Change management is an indispensable part of today’s business landscape, yet it remains a difficult concept to grasp, or is, at worst, simply overlooked. Furthering one’s firm is always part of the equation, but whose responsibility is it to manage the schedule for change and evolution? Is it strictly a managing partner’s job? A shared responsibility among firm leadership? Or should the responsibility be more widely diffused?

In 2016, there still isn’t a clear answer as to who exactly controls the pace of change in a firm. However, there are a number of factors that every firm can keep in mind to make sure that their rate of change is outrunning their clients’. When a firm recognizes what particular factors to pay attention to, they learn why change management is important for not only anticipating the future, but making themselves more marketable.

SQUARE ONE

Perhaps one of the biggest obstacles to change management is deciding how to first initiate a conversation. But getting the ball rolling can be easier than you think.

Carl Peterson, vice president of small firms at the American Institute of CPAs, argues that when talking change management in a place with limited resources, you should seek a connection with similar firms in order to move forward together: “I think the best thing they could do is participate in networking groups. The AICPA has networking groups, and change management is one of those things that comes up all the time, and when they find out what other people are doing and learn to implement it, that’s probably one of the best resources.”

Erik Asgeirsson, president and CEO of CPA.com, believes that the right state of mind is what drives change management inside a business. “I think, broadly, change management is all about having that progressive mindset,” he said. “What we’re seeing in successful firms — [no matter] what size or type — is it’s the progressive firms that are really making the most of these new opportunities that are possible due to this digital revolution that we’re in. They’re saying, ‘Let’s look at this through the different aspects of our organization: how we interact with clients, internal processing, how we’re delivering the service, the types of service that we’re providing.’”

Chris Alger, managing director in BDO Consulting’s Pittsburgh office, echoed this need for a progressive state of mind. “Strong, comprehensive change management programs are actually risk management programs focused on human performance and the human condition in the context of managed disruption,” he said. “Culturally, firms operating within a dramatically changing business environment need leaders that not only embrace change, but are capable of harnessing the value of the business opportunities created by these disruptive situations or forces. These firms will benefit from a formal center of excellence with core capabilities focused on providing the deep competence and methods that help institutionalize and cement the change culture.”

Alger says that such firms will be able to control change factors including, but not limited to, executive sponsorship methods and disciplines; stakeholder analysis and management (change preparedness); communications strategy, planning and execution; workforce development (training and education); and performance management, rewards and recognition.

WHO’S THE BOSS?

Since change management has not often been a conscious concern at firms, there’s rarely a single person identified as being in charge of implementing change. What may be more important than naming a specific spearhead of change, though, is to simply be open to evolution itself. If a leader, any leader, in a firm pushes a progressive mindset, it can set the tone for the firm and its future.

“Change management starts at the top, the idea of setting the groundwork for change,” said Peterson. “I think you have to have a managing partner make some of those hard decisions for the firm, but [there’s] really an opportunity to have inclusion of all staff levels. You can have input from all levels — it doesn’t just have to be the managing partner, it doesn’t have to be just the managers. If you think about the young professionals today, if they have input on what their future’s going to be, the environment or technology they’re going to use, it’s really going to build that team and that culture.”

Actively seeking out that champion of change in your firm may prove more fruitful than laying all expectations on the managing partner. When you find that open mind, our experts argue, it’s worth the investment.

“Your leaders can either act as defenders of the status quo or as enablers of the future way of doing business,” added Alger. “Positioning your firm as a proactive enabler of or catalyst for change can be a significant differentiator in the marketplace. But remember [that] the role of change agent or change manager is not in the DNA of most accountants. Thus, find out who are your natural change leaders and invest in their development and technical capability.”

“I think as you go to the larger firms, they’re having success with someone dedicated like an innovation officer in that role,” added Asgeirsson. “When you’re dealing with the small to midsized firms, you’re not going to have a dedicated resource, but I think you can identify a champion for innovation. I also think that it’s a good idea to have somebody who’s a younger member of the firm partnered with a more seasoned person who has the progressive mindset to doing things differently.”

THE ONLY CONSTANT

Change management doesn’t have to be as strenuous as many seem to think. A good leader with a progressive mindset — or one who seeks out that mindset internally — coupled with an awareness of how the business landscape is constantly shifting will lay the basic groundwork for successful firm evolution. Change starts not with an investment or practice, but a belief that it’s necessary.

