Emerging Opportunities Whitepaper 10.13.09

8/2/2019 Emerging Opportunities Whitepaper 10.13.09

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Five Key Factors and

Nine Management

Strategies for Seizing

the Advantage

Emerging Opportunities for Accounting

Firms in a Changing Economy

By Rick Telberg

A CPA Trendlines Special Report Bay Street Group LLC

This c ustom publi cation has been s ponsored by Res earch In Motion Ltd.

Copyright 2009. Bay Street Group. All rights reserved.


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Emerging Opportunities for Accounting Firms in a Changing Economy

Copyright 2009 Bay Street Group LLC. All Rights Reserved 2

Table of Contents

Executive Summary .................................................... ......................................................... 3

Methodology..................................................................................................... .................. 3

Five Key Factors Driving New Opportunity....................................... ..................................... 4

Key Factor 1: Crisis Creates Opportunity...................................................... .................... 5

Key Factor 2: Recovery, Re-Regulation And New Rules.... ..... ..... ...... ..... ...... ...... ..... ...... .... 5

Key Factor 3: Yes, New Taxes ................................................... ...................................... 7

Key Factor 4: The Talent Shift ................................................... ...................................... 8

Key Factor 5: Technology Drivers .............................................. ...................................... 8

Nine Management Strategies for Seizing the Advantage........ ..... ...... ...... ..... ...... ..... ...... ...... .. 10

1. Client Satisfaction. ...................................................... .............................................. 10

2. Business Development............................ ......................................................... ........ 10

3. Employee Recruitment and Retention ..................................................... .................. 10

4. Technology Management and Cost ................................................ .......................... 105. Expense Control ................................................ ...................................................... 11

6. Document Management........................... ........................................................ ........ 11

7. Research ................................................. ......................................................... ....... 11

8. T ime and Billing ................................................. ...................................................... 11

9. Unified Messaging ..................................................... .............................................. 11

Conclusion....................................... ..................................................... ............................ 11

Appendix.................................................. ........................................................ ................. 12

Research Survey................................................ ......................................................... ....... 12

Demographics...... ...................................................... ....................................................... 12

Survey Results and Findings............................. ......................................................... ........ 13

1. Smartphones play a key role in helping accounting firms achieve

important business objectives....................................... ............................................ 13

2. The single, most important benefit stems from mobile, real-time connectivity ...... ...... . 13

3. Accountants commonly report instances of obtaining competitive advantage

through smartphone use...................................................... .................................... 14

4. Huge opportunities remain for accounting firms to leverage smartphone capabilities ... 15

5. Accounting firms support smartphone usage as a matter of business policy........ ...... . 15

6. BlackBerry is preferred.... ..................................................... ..................................... 16

Conclusion....................................... ..................................................... ............................ 16

Statement.............................................................................................. ............................ 17

Bay Street Group LLC.............................................................................. .......................... 17


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Executive Summary

The year 2009 will forever be remembered as a time when the global economy began a painful

restructuring amid a cascade of systemic failures -- credit panic, stock market crash, and mortgage

meltdown and business contraction. But some smart and able accounting firm decision-makers stand

to benefit... if they can catch the right trends. In this research report, we examine five of the critical

issues that are creating new opportunities for the accounting profession and nine key strategies forobtaining competitive advantage.

Methodology

For this research project, Bay Street Group LLC contacted and interviewed in depth more than two

dozen acknowledged thought leaders in the profession. Highlights of some of those interviews are

included here. In addition, Bay Street Group LLC conducted an online survey of professional

accountants, focusing on decision- makers in mid-size to large accounting firms to assess their use of

cell phones, smart phones and related mobility strategies. Some of those survey findings are

presented here as well.


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Five Key Factors Driving New Opportunity

Based on a pre-project examination of current literature, professional discussions and the ongoing

assessments and analysis of Bay Street Group LLC, five broad areas were identified as timely and

decisive factors driving new opportunities for accounting firms:

1. CRISIS CREATES OPPORTUNITY: Due to economic contraction and dislocation unseen in a

generation, new competitive advantages are quickly emerging for well-positioned market leaders

and astute value innovators.

2. RECOVERY, REDREGULATION AND NEW RULES: As part of the re-stabilization of the global

financial services sector, standards-setters and regulators are conducting a thorough

reconsideration of accounting and auditing rules. New canons of practice are developing for

accountants and auditors. Quick-witted and quick-footed firms stand to win first-mover

advantages.

