Minnesota Chapter

2018 CPAFMA IT Benchmark Survey Findings

Published January 25, 2018
The CPA Firm Management Association (CPAFMA) recently conducted its second comprehensive technology survey tailored specifically to member firms with the goal of identifying the applications, products and processes utilized by peers.  Where possible, the survey attempted to identify which applications firms are moving to in the cloud compared to traditionally on-premise managed solutions.  The survey was conducted in December 2017 to determine what information technology firms would be utilizing in 2018 and compared to the results from 2016 where appropriate.  This survey further highlighted the unique nature of CPAFMA member firms which tend to be medium and larger sized firms.  174 CPAFMA members participated, 88% of which had 10 or more personnel and 40% (70 firms) were multi-office.   The findings of the survey are summarized below and presented by CPAFMA Advisory Board Member Roman Kepczyk via MAPCast on Wednesday, January 24, 2018. A podcast is available on the CPAFMA.org website.

Server Infrastructure

A surprising trend in this year’s IT survey is the number of CPAFMA firms (85 of 166 respondents) that have outsourced their entire IT infrastructure to a hosted cloud provider rather than internally managing their own networks.  While five responding firms utilized Thomson Reuters Virtual Office and two selected CCH Axcess, there was a significant increase in the number of participants that moved to “private” cloud hosting vendors.  Xcentric (a Division of Right Networks) led the private hosting vendors with 77 member firms, followed by Cetrom having two respondents and Bayon Technologies, Network Alliance, NuWave, Tetherview, and Winning Strategies each being utilized by one firm. Traditional, in-firm networks accounted for 40% of respondents which was a noticeable drop from the 77% of responding firms reporting they managed their own networks in the 2016 Survey. Of the firms that managed their own networks, seven (4%) utilized a third party “colocation” facility which provided more robust security, power and Internet access than can be found within most firm offices.

Server Virtualization

Virtualization continued as a very strong trend with the majority of responding firms adopting this technology either internally or through their cloud vendor.  Simply stated, virtualization runs each application in its own “virtual server” providing great stability for accounting applications by minimizing conflicts.  While many respondents indicated they were not sure of what their virtualization strategy was, VMware was the preferred choice of 52% respondents, followed by 37% of firms choosing Citrix Xen, 10% selecting Microsoft Hyper V, and 1% selecting VDI (Virtual Desktop Interface), which has been trending in corporate environments outside of the accounting profession.

IT Staffing

Traditional accounting firm metrics have pointed to firms needing one IT equivalent staff person for every 25 to 32 firm personnel.  This year’s survey attempted to verify this number differentiating between firm size and internally managed versus externally managed networks.  Respondents from large firms (100+ members) had a 1:39 ratio between IT personnel and total personnel in traditionally networked firms, compared to a 1:80 ratio for those in the cloud, pointing to cloud providers taking on a significant portion of the IT burden.  This was also evidenced in firms between 50 and 100 members as traditional firms had a 1:40 ratio compared to cloud hosted firms with a 1:53 ratio. For firms with 20 to 50 members, traditional networks fared slightly better at a 1:32 ratio compared to cloud firms which surveyed at a 1:30 ratio.  The IT Staffing responses for firms with less than 20 members were mostly unanswered making the results unusable.

Significant Downtime

Another new question this year sought to identify what events caused significant downtime in the previous 12 months, with the number one item being Internet outages which impacted 18 firms.  This was followed by seven firms that experienced hardware failures and six firms that had cloud/host outages.  Six Firms were impacted by Ransomware and three firms were impacted by viruses and malware, which was a reduction from the 17 firms impacted in the 2016 Survey.  While the survey found BitDefender to be the most selected anti-virus application with 26 firms, there were 16 other applications that were utilized by at least two peer respondents, so virus applications have the least amount of consensus of any application in responding firms.

Backup Options

For traditional on-premise data backups, eight respondents still utilized tape backups and 34 respondents (29%) backed up to hard disks or solid-state drives, which we have seen to be more reliable and easier to utilize to restore files from than from tape.  The bigger trend of member firms backing data up offsite via Internet-based solutions increased to 64% of respondents compared to 50% in 2016, pointing to web-based backups as becoming the overall standard.  The survey also asked about backup frequency and 73% of respondents backed up daily, 8% between two and six times per week, 8% weekly, and 11% listed “other.” Once again, the variety of applications utilized by firms was significant with no one application having more than a handful of users.

