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We've all seen the target numbers for 'technology expenditures' in accounting firms. They run from 3 percent to 12 percent of billings and usually make managing partners go pale. I believe considering technology in that context misses the ever-changing point. Tomorrow's successful firm managers will recognize that technology is the base upon which the practice depends. While the attest unit, the tax side and even the MAS group are all important and, at least to some extent, interdependent, the glue that holds these components together is technology. This certainly wasn't true 30 years ago, or 20, 10 or perhaps even five years ago. But for the successful of 2005 and beyond, it most certainly is today. And yet we argue about the cost ' and, worse yet, we're not (at least most of us) even accurately measuring that cost.

Just what DOES technology 'cost?' Well, the first part is easy: Simply add up the amounts paid for new hardware. Next, we move to software, and it starts to get just a tiny bit more complicated. Some firms count software purchases but not renewals (I disapprove, but that's another column). And what about connectivity costs? Broadband is almost always included, but now we're beginning to share that broadband with VoIP telephones. And we're faxing via the Internet. All of which tends to drive UP 'technology' costs while eliminating or reducing more traditional expenses, like telephone line charges in this case. But wait, it gets more complicated. Much more! What about research? It was easy when we wrote a check to pay for 18 lineal feet of tax research books. Now we have A&A, tax and MAS research all combined with tax compliance software and/or engagement management software (by the way, this is a GOOD thing!). And those software vendors are now providing client portals, web sites, electronic filing services and online backup.

If the complexity of the direct outlay side doesn't make your head hurt, trying to get a handle on the indirect component most certainly will. First, be sure to measure training and support efforts. That's a cost. And it's usually significant (especially if it's that insidious 'buddy help') and oftentimes unrecognized. Also unrecognized is the administrative time for planning and implementing technologies. Most small firms outsource their technology ' somewhere along the line they've identified a 'computer guy' in whom they place trust rising to the level of 'technology visionary' for their firm. These consultants (often not particularly well-versed in the nuances of the practice of public accounting) range from excellent to down-right scary! So what's a small practice owner to do?

My suggestion is 'get a second opinion.' And a third. Many times a fourth, fifth and sixth can be helpful, too! In other words, ask around. Is your consultant pro-active ' does she come to you with new ideas, help you plan next year's budget and offer to help measure results? If not, perhaps it's not your technology that needs updating, but rather your technologist!

And we're still trying to measure what percentage of gross revenue we should be spending on technology! Yet, and again probably because of our training, we almost always fail to measure what we're buying. It's not technology, but PRODUCTIVITY!

One good way to determine your status is to take The CPA Technology Advisor Productivity Survey sponsored by Selden Integrated Systems, Inc. at www.cpata.com/productivity. The service is free and will provide you with a Productivity Score, which is an excellent starting point from which to measure. I encourage you to give it a try. I really think you'll be pleased.

PS: I've been testing a new piece of hardware that is quite slick. It's the ScanSnap from Fujitsu. It carries a very tight footprint so it was easy to make room for, even in my cluttered workspace. It scans directly to *.PDF at 15PPM and automatically scans both sides, in color, of the page in a single pass, cleverly eliminating blank pages. I've found myself e-mailing those 'on-the-fly' *.PDFs quite often. A single button scan of a pile of papers resulting in a *.PDF file attached to an automatically opened Outlook e-mail message is pretty compelling. And the selling price of about $500 is very reasonable considering the bundled Adobe Acrobat. Now if they'd just make it Twain-compliant. Look for more information on my blog at www.TheTechGap.com.

Mr. LaFollette is Executive Editor of The CPA Technology Advisor. He was a Tax & Technology partner in a large local firm for 23 years, and VP of Product Strategy for a major tax and accounting software developer for five years. He is the President and CEO of Accounting Technology Resource Network, LLC and can be reached at greg.lafollette@cygnuspub.com. He also publishes the tax and accounting blog at www.TheTechGap.com.

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