA firms have several unique distinctions that add to the
complexity.
| “One of the most commonly asked technology questions asked by smaller firms is: ‘When should I consider hiring a full time IT person?’ The correct answer for your firm can be found when you understand the environment, requirements and options for this important initiative.” |
A firm must manage and integrate dozens of applications – often from different vendors – each with its own networking quirks. Plus, nearly every firm employee uses network resources, most on a full-time basis. (Just try to find someone in a CPA firm who doesn’t use a computer!)
In addition, changing demographics, mobility and social expectations of today’s work force require many firms to have IT resources available at any hour – and from anyplace via remote access. On top of everything, all of this must be handled in a way that safeguards client data as well as the network.
The Requirement
The basic IT requirement in any firm (regardless of size) is to provide the necessary resources, keep them updated, make them available when and where they are needed, and keep them secure. These are the tools that serve your staff members who, in turn, serve the firm’s clients. The person assigned to deliver these resources requires special expertise and time to perform the necessary tasks.
The Options
Small firms often assign management of the firm’s computers to a staff accountant (or an owner!). While this person may be able to keep up with basic maintenance (such as Microsoft and tax software updates), it’s unlikely he or she will have the time or expertise to process every IT requirement for long. As a result, almost all firms will need some form of support.
There are three basic options available to a small firm for professional IT support:
- Contract with an outsourced IT company.
- Draw support from an affiliated IT support company.
- Hire a full time IT support employee.
Each of these has advantages and disadvantages. Let’s take a quick look at
some of them.
Contract IT Support
This is often the starting point for a firm that needs more than internal
staff expertise, but should it be the long-term solution? Maybe.
Advantages:
The firm can draw upon a deep pool of IT talent. Unless a support provider
is unusually small, it can offer dedicated specialists for particular
problems. (If you need security help, for example, they will likely have
someone on staff who specializes in just that.)
An outside IT provider also shoulders the cost of training its staff. This
can be a significant expense, and today’s IT work force cannot go without
it. Firms can also count on IT support companies to manage their own
employees, saving a firm the responsibility of evaluating those with skill
sets outside of the accounting profession.
Disadvantages:
Some service providers do an exceptional job of partnering with a firm’s
team while others have less success. Although an intangible, it is essential
that a service provider integrate successfully into the organization.
It really helps when a support provider understands the business priorities
of a CPA firm. What’s so special about March 15th? The IT support provider
should know! More than one firm owner has told me this is a critical part of
the relationship with a support provider.
Support providers do not always understand a CPA firm’s sophisticated
technology environment. Those who possess experience with other accounting
firms and have expertise in commonly used accounting software should be
sought out first.
Because this is a contractual agreement, defining expectations is critical.
Most good support relationships I have seen use clearly defined Service
Level Agreements (SLAs). These spell out what the support provider will do,
how often, and to what standard of timely response. The cost of these
services is also defined in an SLA. Tiered levels of service, or of response
times, can carry different cost structures.
Support from an Affiliated Company
While this is rarely an option for a small firm, some larger firms own and
operate a separate IT support company. Occasionally, though, a small firm
has this opportunity. In either case the conditions are similar.
Advantages:
The advantages are similar to working with a contract support company with
the added comfort of a trusted business relationship in the background. If
you are dealing with your own affiliated company there should certainly be
fewer conflicts over business ethics, service delivery and timely payments!
Disadvantages:
The biggest challenge is the structure of billing rates. Should a CPA firm
pay full, market rates or get a sweetheart rate? A full discussion of this
issue is far beyond the scope of this article, but if this situation exists
for your firm – be prepared to deal with the question!
IT Professional on Staff
Sooner or later, most firms that rely on contract support will consider
hiring someone full-time.
Advantages:
Daily interactions with staff members and desk-side training are the biggest
advantages of hiring an IT employee. This person will have a vested interest
in the firm’s success and should develop the confidence of the staff.
Frequent and in-depth interactions with the firm’s IT environment will
foster a better understanding of its quirks and special needs. And because
this person is there each day, responsiveness is seldom an issue.
Nevertheless, if he or she does not quickly become part of the firm’s team
and share its goals, celebrate its successes and endure its setbacks – then
the hire simply isn’t a good fit. Being a part of the team is essential.
Disadvantages:
A solitary IT employee must deal with everything, and today’s problem is
seldom the same as yesterday’s. As a result, almost every firm will
occasionally need backup support from a professional IT company.
The firm must additionally incur the cost of training its IT employee. A
solo IT employee is on a professional island and will also benefit from
opportunities to network with others.
From an owner’s perspective, the most difficult challenge is to supervise,
evaluate and compensate a firm employee with unique skills. It’s vital to
utilize job descriptions, evaluation checklists and other management tools.
Plan of Action
With all of these requirements and options in view, what is the best course
of action? All firms need IT support beyond the scope of its own
accountants’ capabilities. Most small firms begin with an outsourced
relationship. Should that be a long-term solution? If not, when should the
firm hire an IT professional?
Metrics compiled from the Boomer Technology Circles offer some insight.
Across the board in firms of all sizes, the ratio of IT support providers to
end users is 1:31. In other words, there is one support person for every 31
staff members. Among the smallest firms, however, those employing a
full-time IT specialist have a staff of 15 to 20 employees. Interestingly,
there seems to be little correlation between the method of IT support and
the financial performance of the firm. Revenue per Full Time Equivalent and
Revenue per Charge Hour measurements are about the same regardless of the
support used.
Firm owners tell me the greatest differences are found in responsiveness and
integrating the team. While we have worked with some firms and their
outsourced IT partners that had strong and mutually reinforcing
relationships, firm owners who have done it both ways typically support
employing an internal IT professional. When a firm grows to 20 or more staff
members, the metrics indicate that it is financially feasible to consider
hiring such a person.
The Hire Is Only the Beginning
A firm should expect to pay about as much for this person’s skills as it
would for a comparably experienced accountant. It must also pay for
recurring training, similar to the CPE provided for accounting staff.
Remember this person will work in a one-of-a-kind environment. Smart firms
provide opportunities for their IT pros to network and interact with other
IT professionals serving the accounting industry. The Boomer Technology
Circles, Leading Edge Alliance Special Interest Groups (SIG) and other
associations offer these types of networking opportunities.
So what is the best choice for your firm? If you have more than 20 people on
your staff and are willing to recruit, hire, train, coach and support an IT
person as an integral part of your team, that may be the best way to go. If
any of these conditions challenge you, put the same energies into
researching a suitable contract provider.
You can find firm owners who will argue passionately for each option. Both
will work. You must decide which one fits your firm’s culture and the
owners’ expectations. Good luck with your choice!
About the Author
Kenneth M. McCall, MBA, MCP, CDIA+ is a senior consultant at Boomer
Consulting, Inc., an organization devoted to the application of computer
technology and management consulting. Ken works with firms of all sizes in
strategic planning and budgeting for their technology needs and has worked
extensively in the area of training management for CPA firms. Ken is a
contributing author to the Boomer Bulletin™, a technology newsletter with an
international circulation of over 5,300 and is published regularly in many
state society newsletters. He has been a featured speaker on several
nationally broadcast web events on the topic of “Paperless Office.”
Boomer Consulting, Inc.©