Back to the Web (XMLing It) (Link to Article)

By Robert W. Scott

Internet-based applications and the words application service provider have a bad sound to a lot of people, following the dot-com bust, but not to Matt Camden.

"I am a big fan of the ASP," says Camden. "Why does it work in 2005 and not in 2000? Data bandwidth is cheap. Now, there is security in place to let regular Internet access be acceptable. Now, we have applications that are Web-enabled rather than having to support a remote client or Citrix implementation."

Camden, chief information officer of UHY Advisors, has an opportunity in the selection of technology that few business people ever get. Because UHY, formerly known as Centerprise Advisors, is amalgamating a number of CPA firms, he heads the effort to choose technology standards.

There has been a lot of work to do. The offices used a confusing array of networks and email systems, along with a wide variety of applications.

He wanted to standardize quickly and as inexpensively as possible. That meant outsourcing applications, including outsourcing email administration. The only exceptions are those applications that are critical to CPA firms, such as tax applications and practice management. Even then, Camden is looking to use Web-based systems where possible.

UHY's offices had systems, lots of systems. On email, there were two different vendors, Microsoft and GroupWise, but six different systems, with each office having its own. The five firms that have become UHY also had five networks, and different tax preparation and time and billing systems in the five main offices and 14 satellite offices. The Web has been a big part of the rapid consolidation.

The Web has produced very practical results: Camden's view is that the Internet saves the firm a lot of money on technology infrastructure, while such tools can be installed more quickly than trying to load software on servers at widespread offices.

"We are not building a very expensive firm-wide network," says Camden. "We are not building data centers that require capital, data, and staff to run it."

Camden wants to drive the cost of IT per employee down significantly. The industry average is $7,500 per user per year, a range of about 8 to 10 percent of revenue. Camden says he lowered that to between $4,000 and $5,000.

"We are bringing this in at 2.5 percent of the total and $3,500 per user," he says. "We are going to continue to depress that over the next two years to two percent and $2,000 per user."

Among the Web-based applications UHY has adopted are CCH ProSystem fx Global, the Internet-based tax preparation system, and in May, it decided to implement Immediatech's Web-based GoFileRoom for document management.

To that should be added CCH's Tax Research Network, since most research these days is Web-based. Not everything is ideal. Sometimes Global fx was not available, and sometimes the system slowed down during peak periods. "Global fx is still a work in process," Camden admits. "It was demonstrably better this year. But we did not miss a single deadline in the three years we have been on Global fx."

And he hopes that CCH will have a Web-based version of its ProSystem fx Engagement soon. While UHY currently uses the Thomson Elite practice management system, Camden will probably move to ProSystem fx Practice that has also migrated to the Internet.

For the firm's anti-virus effort, which is also scattered, Camden is also looking to the Web. "We had as many anti-virus implementations as we had email systems," he says. Camden was expecting to make a decision by last month on a vendor that can provide anti-virus and Web monitoring.

Most CIOs aren't putting a firm together and aren't able to choose to keep or replace virtually every system that it needs.

And Camden is also more receptive to Web-based applications than are many business people.

But that is changing. As the memory of the dot-com bust recedes and accounting professionals become more comfortable in using the Web, more businesses are turning to the Internet, some very cautiously.

"There are two ways to approach this. There is acceptance to the ASP model. But people are saying, "we don't want our data on the Internet," says John Stein, vice president of Xcentric, an Atlanta-based supplier of Internet services. On the other hand, "They don't like the fact that they can't get to their data anytime and anywhere."

Access Anywhere
That last factor has been important in driving interest in the Web. Firms want access to documents and they would like staffers to be able to access them from other locations.

Similarly, the attitude towards e-commerce has also changed.

"It has taken a long time to get here," says David Harris, CEO of EC Brands, a Novato, Calif.-based company. "The calls we get for the last six to nine months are from the worried president of a small-to-medium-sized company wondering how he can get online immediately."

Up until nine months ago, Harris still saw general skepticism. Why the change?

"It's my opinion that people buy so much online that the strangeness and newness of it has worn off," says Harris.

The number of online products is increasing. Exact Software plans to launch ExactOnline, an ASP version of its e-Synergy application for the SMB market, although only for the European market at present.

Creative Solutions, the Dexter, Mich.-based tax and accounting software vendor, has ramped up online offerings in the last 10 months with WebEmployee, which lets employees access payroll information and update forms, its UltraTax portals, and by one very important move, hosting Microsoft Exchange through its Virtual Office platform. Hosting for Microsoft Office was available in 2003.

Virtual Office has shown slow, but steady growth, although in the last eight months or so, the number of users has grown by 20 to 30 percent, says Teresa Mackintosh, CSI's director of marketing.

"People are just realizing that their time is better spent on accounting and things they know and can be profitable at," says Mackintosh.

Mackintosh believes interest picked up because CSI reached a critical mass in the applications it supports. Particularly, the addition of Exchange means that most critical applications can be accessed through Virtual Office.

The online interest also dovetails with the growing demand for a paperless operation. With the use of CSI's Payroll CS online and WebEmployee, firms can have a completely paperless payroll system, Mackintosh continues.

"Instead of talking about paperless and the Web, we are now starting to talk about paperless payroll and paperless tax," she says.

Mike Sabbatis, Director of Sales and marketing for CCH Tax and Accounting, also finds that customers and prospects are showing more interest in the Web. The track record of other companies that deliver applications by the Internet is helping.

