Accounting Firms Moving Slowly toward Cloud: MAP Survey Finds Firms Still Relying Heavily on Locally Installed Software
[ILLUSTRATION OMITTED] The future of accounting software may be in the cloud, but the present remains in the server room--at least for now. That's one of the pictures painted by the results of a new section of technology-related questions in the 2014 Management of an Accounting Practice (MAP) Survey from the AICPA Private Companies Practice Section (PCPS) and the Texas Society of CPAs (TSCPA). For the first time, the biennial survey asked firms about specific software choices and whether they access the software over the internet. The new questions also explored firm policies regarding mobile and social media use, document retention, and hardware and software replacement. In addition, the survey inquired about the partners, staff, and outsourced personnel responsible for leading and managing the firms' information technology (IT) efforts. This article examines the firms' responses to the new set of technology questions and what those answers might mean for the profession going forward. THE SOFTWARE SCENE When CPAs envision the near future, they see the cloud. In The CPA of the Future, a study released in December by AICPA subsidiary CPA.com, 90% of the CPAs surveyed agreed that the delivery of digital business processes to clients will become a key differentiator among accounting firms in the next five years. On the other hand, the study, conducted by James Canton of the Institute for Global Futures, also found that only 8% of CPAs believe the profession is future-ready today. That means that at least nine of every 10 CPAs understand that the accounting profession needs to evolve quickly over the next few years to adapt to a rapidly changing business environment, one that emphasizes analytic and forward-looking services over increasingly commoditized compliance and reporting work. Part of that transition will involve the adoption and deployment of cloud-based software. Vendors have clearly hopped on the cloud wagon, with established players releasing software-as-a-service (SaaS) versions of flagship products, as new, cloud-only competitors emerge. It's still relatively early in that process, however, as evidenced by the MAP Survey, which found significantly more firms using software located on their computers than those accessing purely SaaS offerings. Part of the reason for this is the dominance of large vendors and established software packages. QuickBooks, for example, emerged as the clear leader in market share for write-up and bookkeeping software for firms in all seven size categories tracked by the MAP Survey (see Exhibit 1; all exhibits referred to in this feature can be downloaded as a single PDF available at journalofaccountancy.com/ cloud-survey). Write-Up CS from Thomson Reuters was the only other product to register double-digit usage rates among the nearly 1,750 firms surveyed, doing so for the middle five revenue tiers. Asked to indicate the primary way they access their write-up and bookkeeping software, more than 70% of firms replied that they use applications installed on-premise. The percentage of firms primarily using purely SaaS offerings, described as software accessed through a website login, failed to top 9% in any of the revenue categories. On-premise applications also lead the way in most other software categories: tax preparation, time and billing, scheduling, and work flow and document management (see Exhibits 2-5). SaaS applications are still relatively small players except in work flow and document management software, where XCM Solutions' web-based work flow offering has double-digit shares among firms with at least $5 million in annual revenue. Look for other cloud-based software offerings to claim large chunks of market share over the next five years. Firms already are predominantly in the cloud for research software, both for tax and for auditing and accounting. Thomson Reuters' Checkpoint and Checkpoint PPC products control the lion's share of the research software market (see Exhibits 6-7). …