It’s no surprise that the down economy had a serious impact on accounting firm technology spending as many firms hunkered down this year and only invested in those technologies and updates that were absolutely necessary or those that had a clearly obvious return on the investment.  With the increase in IT activity we are experiencing at year end, there is invigorated hope that the 2010 economic outlook will be much more positive, but we believe most cash-strapped firms will wait until after busy season to evaluate next generation products and technologies that other firms were successful with during the upcoming busy season.  With that in mind, we present our In Firm 2010 IT predictions, including updates on those forecasts made at the end of 2009.

1.   Cloud Computing: Last year our number one prediction was the take off of Software as a Service (SaaS) which are applications that are delivered to a client (CPA Firm) over the Internet for a contracted fee based on the number of users or  volume of usage, and which are technically written specifically to take advantage of Internet architecture.  From that perspective, our prediction was iffy at best, so this year we are expanding our prediction to encompass Cloud Computing which includes almost any technology that allows applications to be run effectively over the Internet by an entity outside the firm.  This would encompass applications accessed via Windows Terminal Server and Citrix farms, which would include in part the Thomson Virtual Office suite, and externally by providers such as Xcentric which continue to provide this custom suite hosting capability to CPA firms.   CCH has completely rewritten their tax, practice and portal applications to take advantage of SaaS architecture and added a workflow (WorkStream) tool to be released by the end of 2009, but we are guessing most firms will hold off until reviews come in after busy season.  Now will anyone predict Intuit/Lacerte entering this mix?

2.   Windows 7 Success: Our prediction for Windows 7 in 2009 was that it would effectively kill Vista adoption, which it has, so we get a win on that one.  Looking ahead to 2010, our prediction is that firms will buy any new computers with Windows 7 beginning after April 16, 2010, and will transition their firms to this platform as they replace workstations.  While many of the existing Windows XP workstations could technically be upgraded to Windows 7, the increased RAM needed by the operating system and the additional monitors we are adding, doesn’t make it worth the time and effort on older PCs.

3.   Office 2007 Becomes Standard: We predicted that firms would push towards Office 2007, which has panned out based on the firms we worked with this year.  While we think Office 2010 will be delivered on time and become an effective competitor on the web-based side going up against Google Apps, we think that the major accounting application vendors are going to have a hard time getting their applications (particularly audit engagement containers) to interact properly, so we are betting that firms will stick with Office 2007 because it is stable.  Firms must remember they make their revenue from tax and audit production so the more stable the environment, the more profitable they will be.

4.   Google Continues Being a Thorn for Microsoft: Last year I predicted Google would be seen as a viable competitor to Microsoft Office outside of the accounting profession.  While there have been some educational and small business transitions, it was not enough for me to stake a claim of success so I will just say I was wrong, particularly with the free web versions of Microsoft Office 2010 being announced for next year.  Google however still has a strong following on the “Search” side and with money to invest in acquiring competitive technologies, Microsoft won’t be the only one doing the bidding, so I think their competition will heat up more in 2010.

5.   Apple iPhone Inroads: For those firms that have AT&T as their digital cellular provider, we have seen a lot of partners getting iPhones.  While the ultra cool iPhone is not as prevalent as the more practical BlackBerry devices, we believe we got this one right and it may continue on even more in 2010 if the rumors about Verizon supporting a new and improved iPhone are true.  Those rumors include a better battery and possibly laptop tethering, which would push adoption as we see Verizon as being the most listed digital cellular provider in our firms.  Also, last year we commented that the number of Apple workstations would continue to grow, but not within CPA firms, which has turned out to be correct.  We don’t believe that will change this year as we have not heard about any of the major vendors going this route (and we did not see any Macs lying around when we did our CCH and Thomson site visits this year).

6.   Virtualization Becomes Standard: We felt that virtualization would be promoted as a technology this past year which it was, so that was a fairly easy win.  This year we are pushing the prediction further and feel that setting up multiple servers in a virtualized environment would be the majority of new installs.  We think that the experiences of firms this year and the fact that it was one of the hottest topics amongst the IT groups at the technology conferences and CPA firm network meetings throughout the year, will push the trend to a standard in 2010.

7.   Web Backup Leads to Disaster Recovery: Last year we predicted that firms would begin transitioning to web-based backups due to the increased volumes of data that firms are experiencing by going “paperless” and the high cost of larger tape drives and media.  As the cost of offsite storage and the bandwidth to access it has dropped, we have seen steady adoption, so we feel we also got this one right.  Our take on this prediction for 2010 is that we will see a number of web-based organization not only provide secure offsite storage for accounting firms, but also integrate a disaster recovery solution by being able to host the firm’s applications in their data center.  If the backup company has the data and also the knowledge of how to run accounting applications remotely, they could sell this service much more cost effectively than the cost to a firm of keeping a “hot site” or paying one of the national providers to deliver a trailer and generator in the event of a disaster.

8.   Portal Standard: We predicted that portals would become the standard in 2009 and while many firms did adopt them, the massive sweep we predicted had not happened at the time of writing this article.  While we are taking a ½ correct hit on this prediction, the recent activity in firms asking about portal technology may make it the standard before year end, so you’ll have to let us know if we earned the whole correct prediction.  Interestingly, both Nevada and Massachusetts have passed laws making it more difficult to email a tax return, which would further promote the use of portals, so we are pushing this prediction again this year stating that the majority of U.S. accounting firms will have a portal in place by December 2010.

9.   Laptops as Terminals: We will have to take an “iffy” score on the prediction that firms will transition their laptops to “dumb terminals.” While many firms have adopted Windows Terminal Server and Citrix and have added digital cellular access through air cards and tethering of their smart phones, many auditors are still not using it as evidenced by the high percentage that are still not filling out their daily timesheets and expenses.  While we think this should be the long term standard for securing audit data, we have seen a growing trend towards firms using disk encryption tools to alleviate this concern.  So for 2010, we are going completely off the wall and predicting that a major merger or technology upgrade within the digital cellular providers, will create a usable nationwide digital cellular network that firms can rely on.

10. Scanning Boost: The major providers of scanning technology have all done a good job of improving their products and those that are using them are seeing the benefits.  While we feel the economy at year end will turn around and we will all have solid tax seasons, the late recovery pushed front end scanning technologies in the “would be nice” category instead of “gotta have it” category, which means it won’t be a success for 2009, so we will take a hit on this one.  For 2010, we feel that firms will continue to transition towards front end scanning tools for the organization and bookmarking, but that the automatic input technology will not be as effective as promised until 2011, but then that would have to be on that year’s list!

Well, let’s recap with five predictions right, two wrong, and three somewhere in the middle, it’s better to hold out myself as an information technology focused CPA and consultant than to try to make a living as a fortune teller.  We hope you have a great busy season and look forward to sharing how our 2010 predictions did with you next year.

InfoTech Partners North America, Inc. , 13656 S. 37th Place, Phoenix, AZ 85044 Email: ITPartner@itpna.com Phone: (480) 706-1728 Fax: (480) 718-8880