Your new competitor could be John, the accountant.

March 26, 2019

6 Min Read
Rae I have no idea why but I wanted to be an accountant Then I realized how boring that was going to be and changed paths quickThe VAR Guy says It
Rae: I have no idea why but I wanted to be an accountant. Then I realized how boring that was going to be and changed paths quick. The VAR Guy says: It might be boring but it pays the big bucks! Then again, being a channel chief isn't a bad position to be in, either.

By Carolyn April


Carolyn April

Awash in new players and old, today’s technology marketplace looks both foreign and familiar. There are the usual suspects selling direct or online — major vendors such as Microsoft, AT&T, Verizon, Apple, Amazon and so on. And there’s the enormous downstream network of tech-focused, third-party service providers, resellers and distributors that push a bulk of sales and tech-related services.

But that’s not all. Increasingly, we see a new breed of tech influencers operating from far outside the technology industry altogether. That’s right. Think accountants, lawyers, marketing specialists. Many of them, along with other professional-services professions, have launched a tech practice as an adjunct to their core businesses.

And why not? As longtime users of technologies focused on their industry, professional-services firms could argue they have become de facto experts in certain vertical IT solutions. And now they are monetizing this expertise with their own customers. CompTIA’s recent study on the SMB market, “Technology Buying Trends Among Small- & Medium-Size Businesses,” found that among professional-services firms, the No. 1 business priority for this sector is launching new products and services, with 67 percent of respondents saying technology is a primary factor in reaching this goal. As a blog in Accounting Today, an industry publication, put it: “The most important thing… to remember is that technology becomes part of the products you sell. This is a totally different way of looking at technology in a CPA firm. In a traditional firm, technology is a tool or piece of overhead. In today’s ‘new firm,’ technology is a component of what we sell. It becomes part of the product.”

CompTIA’s study, which is confined to professional-services firms with 1-249 employees, found that 52 percent of are offering some technology services to their customers. Three in 10 are not doing so, but considering it, while just 17 percent have no plans at all.

Cloud-computing adoption is leading many professional-services firms to dive deeper into technology both internally and in their interactions with customers. Rather than hew to the traditional packaged software they have typically used to prepare a client’s taxes, for example, many CPA firms are turning to cloud-based applications that allow for greater interactivity with customers. Among law firms, technology consulting services are increasingly popular. Consider the work that many legal firms are offering today in the areas of compliance audits, which are critical for many industries such as financial and health-care sectors. When it comes to marketing firms’ expansion into technology-as-business, they are heavily investing in services that revolve around website development, social media consulting and execution, and e-commerce.

Customer demand and availability factor strongly into this shift. One-half of respondents cited customer demand as the main driver behind their tech work, which may reflect a desire by today’s customer to attain as many services as they can from a single provider. Other drivers include a desire for new revenue (43 percent) and for new partnerships (36 percent), presumably with tech firms. Notably, just 14 percent cited competitive differentiation as a driver, which could mean that offering tech products and services is no longer considered unique in this sector, but rather becoming table stakes.

Professional Services and Growth

For those professional-services organizations that have taken the plunge, incorporating technology services as a complementary piece of their core business portfolio is …

… paying off. It’s certainly a growth area. Nearly half of respondents (45 percent) said revenue from tech-related activities and services is growing faster than the rest of the business, while another 43 percent said the pace comparatively is about the same.

It should be noted that the percentage of revenue that tech sales comprise of total sales for an accountancy or law firm is most likely much lower than that coming from core business streams. But the fast-paced rate is nonetheless notable, demonstrating the validity of this trend. Customers are pushing their local CPAs, attorneys and marketers to be up on the latest technology, while also looking to them for guidance about how they can best use technology to further their own business objectives. What might start as a recommendation for a particular cloud-based tax or financial application could later extend to the accountant assisting with the integration of that application with other tools and software within their customer’s environment.

Now, for reality. Being able to deliver on technical services that run outside such core competencies as filing court briefs or preparing complex tax returns is obviously not something done overnight — nor inexpensively. This can be especially tricky from a resources perspective for professional-services firms at the SMB size, which the CompTIA study is focused on. To be sure, many smaller professional-services organizations gain confidence with technology as they use it. Over time, a level of technical expertise with the tools of the trade develop within these organizations, and especially among specific members of staff. But to turn these skills into a business practice offered to customers requires much more formality, process and accountability. One place to begin: training. Four in 10 respondents said adding a tech practice to their existing business compelled them to retrain existing staff to handle these new areas. One-third decided to hire new employees dedicated to tech-related services. It’s most likely that many firms undertook a combination of both retraining and new hiring to meet demand. Another third sought the expertise of a third party to help the company reorient around a tech focus.

Third parties play an important role in this story too. Often, deciding to offer or recommend tech products and/or services to your clients entails working with a tech vendor of hardware, software or cloud-based solutions. Four in 10 respondents have formalized such partnerships in the last year, while 36 percent are considering doing so. By aligning with a vendor, professional-services firms gain access to some of the benefits and resources that vendor has in its partner program, which help the sales and marketing process, among other things.

Bottom line: Your new competitor – or partner – could look a lot different than your typical solution provider, MSP or telecom agent. It could be John, the accountant.

Carolyn April is senior director of industry analysis at CompTIA. She has served as an analyst and editor covering the IT channel at titles including Channel Insider and VARBusiness, and Redmond Magazine. She is a graduate of the Medill School of Journalism at Northwestern University in Evanston, Illinois, where she earned bachelors and master’s degrees in journalism.

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