3. YES, NEW TAXES: In the United States, in particular, governments at all levels are seeking

revenue enhancing measures. The new Obama Administration, for example, is seeking to fund

new initiatives in healthcare, energy and education while also covering the long-term costs of

emergency bailouts, prepackaged bankruptcies and new industrial and infrastructure policies.

4. THE TALENT SHIFT: In the past few years, accounting firms suffered sometimes severe s taffing

shortages caused by (1) a surge in assignments related to post-Enron Sarbanes-Oxley auditing

rules and (2) a decline in CPA candidates as students instead pursued MBAs for higher paying

jobs on Wall Street. With the implosion in Finance, students are once again flocking to

accounting, providing a ready, able and price-negotiable pool of new talent.

5. TECHNOLOGY DRIVERS: As can be expected, technology is proving to be the great lever

separating the thriving accounting firms from the merely surviving. Accounting firms are

embracing efficiency, integration, continuous connectivity and workforce mobility as their

watchwords.


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Nine Management Strategies for Seizing the Advantage

The report concludes with a presentation of new survey research by Bay Street Group LLC and nine key

strategies that progressive accounting firms can leverage to gain and maintain competitive advantage.

Key Factor 1: Crisis Creates Opportunity

In any recession, the game tends to favor the big or the nimble, or both. For accounting firms, this means

competitively dominant firms are consolidating their market advantages, while specialized spin-offs and

innovative start-ups seek new footholds.

Well capitalized and profitable firms will be well positioned to take advantage of strategic additions both in

niches and partner talent, according to Joel Cooperman, partner and chief executive at Citrin Cooperman

& Co. LLP, one of the leading accounting firms in New York City, with 76 partners, 218 staffers and

revenue last year of about $80 million, a 12 percent increase from the year before.

The economic downturn will also test the mettle of firms leadership, Cooperman said. The CPA firms that

pay out 100 percent of partner compensation during the year and leave little or nothing for reserve will be

forced, he said, to make dramatic cuts in partner compensation and staff personnel in order to close the

shortfall between lower billings or slower collections and their operating expenses.Some of the less well-heeled firms may splinter, fail completely or seek white-knight merger partners. The

accounting profession has already seen a flurry of such mergers nationwide. In the New York market, RF

Resources LLC, a mergers and acquisitions broker for accounting firms, expects the number of deals to

surge past already record 2008 levels. So far this year, RF Resources has identified 15 deals in the New

York Metro Area representing a 50 percent increase over last year at the same time. RF Resources

president Robert Fligel says the sudden upsurge in takeovers is being fueled by well-monied national

accounting firms finding buying opportunities among mid-size local firms with strong client bases.

At the same time, weaker firms are shedding personnel or otherwise freeing up skilled and experienced

professionals, prompting industry observers to expect a new generation of innovative start-up.

New firms will be born and theyll be charging out at 80 percent of their former firms rates the firms

theyre now competing against, according to James Metzler, vice president of the 350,000-memberAmerican Institute of Certified Public Accountants. And theyll be able to do it because theyll be

competing with the newest technologies, low overhead, and the best people they can get regardless of

where theyre located. Itll be virtual and mobile laptops and BlackBerrys. You wont need brick and

mortar. Building an internet-only firm is easy now and you can have your partner meetings at Starbucks.

The whole idea of an office may become obsolete, if one listens carefully to Teresa Mackintosh, senior

vice president in the tax and accounting business at Thomson Reuters. As we look to the next generation

of accounting firms, we need to focus on the next generation of client, she said. The days gone by

when clients actually enjoyed dropping by your office. Accountants must be able, not just in the future,

but right now, to service clients remotely. Thats why Thomson Reuters, along with rivals like CCH

Wolters Kluwer, Sage Software and Intuit, are fast developing applications that extend their software

packages to advanced smartphone platforms.

Key Factor 2: Recovery, Re-regulation and New Rules

The world economy has entered an era of rapid and intense change in the structure of financial

markets and institutions. This is leading to a wholesale re-regulation of the finance and banking

sectors. G20 nations have agreed to a new system of unified accounting standards. Leading

accountants believe the changes could be more significant than the Sarbanes-Oxley rules enacted in

the aftermath of Enron.


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Already, accountants have become accustomed to throwing around phrases like TARP, TALF, PPIP

and ARRA. The multi-trillion-dollar stimulus and recovery programs are mobilizing throngs of accounting

talent; and accounting firms are actively and openly vying for a piece of the bailout oversight spending.

President Obama is on record for a financial regulatory system with better enforcement, better

oversight, better disclosure, and increased transparency. With the re-regulation of the accounting-

intensive financial sector, the profession expects new revenue streams for a long time to come.