Workstations

Dell still leads the pack for desktop brands with 68% of respondents making them the first choice followed 20% by HP and 12% by Lenovo.   For laptop brands, Dell was not as dominant with 60%, but continued to be one of the top three brands along with HP and Lenovo at 17% each. Within the remaining “other” computers were four firms selecting Microsoft Surface PCs, which could be signifying the start of a new trend as 3% of firms stated they would be going to smaller laptops in the next year. The most popular laptop configuration continued to be a 15.6” with full keyboard (including a ten-key number pad) at 58% of respondents, followed by 23% of firms buying 17” models as their standard, compared to 14% selecting 14”-15” with the standard keyboard and 4% buying 13” or smaller (including Microsoft Surface PCs) without an integrated number pad in the keyboard. The survey also asked what computer processors firms were planning on purchasing in the year ahead and 52% selected Intel’s i7, 44% Intel i5, 3% Intel i3 and 2% listed “other” which could be either Apple or AMD.

A new question for 2018 asked about how many firms had adopted a “hoteling” concept where firms had unassigned workstations which could be utilized by any staff member.  While 132 firms stated they had at least one unassigned workstation available for anyone’s use, 19 firms stated that 33% or more of their PCs were “hoteled,” while the largest segment of 43 firms had between 10% and 20% of all their PCs available for this purpose.

Workstation Software

It comes as no surprise that Microsoft Windows is the dominant operating system (with two firms stating they had one workstation running Apple iOS).  This year the survey asked firms to estimate what percentage of their workstations were running on different versions of Windows, and while Windows 7 was slightly ahead of Windows 10 in the number of firms, the actual number of Windows 10 workstations was greater than reported for Windows 7 (5,675 vs. 5488) pointing to more adoption of Windows 10 in the larger firms.  Regarding Internet Browsers, Google Chrome was the primary application selected by 71 firms (65%) compared to Microsoft Edge/Explorer by 34 firms (31%) which was a complete flip from the 2016 survey with 26% Chrome and 68% Microsoft. 

The 2018 Survey found a significant increase in the number of firms utilizing Office 2016 (including Office 365) with 45% of firms utilizing these versions. 34 firms (31%) continued to use Office 2013 and 26 firms (23%) were still on Office 2010.  With accounting vendors dropping support for the 2010 version, we anticipate many firms will jump onto Office 365 for the combination of productivity applications including Exchange/Outlook.  Adobe 11 was the dominant PDF application with 46 firms (42% of respondents) standardizing on it, followed by 34 firms (31%) primarily on Adobe 12/DC.   14 firms listed Adobe 10 and 15 firms listed Adobe 9 or Doc-It’s PDF program.  With technical support being discontinued for versions 11 and older we anticipate a push in firms going to the 12/DC version after busy season.

Monitors

The survey specifically asked for the standard monitor setup which pointed to 69 members (58% of responding firms) utilizing triple monitors as the standard.  This was followed by 24 firms (20%) using dual standard monitors of 20” or less, and 20 firms (17%) utilizing oversize monitors greater than 20”, which flip-flopped from the 2016 survey findings.  Six firms (5%) utilized quadruple monitors which combined with oversize and triple amounted to 80% of firms using more than dual standard in this year’s survey.

Tablets

41 peer firm provided tablets to all partners (24%), 11 firms provided them to managers (6%), and 5 firms provided them to all staff (3%), which was a noticeable reduction from 34% of partners and 10% of managers from the 2016 findings.  The survey found that 21 firms utilized Apple’s iPad followed by 16 respondents utilizing Microsoft Surface tablets which barely had any users in 2016 and could be signaling pilot programs in many firms.

Phone System

A new question this year asked what type of phone system firms utilized to determine how many were going to the web-based Voice Over IP (VOIP) services.  While the majority (83 firms) continued to use a traditional on-premise phone system, 44 firms responded that they had transitioned to an external VOIP system accounting for 35% of the respondents.  In our consulting with firms, we have found most firms search out service providers to maintain their existing phone system until the vendor can no longer provide support at which point they transition to external VOIP solutions as a more cost-effective solution (but still a significant capital outlay). The survey asked which vendors peer firms utilized and no individual provider tallied more than five responses in either category.

