In September’s Thought Leader column, I introduced you to point solutions and talked about whether they’re the best way to handle firm management. This month, I’d like to go deeper into the topic of point solutions, their limitations and the rise of integrated systems.
A review of point solutions
For those of you who haven’t had a chance to read the September column yet, in this context, a point solution is a software app or tool that’s designed to address a singular or specific task or problem within an accounting firm. While point solutions are often adept at performing the particular tasks they’re designed for, they operate in isolation and may not communicate seamlessly with other systems or tools.
If you look back at the last 30 years of firm technology, it’s apparent that we’re entering a new phase. The initial phase was the rapid creation of core technology solutions that solved big challenges like automating the accounting system, payroll and tax returns. Then came the need for some level of integration, so we saw the evolution of software suites from companies like Thomson Reuters, Wolter Kluwer and Intuit.
The big suite vendors were unable to—or chose not to—keep pace with the rapid move to the cloud and the desire for a much better digital client experience. That opened the door for point solutions designed to accomplish specific tasks. However, we’re now at a place where integrated systems are essential for accounting firms aiming for efficiency, adaptability and scalability.
The limitations of point solutions
Here’s a list of functional areas for firm management that firms are solving for with different point solutions today:
- Time, billing and workflow management
- Client communications
- Payments
- Proposals and engagement letters
- Reporting
- Prospect management
- Client surveys
- Document management
- Client portals
The tasks involved can range from invoicing, getting paid, managing documents and communicating with clients to other specialized functions.
There are so many point solutions available today that firms I talk with often use more than two dozen distinct solutions to solve their firm’s needs. That means with each point solution operating as a standalone, firms face the daunting task of managing multiple systems—each with its own different maintenance requirements, upgrades and subscription fees.
The integration issue also looms large, as ensuring seamless communication and data flow between these isolated systems becomes a massive undertaking.
Data silos are a challenge, too, where crucial data is sequestered within individual systems, impeding the fluid exchange of information and insights across the firm. In an era where data is king, these silos can severely hamper informed decision-making and strategic insights.
Furthermore, the specialized nature of point solutions inherently limits their flexibility. As businesses evolve, adapt and face unprecedented challenges, these systems can become more of a shackle than an enabler—constraining the firm’s agility and responsiveness and leading to:
- Specialization overkill: The bloat of applications creates over-compartmentalization of data and inefficiency for the team.
- Integration challenges: It’s complicated to create seamless data flow and communication between different point solutions.
- Cost implications: There are both overt and hidden costs associated with maintaining multiple point solutions.
- Staff complexity: Such a large number of solutions inevitably creates complexity for staff onboarding, offboarding and training.
The rise of integrated systems
A modern, integrated solution significantly reduces the number of separate applications needed to accomplish the same set of tasks. Since the core of every accounting firm is the client, an integrated solution includes all the functionality needed to manage the client relationship.
Any integrated solution you consider for your firm should be built with the following principles in mind:
- A holistic approach: The core value proposition of many point solutions can be consolidated into an all-encompassing integrated system. Remember, the realistic goal for firms is not to get to one overall solution, but to limit the quantity of solutions.
- Data consistency: Single points of truth help ensure data accuracy and consistency across different functional areas.
- Enhanced collaboration: When data is centralized, it’s much easier to train staff and provides enhanced workflow consistency.
- Cost efficiency: There are overall cost savings in direct and indirect costs, such as training and maintaining the system.
Future trends
So, how will two of the most important issues firms (and all businesses) face today work with integrated solutions? Here are my predictions:
- AI and machine learning: A modern firm will leverage AI and machine learning to create efficiencies and better team and client experiences. The more data that’s consolidated, the more AI and machine learning can assist and provide value.
- Security and compliance: Every vendor you use has a potential direct connection to your systems via the internet. The more vendors you use, the greater the vulnerability. The trend will be to limit the amount of exposure and ensure the vendors you use exercise the best security practices.
The intricate dance of business operations demands more than precision in isolation; it calls for cohesion, flexibility and integration. While point solutions have played their part in the past few years, the future of accounting is integrative, adaptive and holistic. What would have been apps that supported individual startup companies over the last few years are now becoming, instead, features that are part of more holistic integrated solutions.
We now live in an era where data is not just accurate but also accessible; insights are not just profound but also actionable; and where accounting firms are not just responsive but also strategic visionaries in business operation landscapes.