“Humans are naturally averse to change,” said Alger. “Only a few fully embrace change in either their personal or professional lives. ... To an accountant, business change equals business risk, and risks are to be mitigated and managed. Seldom do you find strong agents of change in an accounting firm.”

“I don’t think we can follow that old path of every three to five years we’ll be making major changes,” said Peterson. “Change management should ultimately become part of your process as a firm. You do that every single year — you have a process in place where you can continually evolve and adapt and tweak. It’s an ongoing thing; you don’t want to be reacting to everything.”

Hello and welcome back to another edition of App Watch, the weekly column that gives you – the accounting professional – a quick snapshot of what was announced in the application and service provider world that we have deemed relevant to you. We also offer a bit on insight as to the importance of the news for you and, at times, the accountant-focused tech world at large.

This week’s Watch should come as little surprise. We’re neck deep into tax season and, as such, some familiar (and some not) tax product vendors have some news to share that could be pertinent to this season and beyond. So, without further adieu…

News: Small Firm Tax Research Tool Hits the Market

Metakite Software has released MetaTax, a tax research tool built for small firms and sole practitioners available on the Web and iOS. The company claims it has has over 100 tax topics covering the most common issues encountered while working with individual and small business clients. All content in MetaTax is fully searchable and cross-referenced. All information in MetaTax can be tied back to IRS forms, revenue procedures, notices, and other IRS guidance. Citations are available upon request. Sole practitioners can pay $9.99 per month for the product, while a small firm can pay $19.99 for up to 3 members.

Views: On first pass, who wouldn’t want a relatively inexpensive tax research tool. If you are a sole prac or very small firm, you’re probably just on Google or some other web search for what you need, maybe even the IRS site. Sure there’s the tax research tools offered by the major tax and practice management software makers, but it may not be viable if you’re an extremely small tax practice. If this tool does all it says it can, it seems worth examining.

News: Bloomberg BNA Updates State Tax Analyzer

The new version of Bloomberg BNA’s State Tax Analyzer is out and features NOL Manager, a new way to predict the impact state net operating losses (NOLs) will have on cash, the effective tax rate (ETR), and corporate earnings per share. The NOL Manager feature automatically computes the generation, utilization, carrybacks, and carryforwards of state net operating losses across multiple years and multiple scenarios. NOL Manager was also built to compute and document valuation allowances to withstand internal and external scrutiny; show impacts of IRS and state tax audits on NOLs; estimate taxes for financial statements and quarterly estimates; and calculate and track NOLs from the year 1998 forward for pre- and post-apportionment states

Views: So if any of your clients are dealing with net operating losses (they probably are), you know that while the federal code allows 20 years of NOL carry forwards and two years of NOL carrybacks, states vary greatly on their own NOL rules. As such, companies often have to navigate filing multiple entities in multiple states, forcing them to deal with hundreds or even thousands of returns in a single year. Not to mention, each filing requires its own NOL supporting schedule that could span upwards of 10 to 20 years. Sure, you’re in the middle of tax season now and you probably don’t have a lot of time to check out something new. But it seems this can help take away a pretty significant headache when it comes to state taxes.

News: Vertex SMB Inks Partnership With TaxCloud

Vertex SMB has formed a partnership with TaxCloud, a sales tax compliance service for online retailers. This partnership effectively expands TaxCloud’s geographic area of automated capabilities to include all U.S. and Canadian jurisdictions, while expanding e-commerce platform support for Vertex SMB – specifically to small online retailers. TaxCloud is certified to provide registration, filing, remittance, and audit response in the 24-member automated compliance states included in the Streamlined Sales and Use Tax Agreement.

Views: As with any growing business in this space, it’s good to build partnerships. And when you are a comparatively lesser known service provider, particularly when it comes to sales and use tax compliance, any such union is going to be a plus. Some of you may know that Vertex has a strategic partnership with CPA.com, the business/promotional subsidiary of the AICPA. That alliance alone looks to generate some awareness within the accounting community, now with this TaxCloud deal it adds further awareness and usefulness within the small business community.

That’s all for this week, as ever, if you have anything to add or some of your own commentary and insights feel free to do so below or post your own Any Answers or Blog post on our site.

Sales tax technology vendors have been expanding their efforts to help small and midsize businesses cope with the dizzying array of tax rates and rules across states, localities and countries.

