December 2010 Edition

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Ideas In Motion:

David Beck Talks Technology and Managerial Accounting

By Scott H. Cytron, ABC

David Beck, CPA.CITP, is a partner with Beck & Company, a full service accounting firm with offices in Herndon, VA. The firm offers traditional CPA services such as Audit and Tax, as well as business process reengineering, business process documentation, business analysis, and system selection and design. Through his affiliated company, SystemLink North America, he and his staff provide QuickBooks and Sage consulting solutions, network design and support, and e-commerce solutions. I caught up with David to ask him more about SystemLink, what it’s like to be a reseller and his predictions on tech spending in 2011.

Scott Cytron: Tell me how SystemLink got started. Did it grow organically from the services you offered through Beck & Company or were there other reasons?

David Beck: My background and skills are rooted in managerial accounting. My first job after college was as a staff accountant for a government contractor in Washington, D.C. Subsequently, I took positions as an accountant in manufacturing facilities for Sealy and then for Pepsi.

David Beck, CPA, CITP

It’s interesting to contrast the differences in disciplines of the accounting profession between public accounting and managerial accounting.  Managerial accounting is concerned with providing accounting information to managers within organizations –to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions. Computerized accounting systems assisted the managerial accountant to adequately perform his role in the business. There was some crossover in disciplines; knowledge of auditing was required to assist with external and internal audits.

As a managerial accountant who also held a CPA license, in 1995 I joined my wife’s CPA practice intending to add management advisory services to the firms’ offering. The timing was fortuitous because opportunities to sell and implement mid-market accounting software were abundant. The accounting software industry was riding the wave of Microsoft’s success penetrating small- and mid-sized business. Windows-based applications were just beginning to transform SMB productivity. The raising Microsoft tide was raising the sails of many Windows-based business application developers. Who better to assist SMB to leverage technology for a competitive advantage through ERP solutions than an experienced managerial accountant like myself? After attending an AICPA Technology Conference, I decided to become a Value Added Reseller of Computer Associates Accpac for Windows accounting software. Opportunities to expand our ERP implementation services to other states led us to form a separate entity that we named SystemLink.

SC: I know you offer business process reengineering and business process documentation. How do you explain the benefits of these services to clients and prospects – and what the services can do for them?

DB: As an ERP implementation specialist, and given the ability of information technology to transform efficiencies in the SMB market space, ERP system implementation providers positioned our solutions as vehicles for business process redesign and improvement. Information technology has historically played an important role in the reengineering arena. I consider IT as a major enabler for new forms of working and collaborating within an organization. Why would a client customer purchase an expensive ERP system unless there was a promise of a return on investment? The ROI is achieved through business process reengineering.  Most clients understand the benefits of BPR and it not necessary to sell them on the benefits. The challenge is in managing client expectations and then achieving an ROI through BPR.

SC: I’m assuming that some of your business in SystemLink is a result of cross-selling services from the CPA firm. How do you go about identifying the opportunities with a client that lead to sales?

DB: Cross selling is easy. By nature, professional services delivery is a personal service. We work closely with our clients and strive to become our clients’ trusted business advisors. If a professional service company is competent and can keep clients happy, then clients are willing and eager to engage in other areas, and purchase additional services. Now, the key is that you have to be successful in managing client’s expectations and keeping them happy. Not all firms can achieve a high enough client satisfaction level to effectively cross sell – and it is not easy.

SC: There are still a large number of CPAs and accountants who have not gotten into the reseller business. What’s your advice to them on how to establish software/service affiliations that make the most sense to their businesses?

DB: I would not recommend anyone to enter into the accounting software reseller business. The environment is so different today then when we entered this space years ago.

First, the skill sets a firms needs to be successful are more specialized, and solutions are more complex and therefore more risky to deliver. Second, the industry of software developers/vendors is maturing and the manifestations of that maturation can be found in any college economic textbook. As these ERP products have matured, a consolidation of developers/vendors has occurred. When I first entered this space, there were literally dozens of vendors with significant market share. Today, there are less than half a dozen.

Third, as developers/vendors are no longer able to achieve growth through acquisition, they tend to squeeze additional revenue from their install base, which led them to stress their channel partners by competing with them for incremental revenue. For example, developers/vendors are now more often eager to offer end-user customers training and support services. In the recent past, those services were the “bread and butter” services reserved only for channel partners. Also, to drive incremental revenue, developers/vendors are cutting margins paid on software sales, further stressing their reseller channel.