Its a time of tremendous opportunity, agreed David Costello, president of the National Association of

State Boards of Accountancy, which represents the 54 U.S. jurisdictions that directly regulate

accountant certification and licensure. We can expect increased and more complex regulations, which

will drive up demand. And the premium placed on ethics, competency and integrity will naturally work

in favor of the profession.

In addition to complex new regulatory regimes, United States business executives are also facing the

imminent prospect of abandoning a century of Generally Accepted Accounting Principles in favor of a

new set of global rules -- International Financial Reporting Standards. The implementation timetable

has been pushed back while the U.S. Securities and Exchange Commission wrestles with the financial

crisis. But a single set of worldwide accounting standards is inevitable, according to Jim Reeves,

senior vice president in charge of new product development for the PPC line of tax and accounting

manuals at Thomson Reuters. Globalization simply cant be ignored.

The competitive edge will belong to the professionals and the firms who can best identify the

opportunities, often among their own client base. Indeed, 16 percent of U.S. corporate assets are

already owned by foreign corporations, which are, of course, already using the new global standards.

Leading-edge U.S. firms are finding fertile ground in gaining work at domestic subsidiaries of foreign

companies by offering to translate GAAP into IFRS.

Donald Applegarth, an audit partner at Schneider Downs, the nations 44th largest accounting firm, with

32 partners, 350 staffers and offices in Pittsburgh, Pa., and Columbus, Ohio, has been bracing clients

for the costs of conversion to global standards. He says American companies, burdened with running

both GAAP and IFRS simultaneously, could spend far in excess of the 0.05 percent of revenue

European companies incurred. That may not sound like much, but an IFRS conversion could reap an

accounting firm 5 to 10 times more billings than the average audit.

U.S.-based global accounting firms have been gearing up for IFRS conversion for years. KPMG

launched its effort in 2000, and, with 1,400 conversions so far, may be the leader. But Deloitte, Ernst

& Young and PricewaterhouseCoopers are ceding nothing. Furthermore, conflict-of-interest rules make

it problematic for companies to hire their own auditors, allowing a second firm to get its foot in the

door. Often enough, that second firm is a smaller competitor eager to pick up ground-breaking work

with a big-league client.

Auditors at large and mid-size accounting firms are also gearing up for more changes to come. To

name a few, in the shorthand auditors know:

mandated XBRL data tagging;

the advent of electronic confirmations;

growing going-concern issues prompted by a tough economy; the extension to private companies of new rules FIN 48 on tax planning and

SFAS 141R on business combinations; and

new requirements for 403(b) audits at nonprofit organizations.

In short, the compliance environment is exploding. With new regulatory rules, government audits,

restructurings, workouts, bankruptcy activities, liquidations, fraud, and expert witness activitiesits hardly

an overstatement to suggest accountants and auditors will be fully employed for the foreseeable future.


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Key Factor 3: Yes, New Taxes

The professional tax preparation and planning business has been growing steadily in the United States

since the 16th Amendment was passed in 1913. Professionals, just now digesting the changes in the

tax code stemming from early economic stimulus and recovery initiatives, are bracing for more.

Taxpayers are worried and confused. And, while some low-end tax clients could trade down from mid-

size and large firms to smaller firms, storefront operations or do-it-yourself software, the core of the

accounting profession is expecting an explosion in demand. Its fair to assume youre going to see big

tax-advice opportunities for accounting firms, said L. Gary Boomer of Boomer Consulting, which

coaches more than 140 accounting firms a year in strategy and technology.

But clients are beginning to show some price resistance and significant numbers are in financial

distress. So the challenge for the tax profession will be in making sure profits follow on the additional

revenue opportunities. Technology could well be the deciding factor in profitability.

Even now, tax practitioners are looking at a host of new and complex technical issues, including:

revised Form 990 for nonprofits;

new estate tax legislation;

expansion of the Alternative Minimum Tax in 2010 to 33 million taxpayers;

more than 30 tax provisions expiring in 2009;

President Obamas promise to hike taxes on the wealthy and cut taxes for the middle class;

a Congressional attack on the current 401(k) system;

the tax aspects of bankruptcy, liquidations and debt restructurings (both business and individual);

state and local budget shortfalls, and

new and perilous preparer penalty rules.

Just these changes alone would lead to a surge of year-end planning in 2009 and heavy workloads in

the 2010 tax season. Some are saying accountants can expect a tax "reform" package in 2010 that

could rival the Reagan-era tax-code changes, which, as accountants recall, could drive new business

for years.

