Lugo Research on IT in Accountancy

During August and September 2020, we video interviewed a variety of accountancy firms across Scotland to discuss their views on IT for Accountants. These firms are not existing customers of Lugo and the people interviewed were in a leadership role and responsible for the firm’s IT. The findings of the interviews have been collated and we will be taking a deeper dive into the key themes from the research over the coming months.

In this month’s update we provide an overview of the areas covered by the quantitative research and share with you some interesting top-level statistics.

For context, the average size of firm interviewed was 105 staff, 3 offices, 2700 clients (including Personal Tax) with a turnover of £6.8m, of which 6% was allocated to an annual IT budget. This equates to £34,000 per month or £323 per employee. However, when asked what’s an acceptable cost to cover all IT spend per employee, this averaged at £186 per month, so £137 less per head. It was interesting to note that not many respondents knew by how much IT-related expenditure would increase when taking on a new member of staff.

IT Pain Points and Solutions

Participants in the research were asked to talk about their ongoing pain points with IT, and also to imagine they had a magic wand and describe what they’d like from IT that they don’t currently have.

Main Pain Points:

  1. The responsibility of IT falling to them, as an Accountant
  2. Staff lacking IT skills and confidence, with knowledge held by a few people rather than spread over the team
  3. Keeping up-to-date with the pace of change, whether it’s hardware, software or technology as a whole
  4. Being held back from moving to a fully cloud-based solution as vendors are still predominately developing desktop-based solutions
  5. Remote access
  6. Connectivity
  7. Lack of centralised, unified database, lack of synchronisation and automation
  8. Cyber security
  9. Too many emails

Solution Wishes:

  1. Replicating the same user experience no matter where you are working from and what you are working on
  2. Working on a fully cloud-based integrated solution, no matter the supplier
  3. Document Management solution resulting in a paperless office
  4. Innovative, proactive IT support
  5. Robust system security and more cyber education
  6. Fast, consistent broadband and system speed
  7. Staff and Clients better educated on technology

Communication

We analysed the ways firms communicated pre and during the COVID-19 pandemic, and how they would like to communicate in the future, both internally and with clients.

As you would expect, in-person communication fell dramatically during the pandemic with respondents expecting it never again to return to the levels it was before. The same was true of communication via phone and email, with Microsoft Teams seeing an increase of 25% for internal and 14% for external communication going forward.

Efficiency

In 60% of firms everyone works with multiple or widescreen monitors. With home working continuing to be the norm during the COVID-19 pandemic, is it feasible for staff to now have multiple monitors at home? If they don’t, how much will it affect productivity?

Suggestions of future advancements to make their firm more efficient included:

  • Automation/Robotic process automation
  • Integration
  • Microsoft 365
  • Cloud solutions
  • Remote working
  • Mobile device usage

Accountancy Services & Software

  • It was interesting to note 95% of firms still do time and fees, with the same percentage still accepting payment by cheque.
  • 90% have taken advantage of software automation with the most used solution being AutoEntry.
  • 85% of firms have chosen one cloud bookkeeping package as their preferred solution for clients.
  • A noteworthy 70% said their relationship with clients has changed since moving them onto cloud bookkeeping. Having more insightful and frequent communication with clients has helped to build closer relationships.
  • Firms have seen software integration increase efficiency with less out of date data.
  • None of the interviewees mentioned using any cloud software for audit, which may suggest a gap in the market, or no demand?

IT Strategy & Cyber Security

55% of firms said their IT strategy has changed since the impact of COVID-19, mainly in speeding up longer-term plans such as Microsoft Teams usage and more flexible remote working. 85% see themselves and their colleagues working from home more going forward.

We looked at cost and cyber threats with as many as 70% of firms saying they feel secure enough, although 25% don’t have a communication plan in place if they do get breached. The majority rated themselves highly at 8 out of 10 for their awareness of cyber threats and how secure they are.

60% of those interviewed outsource their IT support. 40% of respondents continually review, revise and streamline the software they use, with 70% saying technology meets their current expectations. IT is valued by most firms with 70% feeling they have enough awareness to make knowledgeable IT decisions.

Training

On average, 84% of people attend training with ICAS being the most popular source of up to date compliance information. 60% of firms are part of a peer learning group such as Innovation 2020 and Accelerate.

The future

There was a consistent theme when respondents were asked what they see as the biggest opportunity for Accountants who are willing to adopt new technology. It was simply that if you don’t change, you will be left behind. Firms embracing the new digital era of accountancy will be able to provide a more personal, tailored service to their clients. Real-time scenario-based tax planning and on the spot projections from their trusted advisor will bolster client retention. Automation will allow firms to take on more new clients without having to increase staff resource and what COVID-19 has shown, is that you are no longer limited to servicing clients within your local geographical area, so the world is your oyster!

 

Look out for more detailed insight into the key themes from our research in future articles. If you’d like to discuss any element of this research, please email Liz.Smith@LugoIT.co.uk

Huge thanks to the participants from accountancy firms across Scotland who gave up their valuable time to take part in this research.

#LugoLove Liz 💙