The result of the changes in the industry is now resulting in the consolidation of the reseller channel; if the trend continues, in the future we will see less choices for end-user customers. Resellers will be fewer and larger as the smaller firms sell out to the larger firms or get out of the reseller business altogether. Survivors of these changes will be firms that have learned to less dependent on vendor relationships and have a more diverse service offering. There is not a successful reseller that I have spoken with who is not busily trying to figure what VAR 2.0 looks like and how to add additional services that are not dependent on a vendor offering.

SC: I did not see a portal on the Beck & Company site. How do you feel about portals? Are they beneficial?

DB: I’ve not been a big fan of client portals for CPA firms. I’ve heard so many stories of firm investing in building portals only to have clients not bother using them. The benefits of portals accrue to the firms who deploy them, but only if clients use them. If a client perceives no value to using a portal, then he or she will not use them. As a result, the firm has wasted time and money. This paradigm, however, will change as generation Y moves into the workforce and applications shift more and more to cloud solutions.

SC: predicted that 69 percent of CPA firms plan to spend more on technology in the next 12 months. How do you think firms can learn more about what to spend their money on so they receive the greatest ROI?

DB: There is so much noise generated by cloud vendors about how they are going to remake the CPA firm. AICPA’s CPA2Biz is also beating the cloud drum, but their independence is questionable because they have aligned themselves with various vendors. My own view is that cloud computing is an unstoppable, building snowball, but the managerial accountant in me says to make sure that the risks are adequately measured. I’m a big believer in technology’s ability to deliver a ROI, but the noise from the cloud vendors make me pause and wonder if we have all gone insane and giddy as we stand in line to drink the Kool-Aid.

This year, I attended a conference of the Information Technology Alliance.  A guest speaker from Google presented a lecture, “Get Ready to Switch – Cloud Computing, Not If, But When.” The speaker made a very compelling argument about the benefits of the cloud model using words like innovation, scalability, radically reduced costs, faster application development and happier end users. I must admit, it was powerful, true and correct. He made a very valid, persuasive pro-cloud argument.

Jump ahead a couple months, and the news of the day was how Google was hacked by students from Chinese schools. Apparently, there is some evidence that the attack was ordered by the Chinese government. Investigations reveal that Google’s computers were infiltrated as early as April 2010.

Does this event expose the Achilles heel of the whole model? I think, yes. Last September, I attended an executive briefing on Cyber Security hosted by the Small and Emerging Contractors Advisory Forum (SECAF). Presenters from large federal government contractors spoke about government contracting opportunities relating to the United States Comprehensive National Cybersecurity Initiative (CNCI), a highly classified, multibillion dollar government program designed to proactively prepare our country for current and future cyber security threats.

What I heard in that briefing was very scary and sobering, and the risks are real. At worst, foreign interests may already have the ability to shut down the Internet and completely cripple our economy. At a minimum, hackers are stealing and compromising valuable information daily.

Modern technology is increasingly becoming a part of everyone’s everyday life. We use the latest gadgets and Internet connections to communicate and transact business. The more we rely on the Internet, the greater our risk. I believe that businesses and other computer users should concern themselves with retaining control over their data – their mission critical information. That isn’t easy to do if you hand it all over to a third party.
SC: What’s your favorite technology, and why?

DB: They say the only thing more boring than a room full of lawyers is a room full of accountants – and managerial accountants are the worst. I know that businesses expect that managing business is the priority – not managing the systems. Technology is an enabler. It needs to be easy to deploy, easy to manage and taken for granted.

You want to know my favorite technology? It’s Business Intelligence and Dashboards. Are you asleep yet? The exciting thing about BI is it was a technology that used to be only leveraged by very large enterprises. The cost of the applications and the skill sets required of users put it out of reach of the SMB market space. Although not yet ubiquitous in the SMB space, the trend is that more and more SMBs are leveraging this technology for their competitive advantage. Application software is becoming more affordable and user friendly. The delivery of BI results can also be facilitated, not just through old-style static reports, but through the use of interactive dashboards.


About Author:
For more than 20 years, Scott H. Cytron, ABC, has worked with CPAs and accountants, providing public relations, marketing and communications services. He is a frequent contributor to industry publications covering professional services industries, including accounting, healthcare, legal, financial planning, collections and debt, and high-tech.

Contact info:
Scott H. Cytron, ABC
Cytron and Company
Phone: 214-647-2611, ext. 150
Website: Blog:


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