Smartphones

The 2018 survey had 56 firms (44%) that provided smartphones to partners, 19 firms (15%) to managers, and 3 firms (2%) provided them to staff.   This was a decrease from the 2016 survey that found 60% of respondents providing smart phones to partners and 24% to managers, which may be trending to BYOD as the standard in the future.  For types of phones, Apple’s iPhone was selected almost three-fours of the time with Android phones accounting for the remainder. Overall, 43% of firms provided some kind of stipend for personnel, which was the same as in the 2016 survey.

Scanner Technology

Fujitsu continued to be the top production scanner vendor of choice with 78 (64%) of respondents (which increased from 57% in the 2016 IT Survey).  This was once again followed by Canon with 25 (21%) of peers selecting them and then Kyocera (6%), Xerox (3%), Ricoh (2%), Sharp (2%) and Lanier (1%). The 2018 survey also asked firms to estimate what percentage of documents were scanned centrally, distributed/shared or individually, which was interpreted as 84% of firms utilizing centralized scanning, 79% utilizing distributed/shared scanning and 55% having some desktop scanning.

CPA Practice Applications

Below we summarize the administrative applications which CPAFMA peer firms utilize to run their internal operations.  The number of firms selecting either on-premise or cloud applications have been identified, where possible, but point out a continued transition towards cloud adoption either for the entire firm or individual applications.

