It's not that nothing is going to happen in terms of trends in the tax and accounting market this year. It's that firms are still grappling with the hot trends of the last two years while trying to get the most out of the technology they have and refine their prices. And one of the main reasons for that is that the economy still leaves them cautious in their spending patterns.
"Everybody seems to be in a marking time," says Tom Davis, a partner with Valdosta, Ga.-based Bowen Phillips. Davis, who provides consulting services to other CPA firms says, "With larger firms, the multi-office firms, the trend is to keep marching towards a standardization of processes where it makes sense and trying to squeeze as much out of what they are doing as possible."

With funds still tight, firms are showing the most interest in developing and refining workflow processes with larger firms also "making substantial decisions relating to document management." And Davis does not think much is happening with cloud computing because vendors are waiting for more firms to show interest in those kinds of applications. In fact, he believes firms will note buy internet-based applications in great numbers until vendors say that is the only option.

The cloud, mobile technology and social media are three of the hottest topics from 2011 and they will likely be among the most talked about issues this year. While Davis tends toward a pessimistic view about whether accounting firms are doing more than talking, Jim Bourke, a principal with WithumSmith+Brown has a more optimistic view. Bourke says that mobile is exploding and his firm gets a lot of questions from peers about how it is using Apple's iPhone and iPad. "A lot of CPAS I talk to have questions about Apple technology and how it impacts us," he says. He adds that the interest in Apple technology that has developed recently is something that has not happened among accounting firms before.

But Bourke also has some cautionary advice about the Apple products. The iPad, he says, "is not a replacement for the laptop in the field for the auditors and the tax preparers. It's primarily for email," Bourke continues. The big advantage is staying in touch with clients from virtually anywhere.

Not surprisingly, vendors with mobile and cloud-based products are more enthusiastic about the market's reception. "The iPad is not a production input device, but it is a great device in the field," says Scott Fleszar, VP of strategic marketing for Thomson Reuters. He adds that his company's products mean users can utilize their mobile devices for more than email in being able to work with firm data. "For most other vendors, you can't utilize the iPad to get to that data and to those programs." Thomson's product line does provide those capabilities, he says, so that the iPad becomes more than an email tool..

Flezsar notes that Thomson intends to release a mobile app that will enable clients to scan receipts and transmit them to accountant via smartphones. It also plans to utilize the recent Emochila acquisition to "invest further in website design in order to elevate accounting firms' online presence."

In terms of business tools, Thomson will incorporate its desktop Financial Analysis CS program in Accounting CS for free. Accounting CS was one of a number of desktop packages that vendors hoped would be used by firms to develop new business services. But the programs simply haven't been a hit. With the new approach, Financial Analysis will be not sold separately and "all Accounting CS customers will have it," says Fleszar. He continues with the theme that has been articulated for much of the last two decades that accountants need to be more forward looking to provide value-added services instead of simply working with historical data.

CCH is also continuing to move along the electronic mobile path. Mike Sabbatis, president of CCH, says that his company has had strong reception for the 75 eBooks that it has released and plans on launching another 40 this year. "Those are the kinds of things you used to get in big hardback covers," he says.

Sabbatis is also seeing strong interest in document management systems. Many observers think that despite all the talk of the last few years, the penetration of such applications is still fairly low among firms. But in an interview conducted as 2011 ended, Sabbatis noted a flurry of year-end buying and commented that "A lot of that flurry at the yearend has been in document management systems."

And while cloud computing may be less than hot in many application areas, it is the way tax research has been done for the last few years. Sabbatis notes that internet-based technology in general lets CCH get more products to the user more quickly. In particular, he cites the addition of new views to the company's IntelliConnect research platform. "Search used to be completely pre-filtered," he says. But with the technology utilized in IntelliConnect, CCH has been able to provide "post-filtered" Google-like searches. "We have the ability to do that quite easily."

Sabbatis also sees firms continuing to concentrate on improve process and workflow. "There are plenty of people who have antiquated process around managing documents," he says.

From an IT perspective, Davis sees the multi-office firms continuing the move towards virtualizing servers. That means reducing the number of physical server by acquiring larger boxes that have chips that can provide multiple virtual servers. "That's a no brainer when anybody is getting ready to replace a significant box," he says.

No one volunteered thoughts about the impact of social media, whose productive use in a business environment remains something many firms are trying to figure out.

"Social mobile it's like teenage sex, everybody is talking about it, nobody is doing it," says CPA David Cieslak, a principal with Arxis Technology, a Simi Valley, Calif.-based accounting software reseller. However, Cieslak says that firms should work on their web sites, not just to support the newer technologies, but to keep their image up-to-date. "All firms should be redoing their website every two years, like a fresh coat of paint," he says. Websites need to be geared to support social media, along with simply avoiding a stale look. His firm is about to roll out a new website, Arxis Cloud Solutions which will have "brand new graphics, a brand new look and feel to support a cloud feel for the practice."

Cieslak does not mean that firms should simply revamp sites. "I think it should be largely knocked down and started over. You want it to be stimulating; you want it to be enjoyable, you want it to be sticky. If it's two or three or four years old people are going to pick up on that."

Cieslak doe see some interesting tech toys on the horizon. In particular, he is interested to see the response to Ultrabooks, which he said is a standard from Intel that is a response to the MacBook Air. "It's going to be the next level up from a tablet, not quite as a heavy duty as a laptop," he says. Thicker than an iPad, Ultrabooks have flash storage and are "not inexpensive," Cieslak continues. In particular Ultrabooks are a response to tablet users who want a keyboard.

One area in which the internet is emerging as a strong platform is in sales-and-use tax applications. And tax and accounting firms are going to see a lot of activity in this area as vendors try to involve them more in the process. That includes CCH, which acquired SpeedTax in 2011, and Avalara, whose internet-based AvaTax provides the calculation and reporting engines for a wide variety of accounting software programs. And both companies are ramping up their efforts to develop the CPA and reseller channels.

The SpeedTax offering will replace CCH's Sales Tax Online and will get more integrations and will also work with the company's outsourced service, Sabbatis says. He also notes the integration of the company's CorpTax system on the high-end and sees great potential with its Global Integrator, a tax provisioning system that can be SaaS-based. "We see that as a great place to grow and a great place to invest," he says.

Avalara is getting ready to launch its CPA program in which it seeks to get firms to refer clients to its product. But Marshal Kushniruk, the company's VP of business development, believes the effort is about more than simply developing a sales channel. Sales-and-use tax technology will become as widespread as payroll services, he believes. Business will simply need to react to developments as businesses that utilize the Internet start collecting taxes.

"Amazon has capitulated [on collection] whether they publicly admit it or not. It means the rest of the people are going to follow," says Kushniruk. And the spread of mobile devices is also going to be accompanied by the need to collect taxes for sales that are made via these devices. A business, he notes, might be at one farmers' market on Friday, and another on Saturday and would need to address the demands of tax jurisdictions at every location at which it operates. "Traditional nexus has simply gone out the window," he says.


Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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