Accountants are coming off a very strong tax season, confirmed Bob Dias, vice president of product

and segment management at CCH Wolters Kluwer, the company that supplies ProSystemFX tax prep

software to accountants and also writes the how-to manual on the U.S. tax code that even the IRS

uses. Going forward, Dias said, the critical business challenge for accounting firms will be effectively

managing all the new demands on their time and resources. Here, technology plays a pivotal role.

Firms need to be minimizing the mundane pieces of workflow, Dias said, and let technology handle

as much as possible. Client data, Dias said, needs to be available at all times, to all in the firm who

need it, whenever they need it, wherever they are. Real-time connectivity among knowledge workers

like CPAs breeds more knowledge and faster response times. With so much information flying around,

every which way, it changes the nature of the information. Dias terms it spontaneous intelligence.

Firms that are successfully focusing on efficiency, connectivity and mobility are reducing their

resource efforts by as much as 40 percent, according to Dias. The firms that get it, get better at it

every year.


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Key Factor 4: The Talent Shift

While many accounting firms were caught flat-footed after the surge in Sarbanes-Oxley work because

of a lack of qualified staff to handle the work, today the industry is much better positioned. The

pipeline of new accounting college students is swelling to record numbers. The number of candidates

sitting for the licensing exam is bouncing back. And many smart Twenty-somethings who in recent

years may have pursued an MBA to work on Wall Street are instead looking at getting theiraccountants license and going to work for accounting firms. As a result, accounting firms are finding

that talent, once an issue which constricted opportunity, is now a factor in creating opportunity.

With layoffs in other sectors of the economy, accounting firms stand to reap a whirlwind of fresh

blood. There are opportunities we havent seen in a long time, said Gary Shamis, managing director

at SS&G Financial Services Inc., a six-office accounting firm based in Cleveland, Ohio, and a leading

consultant to other accounting firms. Were getting resumes from some very high quality people.

Some older and more senior partners and staff may find it increasingly difficult to adapt to the ever-

faster pace of workflows and new technical literature. So a younger generation, whose bargaining

power may be temporarily impaired by a slowing economy, will eventually begin to take its place as

equals. The most knowledgeable people in the room may no longer be the most veteran.

The changes were seeing in the workforce are fundamental, according to Tom Hood, chief executive of

the Maryland Association of Certified Public Accountants. And a lot of that has to do with the power of

technology to empower, to force transparency, encourage participation, and create engagement. Will

that work in the strictly hierarchical model thats traditional to accounting firms? Im not sure. I think a lot

of firms need to find new ways to work.

Of course, collaborative work modes, global customers and remote access to anything anywhere,

require new ways of thinking about work and managing people. Theres no such thing anymore as a

snow day off from work, quipped Bob Scott, executive editor of the Progressive Accountant.

A new cultural and mental state is developing, according to Glen Keenan, president of XCM Solutions

LLC, an industry leader in providing workflow automation solutions to the tax and accounting

profession. You dont drive an hour and a half just to say youre in the office when you can get your

work done from your lap-top or your BlackBerry. On Keenans BlackBerry, by the way, he can

monitor and manage the mad rush of tax season, even reviewing individual returns, if necessary.

Key Factory 5: Technology Drivers

As accounting firms seek to capitalize on opportunities for growth, they are also speeding the adoption

of new productivity-enhancing technologies. Leading-edge accounting firms seem to share a few

technology traits in common:

They are fiercely dedicated to improving workflows, speeding existing processes and accelerating

change.

They believe in the power of a collaborative workforce, knowledge sharing, constant connectivity

and mobile work styles to improve client service and satisfaction.

And they possess a tireless passion for finding better ways of doing things.

Todays economic forces and business realities can only intensify an accounting firms need for speed.

The fact is that the most profitable firms actually work fewer hours and make more money,

according to Greg LaFollette, CPA.CITP, senior manager in tax and technology consulting at Eide Bailly

LLP and executive editor of The Tech Gap at LaFollette Consulting LLC Theyre just plain, good

process people. They have got it down.

Smart firms, LaFollette says, dont even use the term remote computing. Its ubiquitous; its

everywhere. Some in my generation see that constant connectivity as a ball and chain, but the rest of


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your staff sees it as freedom. Its freedom when you can attend your kids soccer game and still

check your email on your BlackBerry.