  • Practice Management: 76 firms (44% of respondents) utilized CCH’s Practice Management, of which 34 were in the cloud either privately or through their Axcess Suite. Thomson Reuters had 58 peer firms using their Practice CS application, of which 39 firms were in the hosted in a private cloud or Thomson’s Virtual Office.  OfficeTools (rebranding as WorkSpace) also made a good showing as it was selected by 34 respondents, evenly split between hosted and on-premise servers.
  • Payroll: For producing internal firm payrolls, ADP swapped the lead position with Paychex, which was the top selected provider in 2016.  33 respondents utilized ADP in 2018 followed by 23 Paychex firms.  Intuit continued to be in the number three slot with 17 firms using Intuit Online and 8 utilizing QuickBooks internally.  The remaining 53 respondents utilized a wide variety of solutions with a majority of all firms selecting the SaaS/Externally Hosted version, rather than processing with on-premise applications.
  • Continuing Professional Education (CPE): Practice Management applications are once again the tool of choice for CPE Tracking with 30 responding firms utilizing CCH and 21 utilizing Thomson Reuters’ tools, of which 16 utilized Thomson Learning/Virtual Office and five used their on-premise Practice CS.  Not surprising was that a significant number of firms (26) continued to utilize Excel spreadsheets for tracking CPE internally.
  • Human Resources: HR Management continues to be topic area where there was a wide variety of applications with no one product being dominant.  ADP’s HRIS tied with Halogen with each vendor having seven firms responding they used their application, followed by four firms that utilized Bamboo and four firms that utilize Paychex.  No other application received more than three responses showing there is no consensus on what applications firms use to manage their internal HR needs.
  • Intranet: Microsoft SharePoint continued to be the most dominant intranet tool used by firms (20 firms with the majority on-premise) but web-based WordPress (eight firms) narrowed the gap from the 2016 survey.  Our consulting with CPAs has found that many firms still utilize an administrative drive or their document management application, which was not reflected in the survey question.
  • CRM Tools: Practice Management continued to be the most dominant tool utilized for Customer Relationship Management with 53 firms using CCH and seven using Thomson Reuters, the same two products and standing as the 2016 survey.  SalesForce was next with three users and no other application had more than two responses.
  • Website Maintenance: While a large number of respondents (45 firms) maintained their own websites with local providers, CPA Site Solutions led the 2018 survey respondents with 13 firms, followed by CCH SiteBuilder utilized by 12 firms, and Thomson Web Builder CS utilized by seven firms.
  • Internal Accounting: QuickBooks continues to be the dominant accounting product utilized by participating firms with 50 members utilizing the On-Premise product and 45 members utilizing Online/Cloud hosted versions.  Sage/Peachtree was next with 11 firms followed by Intacct with five firms and Thomson CS with four firms.
  • Website Payment Systems: A new category this year was the website payment systems which allow clients to pay their invoice directly themselves via credit card without firm administration being involved.  Thirteen firms had adopted such a system with the top three selections being QuickFee (six firms), CPACharge (three firms) and PayPal (two firms), so look to ask peer administrators about their experience with these systems in upcoming meetings.
  • Accounts Payable Management: QuickBooks was once again the dominant application used for managing payables by 78 respondents (44 on premise users and 34 in the cloud), followed by cloud-based Bill.com with 21 users.  The third and fourth most utilized products were Sage/Peachtree with six firms and Thomson Reuters CS with three firms.
  • Expense Reports: Practice Management was the most often cited application for capturing expense reports with eight firms responding, followed by seven firms that utilized Excel.  The top three cloud-based expense products were Expensify (three firms), Tallie (two firms), and Concur (two firms).
  • Scheduling: Excel continues to be the dominant tool utilized for scheduling staff with 46 firms reporting they do so.   This was followed by firms using Practice Management scheduling components [CCH (27) and Thomson (10)].  ProStaff was utilized by nine member firms, which placed it in the lead of the dedicated internal products followed by Outlook with seven firms and XCM Schedule with six firms.
  • Email/Groupware: Microsoft continues to be the dominant accounting firm groupware product utilized by 128 firms.  The 2018 survey found 89 firms using Cloud/Hosted Exchange versus 39 firms still maintaining their own servers.  This is a stark contrast from 2016 where the numbers were reversed with 79 firms managing their own servers compared to 37 that had transitioned to the cloud. Google Gmail was the only other product listed with three firms. This year’s survey also asked if firms set file size limitations on email mailbox sizes and 25 firms (23% of respondents) limited the file size to 1Gb.  The majority (34%) of respondents allowed for 2Gb-5Gb mailbox size and a surprising 29% (31 firms) had no limits set.  The remaining 14% of respondents (15 firms) set limits between 6Gb and 50Gb per user, pointing to a loosening of limits since the 2016 survey.
  • Collaboration/Instant Messaging: Microsoft’s Skype for Business (formerly Lync and Office Communicator) was the dominant application in this space with 36 member firms selecting it (with the majority-24 firms, using it in the cloud).  The three Google groupware users from the previous question also utilized Google Plus for their Instant Messaging.  The survey also identified four firms utilizing Microsoft Teams, which is a product to watch as it becomes an important part of Office365.
  • Video Calling: 52 peer firms were using video calling through Microsoft Skype for Business, again being the dominant product from the 2016 survey which falls in line with the findings of Groupware usage as it is integrated into Microsoft Office. This was followed by five firms using GoToMeeting, three firms on FaceTime, and three on Cisco products.
  • Document Management (DM): Of the firms that answered the DM question, 33 utilized CCH’s Document Management and 32 utilized Thomson products (19 GoFileRoom/13 File Cabinet Solution).  Doc-It made significant inroads in this year’s survey with 7 member firms utilizing the application. Overall, the majority of firms utilizing document management, utilized applications hosted in the cloud.

Tax Applications

This survey was combined with the previous SaaS/Cloud survey with the intent of identifying which applications are moving to the cloud as there have long been tax, document management portal and research tools available.  Below we summarize the tax application trends within CPAFMA peer firms.