“One of the things that we focus on is the SMB space,” said Marshal Kushniruk, executive vice president of business development at Avalara. “Even though we do some enterprise business, our major focus is the SMB space. We believe that the smaller businesses need to compete with the bigger guys and are really the ones that are driving the economy.”

Another sales tax technology vendor, Vertex, has set up a Vertex SMB unit to target small and midsize businesses with a streamlined version of its corporate offerings, according to Bradd Wildstein, director of channel sales. Thomson Reuters markets its ONESOURCE series of indirect tax products across the world to businesses of all sizes.

Demand for international capabilities has been growing among smaller businesses, particularly for ecommerce.

“We believe we have to develop a product or suite of products that allows us to take globalization for the little guy to the market,” said Kushniruk. “When these customers are selling across borders or across countries, they really have to worry about shipping it, with landed cost, duties, excise, and tax. They need to collect the right VAT or sales tax and most importantly pay the tax.”

Avalara and Vertex use connectors that are able to link their systems to outside accounting software, such as QuickBooks and Dynamics GP, or ecommerce technology such as Magento. ONESOURCE also integrates with outside systems like SAP.

“We have 500 different connectors that have been written, and they allow small businesses to essentially have an omnichannel type of presence,” said Kushniruk. “They may be doing invoices in QuickBooks and selling in a Magento shopping cart and a Shopify shopping cart. We’re consolidating all of the tax and helping them figure out the right tax that should be charged on the item, and paid in that particular jurisdiction, whether it’s the state of New York or Germany.”

Expanding internationally can be a challenge for any small business. “When clients go global they have to figure out first of all should they be registered in a country or not ship into that country,” said Kushniruk. “If they should be, what’s the correct VAT rate? On top of that, what is the product you are selling in that particular country or set of countries or states in the U.S. and how is that particular product taxed?”

Avalara is also offering specialized content for growing industries, like the sharing economy represented by companies like Airbnb and Uber. In recent years, it has also been forming alliances with state CPA societies, such as the Illinois CPA Society, the Kansas Society of CPAs, and the Maryland Association of CPAs. Vertex SMB has allied with the American Institute of CPAs’ CPA.com unit.

The calculations can be complex. “A baby carriage could be taxed at 24 percent in the U.K., and at a reduced rate in Germany, which is about half of their standard rate, and a zero rate in France, which is not a zero amount, but it’s essentially a tax holiday on it,” said Kushniruk. “In Louisiana, it could be 100 percent of the state rate, and then it could be in a tax holiday in New York State from August 1 to 14 because of back-to-school sales or something. All of that stuff goes into the determination, as well as landed cost. If I’m shipping a product from the U.K. into Ireland, is there an excise or a duty on top of that? For small businesses, the penalties are huge if they get it wrong.”

Several of the most influential and respected leaders in the accounting profession are meeting this week, Feb. 15-17, at the Westin Galleria Hotel and Resort in Dallas, for the sixth annual Accounting Thought Leader Symposium. These individuals come from across the accounting spectrum, including small tax-focused firms, general practices, national firms, accounting educators and technology consultants to firms, and all are well-known speakers at tradeshows and CPE events.

[Follow the Symposium on Twitter: #CPAPA_TLS]

During the symposium, these professionals will meet with core development and executive staff of key accounting technology providers to determine and shape the future of the profession, including both short- and long-term evolutions in technology, workflow methods and firm management.

The companies participating in this year’s event include Avalara, Intuit, Sage, TSheets, and Xero. The invitation-only event is hosted by CPA Practice Advisor, a provider of practice management advice, best-practice insight, news, digital resources and technology reviews for professional accounting firms.

Participants come from across the world, with the most distant attendees this year being Donny Shimamoto, a CPA and technology consultant from Hawaii, and Clayton Oates, a former Big 4 accountant who is now principal of an Australia-based technology consultancy.

“As we conduct these meetings, we believe all accounting professionals should think about challenges they have faced in the past year,” said Gail Perry, Editor-in-Chief of CPA Practice Advisor. “How did their firms meet these challenges? What was less than successful and why? And what new challenges have surfaced that will have continuing impact on their firm and the profession?”

These thought leaders will be discussing the same issues, Perry said. “They will be focused on what they can do, considering their visibility and their roles as mentors, teachers, advisors, and solution providers, to help the accounting profession get to the other side of modern obstacles.”