But old habits die hard. Traditionally, accountants apprenticed as auditors, where they were trained to look

at the previous years workpapers and make sure they followed the same procedures again, noted

Stephen Barrett, the partner in charge of technology at HKMP, a six-partner accounting firm in New York

with 20 staffers. But you cant run a firm like that these days.

At HKMP, he said, We try to take what we did last year, look at it, and find new ways to make it work

better. As a result, HKMP has become the model of a modern accounting firm:

There is no library; tax and accounting research is done online.

There is no file room; all final records are scanned and stored electronically.

The few file cabinets that remain in use at the firm generally contain snacks for the staff. (Look under G

for the Granola bars.)

The firm has automated every client process, created business dashboards for partners to check

every morning, and made every document in the system available to whomever needs it, whenever,

and wherever.

HKMP has turned its passion for technology into a side business applying its own experiences tomuch larger accounting firms. For one such firm, HKMP automated the year-end closing process,

saving about three-and-a-half hours per staffer per engagement. Barrett calculates the client is

saving about $7 million a year.

At the core of the HKMP system is a versatile, scalable document management system from

Autonomy Interwoven, which is emerging as a market leader among mid-size to large firms. Most of

our customers are what I would describe as progressive accounting firms, said Mark Jackson, senior

product manager for accounting solutions at Autonomy Interwoven. They are pro-active at looking for

ways to become more efficient and at improving their business processes.

One of the strengths of the Autonomy Interwoven platform is the flexibility it provides developers in

creating customized applications for use on handheld devices.

Anything I do in the office, I can do at home, or on the road, or on my couch from my BlackBerry,Barrett said. With his BlackBerry, Barrett calculates his 40-minute, twice-a-day commute is worth

$116,250 a year in billable time.

Darren Root, founder of Root & Assoc. in Bloomington, IN, and executive editor of CPA Technology

Advisor magazine, takes it one step further.

For all the workflow economies that HKMP can build, the value is multiplied exponentially when it can

all be done remotely, on a handheld device like a BlackBerry. Roots choice happens to be a

BlackBerry Bold. With it, he can update his Salesforce.com customer relationship management

system, which ties into his intact accounting system. He can practically start the invoicing process

while talking to a client at a cocktail party with a drink in one hand and his BlackBerry in the other.

But its more than that. We need to get to where were doing everything we can on our mobile

devices, he said. Thats a whole new mindset for the firm of the future.


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Nine Management Strategies for Seizing the Advantage

Leading-edge accounting firms are already taking advantage of the changing economic and regulatory

terrain to gain a competitive edge. As we have seen, they are seizing opportunities in crisis,

capitalizing on new regulatory schemes, planning for new tax regimes, sweeping up talented people,

and making the best of new technologies.

The new levels of continuous connectivity, remote computing, and wireless mobility are naturally

concentrating a lot of attention on the savvy use of smartphones like the BlackBerry. To assess how

firms use and benefit from smartphone capabilities, Bay Street Group compiled the responses of over

100 practicing accountants. Their responses yielded a veritable to-do list for firms seeking the next

level in competitive strategy.

For instance, accountants who report they work in a competitively superior firm are about twice as

likely to also report that they carry a smartphone. Those accountants are also more likely to:

Synchronize the data on their smartphone with their in-office applications, meaning they are

carrying their essential information wherever they go, to be used whenever they need it;

Monitor and manage document workflows for seamless project management;

Better balance the sometimes conflicting demands of work and family;

Stay on top of new developments in real-time; Attract and retain more talented people; and

Impress clients with the firms connectedness and responsiveness.

Furthermore, the competitively superior firms are also three times more likely to issue smartphones to

not only partners and senior directors, but also to senior staff and general management personnel. And

where the BlackBerry platform is chosen as the preferred solution firm-wide, twice as many

accountants say it gives their firm a competitive edge over their rivals.

Some of the key opportunities and strategies that can be leveraged by the right smartphone solutions

include the following:

1. CLIENT SATISFACTION: Clients are demanding higher levels of service. But expectations for

responsiveness are not limited to the 9-to-5 work day. With workflows spanning the globe and

multiple time zones, the workday has become 24/7. Responses that once could wait until

tomorrow may mean several days of lost work in a round-the clock world. Five minutes to tap

out an email or approve a document can mean all the difference to a client in London or a

technician in Bangalore. Indeed one in four accountants at mid-size and large accounting firms

say smartphones help their firms to impress clients with our connectivity, And what about

those clients who dont seem to mind waiting? Well, dont confuse patience with satisfaction.