  • Individual/1040 Production: CCH continued to be the dominant 1040 application used by respondents with 74 firms selecting it (including 32 in the cloud).  This was followed by 36 firms Thomson’s UltraTax (of which 23 were in the cloud).  Nine member firms utilized Lacerte, with four being cloud-hosted.
  • Business/Other Returns: Not surprisingly CCH was again dominant in business tax applications with 75 responses (33 Hosted Cloud/Axcess) followed by Thomson Reuters UltraTax with 37 firms (of which 23 were in the cloud).  Also, seven members selected Lacerte, of which four were in the cloud, pointing to the transition towards more cloud/hosted applications over the 2016 findings.
  • Tax Bookmarking: With the preponderance of firms using CCH for tax processing, it remained no surprise that CCH FxScan was the most dominant bookmarking tool with 50 firms, followed by SurePrep having 12 responses, and five firm each selecting Gruntworx and Thomson Reuters’ Source Document Scanning.  According to the 2017 CPAFMA Paperless Benchmark survey, 67% of peer firms were utilizing automated tax bookmarking tools.
  • Tax Scanning to OCR: CCH FxScan was also selected by the majority of firms (46 of 62 respondents) that were utilizing Optical Character Recognition to import data into their tax programs.  CCH was followed by SurePrep with seven responses and three using Thomson’s Source Document Scanning.  The 2017 CPAFMA Paperless Benchmark survey found that 49% of peer firms were utilizing Scan to OCR applications.
  • Client Data Accumulation: A new question this year meant to explore the adoption of client data accumulation applications in lieu of using organizers, found that 18 firms planned on piloting CCH’s My1040 Data application in 2018, followed by two firms planning to use Thomson Reuters FileCabinet and Workpapers CS.  Lacerte Link and TaxCaddy were also selected by one firm each for this upcoming busy season which will overall be a new product category to watch.
  • Dedicated Workflow: While we see many firms traditionally utilizing Practice Management Projects to track tax workflow, the trend towards dedicated tools continued from 2016.  The top three products that peer firms have transitioned to were XCM (19 firms), Thomson FirmFlow (16) and CCH Workstream (10), followed by two firms each Doc-It and OfficeTools.  This is an area we see a continued trend towards firms adopting in the next few years as the efficiency gains within firms are touted by each of the vendors.
  • Tax Research/Forms: Thomson’s RIA Checkpoint continued to be the dominant Tax Research tool utilized by 68 responding firms, followed by 51 firms using CCH Intelliconnect, and 38 using BNA.  With only 112 firms responding to this question, the numbers point to many firms having duplicate products, which should be evaluated to eliminate redundancy in licensing and training.  For accessing tax forms, 50 respondents stated they used CCH, while 43 utilized Thomson RIA Checkpoint, and 12 had BNA’s SuperForms product.
  • Tax Projections: A new question in this year’s survey asked what firm were utilizing for tax projections. CCH’s Planner product was the top product selected by 40 peer firms, followed by 36 firms utilizing BNA Income Tax Planner and 19 using Thomson’s UltraTax Planner.
  • Tax Portals: The survey split out the Portal/Secure Email question from the 2016 question, with the most utilized portal product in this year’s survey being CCH’s Portal with 55 firms.  This was followed by 21 firms utilizing Thomson products, and 14 standardizing on Citrix’s ShareFile portal.
  • Tax Secure Email: The leading secure, encrypted email solution for delivery of tax returns was once again Citrix ShareFile with 52 of 89 firm respondents selecting it. This was followed by 13 cPaperless SafeSend respondents which was a noticeable increase from the 2016 survey. The survey also identified five firms utilizing Mimecast and four firms using CCH’s Share Safe product which allows for secure delivery without having to setup a separate portal.
  • Digital Signatures:  Another added question within the 2018 IT survey found 23 respondents utilizing Right Signature as the electronic signature application.  This was followed by 13 using CCH’s product, and 12 each using cPaperless SafeSign and Thomson eSignature. With these products maturing and firms doing more digitally, we anticipate a noticeable jump in this category in the future.

Audit and Accounting Applications

The survey also asked questions specifically in regards to assurance services to identify adoption of the following applications and utilities:

