CPA Practice Advisor

NOV 2014

Today's Technology for Tomorrow's Firm.

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24 November 2014 • www.CPAPracticeAdvisor.com BRIDGING THE GAP By Jim Boomer, CPA.CITP On a "Need to Know" Basis Far too often, the M&A; process is conducted in tight secrecy. Only a select chosen few are priv y to the dea ls bei ng considered, let a lone timelines and terms of the agreement. This small group ty pically doesn't include anyone from IT. Instead, they are told what they need to know when they need to know it. And in a lot of firm's process, that means they are told something to the efect of, "We are bringing in 50 new people next week . G et t hem set up w it h t he tec h nolog y t hey need to h it t he ground running." Take a Proactive Approach Other than talent, technology is the largest investment for most f irms involved in an M&A; deal. It's also an impor tant strategic asset for f irm innovation and grow th. For these reasons alone, it seems only logical that IT should be brought in early in the due diligence process to provide an important piece of the overall deal. Allowing IT to be proactive in their planning can help streamline the transition for all parties involved. The Number That's Getting Attention We've had lively discussions about this topic in the Boomer Technology Circles and the CIO Advantage over the last several years. But it wasn't until one of our CIOs from a large f i r m t hat i s ver y ac t ive i n M& A shared the average cost to fully inte- grate each person from an IT per- s pe c t i ve t h at we h a d some e ye - opening numbers. Based on their experience, frms s h o u l d b u d g e t a p p r o x i m a t e l y $10, 0 0 0 to $12 , 0 0 0 per u ser for hardware, sofware, conversion and training. Tis may seem high to you and it was initially met with a great deal of skepticism. However, over t he y e a r s t he nu m b e r h a s b e e n confrmed by many of the experi- enced CIOs. A nd according to our annua l metrics we col lect for the Boomer Technolog y Circles™, the best frms ty pically spend roughly $10,000 per FTE for technology, so this number is reasonable. Rip and Replace Once the ink has dried, the decision has to be made about the best strategy for handling inconsistent technology. Do you allow each frm to operate as it did pre-merger? Or do you remove the bandage quickly and take a "rip and replace" approach. Many frms have found that a full replacement at day 1 is less costly in the long run. Regardless of the age or condition of the acquired frm's equipment, there is a sig nif icant cost to sup- p or t i n g mu lt iple h a rd w a re a nd sof t ware systems. You a lso delay efciency gains that could be recog- n ized by hav i ng consistent tech - nolog y a nd proc e s se s . Ye s , t h i s means one tax application, one audit application, one document manage- ment system, etc. Two other major considerations that need to be taken into account are d a t a c o n v e r s i o n a n d e n d - u s e r training. Moving and consolidating data onto a single uniform system requires a signifcant investment of time and money. No less costly is the t ra i n i ng t hat w i l l be requ i red to ensure that your team is operating at peak efciency. Timeline Compression As I said previously, the M&A; craze doesn't appear to be slowing down. And the timeline from initial discus- sion to deal completion isn't slowing down either. In fact, deals that used to take months are now being com- pressed into a mater of weeks. Tis is leading many CIOs to start plan- ning for the next deal before a target has been identifed and talks begun. In summary, the experiences from many leading frms have proven that mergers a nd acqu isit ions ca n be accomplished in an orderly fashion a nd desi red ga i ns ca n be rapid ly achieved. It requires a proactive, detailed and thorough analysis and plan for every deal. From an IT per- spective this means the ability (and time) to plan, a reasonable budget and the involvement of IT Professionals early in the process. Tis is just another reason frms are rapidly learning the value of a CIO with a seat at the management table. Success is based upon a team approach! 2 4 N o v e m b e r 2 0 1 4 • w w w . C P A P r a Jim Boomer is a shareholder and the CIO for Boomer Consulting , Inc. He is the director of the Boomer Technology Circles™ and an expert on managing technology within an accounting frm. He also serves as a strategic planning and technology consultant and frm adviser in the areas of performance and risk management. In addition, Jim is leading a new program, Te Producer Circle, in collaboration with CPA2BIZ and the AICPA. jim.boomer@cpapracticeadvisor.com O ur profession is currently a hotbed of merger and acquisition activity and there are no signs that it is slowing down. The drivers of all this action are numerous and range from retirement to fueling growth. As the current leadership inches closer to retirement age, more and more will be looking for their exit strategy. So what is technology's role in all this activity? Unfortunately, in a lot of these deals, IT is involved too litle and too late. The Role of Technology in Mergers and Acquisitions of Accounting Firms

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