2. BUSINESS DEVELOPMENT: Those tasked with sales, marketing and practice development need

to be able to seize opportunities in real time and to be able to communicate by phone and email

regardless of location. In fact, about one-fourth of the accountants surveyed at mid-sized and

large accounting firms say smartphones help their firm maintain a competitive edge.

3. EMPLOYEE RECRUITMENT AND RETENTION: Firms that present themselves as leaders need to

also provide technology that supports the work-life balance that busy and talented professionalsexpect. Half of the accountants surveyed say smartphones are a key ingredient in their firms

work-life s trategies.

4. TECHNOLOGY MANAGEMENT AND COST: Like any business, the most progressive accounting

firms are laser-focused on smooth management, reliability and security of their information

technology systems, while seeking the lowest cost of ownership over time. BlackBerry is clearly

the first choice for most firms, by a margin of two-to-one over any other option, according to

the survey. And standardizing on the BlackBerry platform offers significant cost and ease-of-

management advantages.


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5. EXPENSE CONTROL: Smart cash managers know that capturing the travel, entertainment, meal

and other routine expenses as soon as they are made is the way to assure accurate and timely

accounting. Waiting days or weeks for an Excel spreadsheet to be submitted can wreak havoc

with budgets. But expense recording applications designed for the BlackBerry platform allow

partners and associates to capture expenses when they are incurred, allowing the firm to better

manage expenses, speed up partner and associate reimbursements, and, of course, billbacks to

clients. Exgis Time and Expense Pro, for example, tracks time, expense and mileage entries

against clients, projects, locations, and, for international travelers, even foreign currencies. The

data is exportable to a spreadsheet, which can be sent as an email back to the home office.

6. DOCUMENT MANAGEMENT: Roughly 40 percent of accountants say their firms send and

receive documents via their smartphones. Plainly, access to critical work papers and client

product is now standard at many leading firms. New BlackBerry smartphones, using tools like

Documents to Go from DataViz, even offer the ability to edit, create and send Word, Excel, or

PowerPoint documents and manage PDFs. And solution providers like Autonomy Interwoven

deliver enterprise-level Worksite Mobility capabilities.

7. RESEARCH: Accountants with smartphones are taking their libraries and reference materials

wherever theres a wireless connection. Some 40 percent are following business and financial

news and checking competitive information on the web through a mobile browser. Some of most

popular stops on the mobile web include Bloomberg, AP News, Thomson Reuters and the New

York Times, which offer BlackBerry-optimized news readers. Meanwhile, major tax, accounting

and legal research services such as CCH and Thomson are planning to follow their users with

new mobile-based applications under development to meet burgeoning demand.

8. TIME AND BILLING: Nearly every smartphone user already maintains his or her calendar on their

device, according to the survey. But if your firm is still tracking billable hours the same as 10

years ago, theres probably another firm thats doing it better and billing more. There are a bevy

of time capture applications that simplify time keeping to yield more current updates to

timesheets and greater visibility into resource effectiveness and availability. Airtime Manager,

for example, prompts users after each call or email to book the time charges, capturing

otherwise lost billings.9. UNIFIED MESSAGING: With 99 percent of smartphone-equipped accountants using the device

for phone calls and voicemail, the next big break-through in productivity is expected to be

unified messaging. The BlackBerry Mobile Voice System merges the desk phone, the corporate

PBX and the mobile BlackBerry smartphone. Calls are transferred seamlessly. The system

drives down the cost of long distance charges and takes advantage of lower-cost landline

charges. It also simplifies life for clients who need to recall only one phone number for their

accountant. And it protects the firm by confining proprietary staff-client activity to a firm-owned

device and database. With MVS, BlackBerry does for voice what it does for email.

CONCLUSION

The survey data and the in-depth interviews clearly reveal that the firms best prepared to capitalize onthe current economic and business conditions will share several forward-thinking strategies. They will

share new ways of working, flexible schedules, tight networking among colleagues and, of course, the

right smartphone strategies.


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Survey Results and Findings

1. Smartphones play a key role in helping accounting firms achieve important business objectives.

Clearly, accounting firms rely on their smartphones to provide reliable, real-time client service.

In addition, 65% of respondents report that their firms use of smartphones "improve productivity,

workflow and project management." And 48% say smartphone usage improves work-life balance.

Critical objectives achieved with smartphones

Maintain client contact and good serv ice 97%

Improve productivity, workflow and project management 65%

Help balance life and work 48%

Stay on top of new developments in real-time 38%

Maintain a competitive edge 28%

Impress clients with our connectivity 25%

Attract and retain talented people 17%

Record expenses on-the-go 5%

Make time and billing easier 3%

2. The single, most important benefit stems from mobile, real-time connectivity.

When asked to identify the "single, most important" benefit of smartphone usage for their firms,

accountants most often mention the constant connectivity that allows them to provide real-time

client service and maintain efficient workflows.