  • Audit Binder: The dominant engagement binder application utilized by firms was CCH Engagement with 68 firms.  Within these CCH respondents 25 firms stated they hosted their binder in the cloud, which would point to firms hosting their networks with Citrix or Windows Terminal Server as this is not anticipated to be part of the CCH Axcess suite for another year or two.  22 firms utilized either Thomson Engagement CS or their web-based AdvanceFlow product, followed by 9 member firms utilizing Caseware.
  • Audit Analytics: Only 28 firms provided a valid answer regarding Audit Analytics tools which was a new question asked in this year’s survey. ProfitCents was the most often selected application with 23 firms utilizing it, followed by RMA with five firms responding they use it. We anticipate the upcoming rollout of artificial intelligence (AI) and big data analytics tools being integrated into accounting products will increase adoption of this type of application.
  • Data Extraction: While being touted by digital audit pundits for more than a decade, the majority of this year’s respondents (36 of 62) continued to utilize Excel manually for data extraction.  Of the dedicated data extraction tools, Active Data (an Excel add-on) had ten users, followed by seven IDEA and four ACL firms. Within “other”, three new products emerged including three firms utilizing TeamMate Analytics, and one each using MindBridge and Validis, which have been touted as the next generation of data extraction and AI tools.
  • Client Accounting: It comes as no surprise that QuickBooks is the dominant tool for client accounting with 80 of 97 (82%) responding firms utilizing it, and an increasing number being operated in the cloud.  Thomson was next on the list with 29 firms using a combination of their Accounting CS and CSA as well as 21 firms utilizing Sage/Peachtree products, with some firms utilizing more than one application.
  • Client Payroll: QuickBooks was once again the dominant application firms utilized for producing client payrolls with 61 of 86 (71%) respondents selecting the application.  Thomson Reuters took the second spot with 18 firms, 12 utilized ADP, and four Paychex, with all vendors having more cloud usage than on-premise.
  • Depreciation: This question was added this year with Thomson Reuters Fixed Asset CS being the most selected product (51 of 100 firms) followed by CCH Fixed Assets (44 firms). The other products listed by peers were AssetKeeper and BNA FAS with seven firms using each application.
  • Working Remotely: Citrix was utilized by 55 firms (55% of respondents to this question) followed by 30 firms (30%) utilizing Microsoft Windows Terminal Server/RDS for remote access, which flip-flopped from the 2016 survey.  The remainder of firms either did not have a remote access tool or utilized VPN or another of the remote support tools which was split into a separate question in 2018.  Interestingly, six firms had at least half their personnel work remotely one day per week or more, 19 firms estimated between 20%-49% of their staff worked remotely one day per week or more.  17 firms estimated that between 10%- and 19% of staff worked out of the office at least one day per week and 33 firms estimated it was between 1% and 9% of their staff that did this.
  • Remote Access Support: For providing remote support to clients, 25 respondents (30% of respondents) selected LogMeIn, 15 firms (18%) utilized TeamViewer, nine firms (11%) selected GoToMyPC and eight firms (10%) selected GoToAssist/GoToMeeting.  The survey also found six firms utilizing Join.me and five using ScreenConnect, which had not appeared on the previous survey.

IT Governance

The vast majority of peer firms (79 firms representing 71% of respondents) utilized a technology budget that was reviewed at least annually.  Surprisingly, only 37 firms (34%) had a designated IT Committee.  Of those that did have a committee, 11 met quarterly, ten met monthly and three met annually.  The other nine respondents stated they met “as needed.”

IT Training Resources

The survey once again had respondents list the best training resources with the most firms selecting the accounting vendor user conferences: CCH (18 firms), Xcentric (16), Thomson Reuters (12), and XCM (two). This was followed by 16 firms listing the CPAFMA National Symposium and/or Technology Fly-in and 11 going to the AICPA ENGAGE (formerly TECH/Practitioners Symposium).  The CPAFMA and AICPA ENGAGE conferences will be held together this year (June 11-14, 2018) in Las Vegas, Nevada.

Cloud Future

The survey’s final question asked when the respondent believed that the majority of CPA firms will run entirely in the cloud with no local servers.  A surprising 40% estimated it would happen between 3 and five years, another 40% thought it would be between five and ten years and 8% believed it would take 10 years or longer.  14% estimated that it would be less than three years, which we would agree with by quoting Bill Gates when he was Microsoft’s CEO:

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.  Don’t let yourself be lulled into inaction!"

Roman H. Kepczyk, CPA.CITP is the Director of Consulting for Xcentric, LLC and works exclusively with accounting firms to implement today’s leading best practices and technologies incorporating Lean Six Sigma methodologies to optimize firm production workflows. Roman is also the author of “Quantum of Paperless: A Partner’s Guide to Accounting Firm Optimization” which includes the results of the 2018 CPAFMA IT Benchmark Survey.