The symposium also hosts the annual Accounting Hall of Fame Awards award and reception. Hall of Fame members include Greg LaFollette, CPA.CITP, Randy Johnston, Rick Richardson, CPA.CITP, L. Gary Boomer, CPA.CITP, Chris Frederiksen, CPA, and Tom Hood, CPA.CITP. A new Hall of Fame honoree will be inducted on Tuesday evening.

The 2016 Accounting Thought Leader Symposium attendees are:

• Jim Boomer, CPA.CITP (Boomer Consulting)
• Jim Bourke, CPA.CITP, CGMA, CFF (Withum)
• Jean Caragher (Capstone Marketing)
• David Cieslak, CPA.CITP, CGMA, GSEC (Arxis Financial)
• Gale Crosley. CPA (Crosley Company)
• Chris Frederiksen, CPA, CGMA, PFS (2020 Group USA)
• Angie Grissom (The Rainmaker Companies)
• John Higgins, CPA.CITP (CPA Crossings)
• Tom Hood, CPA.CITP, CGMA (Maryland Assn. of CPAs)
• Randy Johnston (K2 Enterprises and NMGI)
• Roman Kepczyk, CPA.CITP, CGMA (Xcentric)
• Allan Koltin, CPA (Koltin Consulting Group)
• Mark Koziel, CPA, CGMA (AICPA Firm Services)
• Greg LaFollette, CPA.CITP, CGMA (CPA.com)
• Clayton Oates (QA Business)
• Edi Osborne, CSPM, CPBA, CPVA (Mentor Plus)
• Rick Richardson, CPA.CITP, CGMA (Richardson Media Tech)
• M. Darren Root, CPA.CITP, CGMA (Root & Assoc. and Rootworks)
• John Sharbaugh, CAE (Texas Society of CPAs)
• Donny Shimamoto, CPA.CITP, CGMA (Intraprise TechKnowlogies)
• Leslie Shiner (The Shiner Group)
• Doug Sleeter (The Sleeter Group)
• Sandi Smith-Leyva, CPA (Sandi Smith-Leyva, Inc.)
• Brian Tankersley, CPA.CITP, CGMA (K2 Enterprises)
• Rick Telberg (CPA Trendlines)
• Geni Whitehouse, CPA.CITP, CSPM (Even A Nerd)
• Sandra Wiley (Boomer Consulting)
• Jennifer Wilson (Convergence Coaching)

CPA firms across the board see new client services as their top innovation priority for the next 12 to 18 months, but firms that have embraced cloud technologies see more urgency in making those additions.

That is one of the key findings of the CPA.com Innovation in Public Accounting Survey, the results of which were unveiled at the Digital CPA Conference in Las Vegas in December. CPA.com is the for-profit arm of the AICPA.

A total of 409 firms responded to the survey, which was conducted online Oct. 4—23, 2015. Of those firms, 178 were identified as early majority, which CPA.com defines as firms that have either launched a cloud-based accounting practice or made advancements in client advisory services. The remaining 231 firms were deemed to be in the general group. The early majority group had a higher proportion of larger firms (20% were associated with firms with 100 staffers or more), compared with the general group (10% were from firms with 100 staffers or more).

Asked to name their top innovation priorities, firms in both categories placed highest importance on the development of new service offerings for clients (see the charts "Firm Innovation Priorities: Early Majority" and "Firm Innovation Priorities: General Group"). Early majority firms, however, see greater urgency for deeper and faster change than firms in the general group (see the charts "Timing of Change: Early Majority" and "Timing of Change: General Group").

"The good news is that a solid majority of CPA firms realize they have to change to stay relevant," said Amy Radin, a strategic marketing consultant and innovation expert, who helped design the survey and discussed some of the results in her keynote speech at the Digital CPA Conference. "But for the general group of CPA firms, we see a sizable minority who say change may not be necessary for five years or more, if at all. Beware: Clients aren't likely to be that patient."

Firms in both categories ranked time and talent concerns as their biggest barriers to innovation. Those in the early majority, however, view processes as a bigger challenge than strategy to their innovation efforts, while firms in the broader group place a greater priority on strategy issues.

"One interesting finding of the survey is that CPA firms, early majority or not, don't really see a competitive threat from specific challengers," said Erik Asgeirsson, president and CEO of CPA.com. "Only a small percentage of firms said it was a priority to respond to 'a competitor who is outpacing us.' The problem is tomorrow's competitor might be invisible today, and if you aren't paying attention to client expectations, it can take you by surprise."