Sample verbatim comments:

1. Instant email notification and communication

2. 24/7 connectivity

3. Ability to react to issues more timely.

4. Ability to serv ice a client when away from the office.

5. Access to the firm's lifeline of contacts and stockpiled emails and voicemails. Keeping those in

check allow me to stay on top of them or they are like an unruly haircut.

6. Allows me to answer staff questions in a timely fashion.

7. Allows me to avoid miss ing appointments

8. Allows me to stay on top of office without being at home or in front of another computer.

Freedom.

9. Allows us to be in contact with our clients outside of the office.10. Allows us to be out of the office but still be able to handle work that needs to be done by people

in the office and stay connected to our clients.

11. Allows us to be productive (billable) when we otherwise would not be.

12. Allows us to maintain real-time communications.

13. Almost instant communication and file sharing

14. Be responsive to clients while giving us the freedom to enjoy other parts of our life as well.

15. Client service and responsiveness.

16. Constant communication with co-workers to maintain productivity.


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17. For me, the most important thing is having my calendar with me at all times, to update as needed

while I am at a client, at home, etc. I put everything on there, personal, professional, volunteer

work, etc.

18. It acts as a comprehensive Personal Ass istant for email, phone calendar and contacts in order

to act upon time-sensitive information and events.19. It allows me to get my business e-mail pushed out to me when I'm on the road, so that I can

deal with, and delegate, e-mails as they arrive during my downtime, rather than having to return

to the office at the end of the day to have to deal with an Inbox full of e-mail.

20. Keep work moving and allow current changes in work ass ignments based on current changes in

level of importance.

21. Keeping on top of things on a real time basis. Others aren't waiting a longer period for a

response.

22. Keeps all my contacts and work performed for years

23. Make it possible to respond immediately to clients, making them think we are always available.

24. More clients treat e-mail like phone calls in that they expect a response in a very short period of

time. When you are in meetings or on the road it helps stay in touch the way clients expect.25. My phone allows me to go to manage staff and jobs without always being physically present. I

provide better customer service when I am aware of my emails at all times.

3. Accountants commonly cited instances of obtaining competitive advantage through smartphone use.

Respondents consistently reported that their use of a smartphone provides a discernible competitive

edge. In one notable instance, a respondent reported: "Received notification of Madoff arrest before it

was released to the media. That allowed me to call client/victims and alert them before they heard it

on the news."

Additional sample verbatim comments:

1. Yes, I would say that we have been able to respond more quickly than competitors to RFPs orother client requests because of connectivity.

2. Being able to answer client emails when out of town or not at the office has eased client

concerns on numerous occasions.

3. Yes. We impress our clients with the ability to communicate and transmit information about their

engagement while in the Weld.

4. Our timely response has convinced several new clients to use our firm.

5. Yes, I have been able to respond to clients and prospect immediately due to my having access

to files, documents, and other resources.

6. We also can use it as a wireless device for our laptops.

7. Breaking news allowed faster response than competition. Continued dialog for negotiations while

remote allowed better positioning.8. Was able to tweak buyout spreadsheets for a client using Documents to Go.

9. Someone on vacation was able to check emails and respond or arrange for a response to a

request for proposal.

10. The ability to respond quickly to developing client serv ice opportunity by remotely receiving

information via email and passing it on to another remote user via email who was able to

coordinate with the prospect and respond quickly to secure the account.


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4. Huge opportunities remain for accounting firms to leverage smartphone capabilities.

While it is no surprise that accounting firms use smartphones primarily for phone calls, email,

calendar and contacts, it is clear that many stand to gain from further leveraging their smartphone

investment.

How accounting firms use smartphones today

Make and receive phone calls and voicemail. 99%

Send and receive email. 97%

Manage calendar, tasks and contacts. 94%

Text message or instant message. 74%

Sync with in-office applications. 58%

Receive and send documents. 42%

Surf the web. 42%

Follow business and financial news and issues . 37%

Play games. 16%

Watch video. 11%

Access /update customer relationship management (CRM) data. 8%

Research technical or professional questions. 7%

Monitor and manage document workflows 6%

Other 3%

Access accounting systems, ledgers, balances or bank accounts. 2%

Record time and billing. 0%

In particular, applications and solutions are currently available to accounting firms to:

1. Manage documents and workflow

2. Access customer relationship management data, and

3. Record time and billing activities.

5. Accounting firms support smartphone usage as a matter of business policy.

In cases where accounting firms have adopted smartphones, 24% of the firms issue devices to

professionals hold the rank of senior staff or above. Another 26% of firms limit company-issued

smartphones to partner-level personnel and 6% to only the managing partner.

