Today's Technology for Tomorrow's Firm.
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12 January/February 2014 • www.CPAPracticeAdvisor.com THE BLEEDING EDGE • Innovation will be sluggish. This isn't just a function of the ongoing recession, which cut corporate R&D; budgets. It is also a function of the budget woes in Washington, DC. Congress, as part of the "fscal clif " deal in January 2013, made the R&D; tax credit retroactive for 2012 and extended it to the end of 2013 – but no further. In the current fscal envi- ronment, extending the credit further for 2014 is uncertain at best. Also afecting innovation, though, is the fact that the tech industry has just come off of a sustained period of massive and amazing innovations. From smartphones and Facebook to tablets and Google Glass, we have staggered consumers and business users alike with the sheer breadth of innovation over the past decade. In 2014, we'll take a breather to catch up and evaluate where we are. • Government f unding for tech- nology will be scarce. Between the scandals, the website catastrophe of the Afordable Care Act, and the fscal woes, the government doesn't have the luxury to indulge in technology. There is an election coming. And w h i l e t h i ng s l i ke t h e Nat i o n a l Broadband Plan and broadband stimulus took center stage in the frst two years of the Obama Administra- tion, technology will only be men- tioned in 2014 in reference to failures of websites and security. Worse yet, the government research projects that drove such innovations as the optical digital recorder and the Internet are difficult to fund these days. And research grants across the board have dried up. • Hardware inventories are building. Two factors are involved in this – the economy, and the failure of some core technologies that were supposed to be huge in 2013 but failed to materi- alize (as in touch screens). In the countries that make microprocessors, memory, peripheral devices and other hardware, inventories are building. Tey have to be sold, or the companies will face bankruptcy siting on huge inventories for which there is only lukewarm demand. Tere are other factors as well. Steve Ballmer is out at Microsof, and Steve Jobs has left this dimension. Major innovators are out as companies seek to shore up profts for their shareholders and recover from failed eforts to cash in on the smartphone/tablet/cloud computing trends. Also, consumers are balking. Afer every major technology boom, there is a popular backlash – and we would be foolish indeed to think we will escape it this time. The innovations of the Twenties (automobiles, radio, airplanes) gave rise to the frst of the science-based monster movies. Manned space travel gave way to fears of alien UFOs. And the current iPhone and tablet revolution will give way to…who knows. But there is a consumer backlash that will ebb and wane in 2014. Last year, we predicted with great conf idence that 10 things would happen: • Automobile technology would be an emerging trend. • AOL would make a comeback. • Te desktop PC would face declining sales, but would not be dead. • Tax preparation systems would stage a recovery to become more central to accounting practices. • Computer security would begin to evolve. • Touch screens would be a bust. • Windows 8 would be…somewhat successful. But no more than that. • Technology costs would soar, espe- cially for cell phone data plans. • PC Gaming would stage a comeback against "game consoles." • App Stores would become a fading trend. We won't handicap these predictions, 12 January/February 2014 • www.CPAPracticeAdvisor.com By Dave McClure Dave McClure is a consultant and widely published writer on technology issues. He can be contacted at dave. mcclure@cpapracticeadvisor.com I t is hard to imagine a more disastrous year for technology than 2014 will be. Sure, there will be a few litle bright spots in terms of falling costs for hardware and storage. But three signifcant trends are converging that will make things difcult at best for the tech side of the accounting profession: The Dark Side of Technology Predictions for 2014 cpa_12-14_McClure.indd 12 2/5/14 11:42 AM