"We are seeing companies like Salesforce.com that have gained acceptance," says Sabbatis. Internet-based tax research products, such as CCH's Tax Research Network, have also given accounting professionals more comfort, as has the use of CCH's TaxNotebook, its online organizer.

Sabbatis says CCH's technology background also helps assure that their data is safe. "Our background in the service bureau business gives people peace of mind about our data center infrastructure. They can let some of that data go," he continues.

The only other CCH application that has moved to the Web is the Global fx tax preparation system, which has 350 customers. That can change quickly because of CCH's use of Microsoft's .Net architecture to write Web-enabled systems.

CCH expects to make a Web-based version of its ProSystem fx Document available for smaller firms this year. The market can expect a Web-based write-up package, although Sabbatis gave no target date.

Among CCH's competitors, RIA's GoSystem RS, the first Web-based professional tax preparation system available, also started out with lots of down time when WithumSmith+Brown became one of the first users.

"We stuck with it until they got it right," says Jim Bourke, MIS director at the Red Bank, N.J.-based firm. The system lets staffers work on returns from their homes, especially valuable when the weather is bad. With the firm's Virtual Private Network, they can access the system from elsewhere and print returns in the office.

Paperless Push

Interest in document management has been driving firms to consider online applications such as GoFileRoom.

But the inherent disaster-recovery capabilities of a Web-based system also played a role in the decision of Sax Macy Fromm, a Clifton, N.J.-based CPA firm, to adopt GoFileRoom in 2003.

"The document management system has a disaster recovery piece built into it, which is a very important piece," says Ralph Heiman, the firm's managing partner. Bourke also chose GoFileRoom because of that issue.

Heiman's firm, which has 18 principals and employs 100, started with a server-based system, encouraging its use by deliberately building a new file room that was smaller than was needed when it expanded its offices four years ago.

Heiman has no worries about GoFileRoom's security. "We think it is pretty secure. We have allowed clients to access tax returns by going into our Web site," he says. The ability of multiple users to simultaneously access data is also important. Moreover, files don't get lost.

"I can't think of the last time that we had an email going around the office about a missing file," he says.

NetPaying

Online payroll processing is another area in which vendors are introducing systems, although user demand seems weaker than expected.

The major service bureaus, ADP and Paychex, offer Web-based processing, while Microsoft and CCH have alliances with PayCycle, which processes solely through the Internet.

Another entry will come this year when Sage Software launches Sage Payroll Services, a mid-market adaptation of its Peachtree Payroll Services, pitching the product as costing 40 percent less than similar service from ADP, while including more features. Sage also wants to field a "CPA-friendly" program for use by firms that want to do service bureau processing for their clients.

But another product, Sage's ePeachtree, has yet to have much impact on the market. There has been increased demand "in certain product segments such as CRM and sales tax," says Ron Verni, Sage Software's CEO. "But on the pure accounting side we are not seeing an uptick."

Sage jumped into the online CRM market when it acquired Accpac and got its Accpac CRM, which has server and Web-versions that look and work the same. In May, Sage began rolling out the product across its lines as Sage CRM.

Sage's message about the Web is one of choice: a choice in CRM platforms and a choice for those who want to do payroll in-house or outsource it via the new payroll services.

Microsoft also had the Web in mind with Microsoft CRM. "When we developed Microsoft CRM we had a native Web-client architecture," says Brad Wilson, general manager for Microsoft CRM. "It made it easy to deploy through both an Outlook client and a browser client. I see a pretty good balance in our customer base in people using it for Outlook or a browser client. We are trying to make sure you have the same abilities to work in a very natural way."

Wilson says that certain tasks such as lead capture are easier to do in a Web environment. "In certain call centers, we see people more often using a browser-based front-end," says Wilson.

XMLing It

The development of the standards called Web Services have also fueled the emergence of applications.

This includes AvaTax, a Web-based sales and uses tax program from Avalara that uses Web Services to pull data off Internet sites operated by taxing agencies. For most companies, staying current on these taxes is an ordeal.

"You'd call the revenue department. You could go online to the government Web site to try to track that down. There are some services you could subscribe to," says Jared Vogt, Avalara's CEO. "We take that whole process and take it away from them and make it a simple thing."

Currently, AvaTax integrates with MAS 90/200, Accpac Advantage 5.2 and 5.3, and Great Plains.

Avalara replaces the native tax system in the users' accounting system, operating in the background, reaching out over the Internet to Avalara's data center which determines rules, including nexus, and applies the correct tax rate to the invoice line.

When a new customer is added, "we automatically validate the address. That's a key thing for us to get an absolutely accurate jurisdictional assignment - you have to go down to the street address," says Vogt. "You can't assign taxes by zip code."

Similarly, Web Services, including the use of the XML file specification to support the exchange of files between applications, underlies Intacct's move to turn its online accounting system into an Internet platform.

The technology enables firms to customize Intacct for vertical markets and also to upgrade customizations involving third-party applications that integrate with Intacct, says CEO Robert Jurkowski.

"We are coming out with something called Custom ERP," says Jurkowski. "Every client has a different need and different integration requirements."

Custom ERP is part of a series of enhancements including Event Subscriptions that can automatically trigger the updates to third-party products and Connect ERP.

Another way that Intacct is trying to spread its online accounting system is by providing it as an engine for other vendors who do not want to write their own. One of those is RealPage, which makes property management systems.

Jurkowski says the interest in Web-based products goes beyond accounting.

"It's not about accounting applications. It has to do with where the marketplace is moving with business applications," he says. "It's about the emergence of software as a service."

Robert W. Scott is Editor of Accounting Technology and can be reached at robert.scott@sourcemedia.com.