Who gets a "company-issued" smartphone in an accounting firm

Managing Partner/President/CEO/COO 6%

Partner/Senior Executive -- and Higher 26%

Senior Staff/General Management -- and Higher 24%

Mid-Level Staff/Internal Auditor -- and Higher 4%

Junior Staff/Accountant/Administrator -- and Higher 3%

No one is issued a company-supported smartphone. 28%


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Survey results from smartphone users also indicate that 66% of accounting firms support

smartphone usage by either buying the device directly (44%) or reimbursing the employee for all

or part of the cost (22%).

Who owns the device in an accounting firm

It belongs to the user personally. 31%

It belongs to the firm. 44%

It belongs to the user but the firms helps cover the costs. 22%

Additionally, 50% of firms are willing to support both personally-owned and firm-owned devices.

Smartphone spending policies are generally a high-level decision at accounting firms. Some 44% of

firms lodge the power with the chief executive alone.

Who makes the smartphone spending decision

The CEO or Managing Partner 44%

A CFO, CTO, CIO or other C-Level Top Executive or Senior Partner 21%

A committee of senior managers and executives 28%Other 14%

6. BlackBerry is preferred.

Among accounting firms with a preference, the BlackBerry mobile platform is preferred by more

than a 2-to-1 margin over any other platform

Accounting firms' preferred mobile platform

No mobile platform used. 16%

No preference. 20%

BlackBerry preferred. 38%

Windows Mobile OS preferred. 14%

iPhone preferred. 5%

Palm OS preferred. 5%

Other 2%

Conclusion

Mid-sized and large accounting firms clearly see the value in equipping their senior client-service

personnel with smartphones. And when they do, they most often turn to BlackBerry.

Research in Motion Ltd commissioned Bay Street Group LLC to conduct independent research and analysis in the

account ing prof ession. The content o f this report is the product of B ay Street Group LLC and is based on independent,

unbiased research not tied to any vendor product or solution. Although every effort has been made to verify the accuracy

of this in formation, neither Bay Street Group nor the sponsor of this report can accept any responsibility or liability for

reliance by any person on this research or any of the information, opinions, or conclusions set out in the report.


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Copyright 2009 Bay Street Group LLC All Rights Reserved 17

Statement

New York

June 2009

Bay Street Group LLC prepared this CPA Trendlines Special Report to (1) assess emerging risks and

opportunities relevant to mid-size and large accounting firms in light of recent business and economicevents and (2) to assess the state of smartphone usage and policies at such firms. For this research

project, Bay Street Group LLC contacted and interviewed in depth more than two dozen acknowledged

thought leaders in the profession and conducted an online survey of accounting professionals.

As the exclusive sponsor, BlackBerry/Research in Motion Ltd. was consulted in the development of

the project, received customized survey data expunged of personally identifying respondent data, and

was provided with advisory services.

This research is not intended for use beyond the context in which it is published and does not imply

that organizations are guaranteed success by using only these findings to achieve their objectives. To

be sure, gaining the most benefit from ones investment begins with an assessment of an

organizations unique needs.

Bay Street Group LLC hereby certifies that we wrote and edited this report independently, that the

analysis contained herein is a faithful representation of our evaluation based on our research and our

experience, and that the conclusions and recommendations are entirely our own.

Bay Street Group LLC

Bay Street Group LLC

Bay Street Group provides actionable information, strategic insight, and results-driven solutions to the

professional tax, accounting and finance communities. Clients include CPA firms and the vendors

which serve them.

Services include:

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Rick Telberg is the founder and principal of Bay Street Group. He is a veteran analyst, consultant,

commentator, publisher, and editor. As Editor At Large for the AICPA Insider, he is the professions

most widely-followed commentator. He is also editor of http://cpatrendlines.com, which provides Bay

Street Group news and analysis online.

In the accounting profession, he has served in leadership positions at Accounting Today, The PracticalAccountant, Accounting Technology, WebCPA, CPA2Biz and SmartPros.

Rick Telberg Bay Street Gro up LLC

Principal 13 Atilda Avenue

Phone: 1 (914) 674-4531 Dobbs Ferry, NY 10522

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[email protected] www.baystreetgroup.com