Managing Information in the Information Age
How can a formal knowledge management program keep your firm current?
Accounting firms are often inundated with information. But, according to a nationwide survey by tax, accounting and audit data firm CCH, many accounting professionals have been slow to adapt to the information age.
Among the many technological trends garnering the attention of the industry are knowledge management (KM) solutions, which are electronic programs designed to capture and share an organization’s unique information with its employees. The purpose of these programs is to tap into and disseminate the intellectual resources of a company’s thought leaders, to foster innovation by encouraging the free flow of ideas, and to serve as a centralized repository for company-specific assets, such as customer lists, marketing research and process documents.
An intelligent business
“When identifying the building blocks of an intelligent business, knowledge sharing serves as the cornerstone, beginning with the most fundamental component: The creation of a formal knowledge management program for capturing and deploying knowledge,” says CCH President Mike Sabbatis.
An intelligent business, he says, is one that leverages to the highest extent its most valuable assets, its professional staff (their time and knowledge) and technology tools to achieve the maximum return.
“Doing this isn’t about making hard-working staff work harder,” Sabbatis says. “Instead, it’s about ensuring that maximum productivity is achieved through firm processes and technology, and that the staff’s specific client knowledge and individual expertise is captured and shared.”
Despite the increased attention in the industry, CCH’s 2007 Intelligent Business Survey found that only 36% of the accounting firms surveyed had a formal KM program in place.
Knowledge management creates the information storage structure firms need to efficiently document important professional information and provide solutions to common problems. So if the advantages of formal KM programs include increased efficiency, improved client service and enhanced productivity, why are so few accounting firms adopting the technology?
Timing is everything
The answer, according to Tom Davis, a consultant to CPA firms on using technology, is because managing knowledge isn’t always easy.
“Most small firms don’t have the tools to handle KM in an efficient and effective manner,” Davis says. “Additionally, a major challenge firms face when implementing KM systems involves completing the buy-in by all firm members. Unfortunately, the people with the most to offer are frequently the ones who are either too busy or intimidated by technology to make a contribution to the firm’s knowledge store.”
But implementing a formal KM program, he adds, may alleviate that shortage of time. The other benefits could include faster service completion (which translates to higher client satisfaction), improved standardization, more efficient use of staff resources and higher firm profits.
According to Davis, accounting firms have a wealth of information existing in countless forms. “Today, partners walk around with critical knowledge in their heads that firm members have little access to,” he says. “Critical client information is stored in a manila folder hidden in a metal cabinet. Client mailings are built and rebuilt from information extracted out of the time and billing system at high administrative costs.”
It’s because of this organizational struggle, combined with significant advances in technology, Davis says, that the accounting market is the ideal candidate for KM programs.
Ensure accountability
When San Diego, Calif.-based accounting firm Sorensen & Snead, LLP, quickly began growing after its first year in business, partner Dale Snead turned to a KM program to keep his business on track.
“When we opened in 2003, we were using an outdated system,” Snead says. “But as we grew, we needed to put something in place that would keep us from missing deadlines and losing client information.”
Since adopting a KM software program that tracks the account progress and provides reminders of deadlines for more than 1,200 clients located in 32 states and countries, it has become an indispensable tool within the firm, Snead says. “It not only keeps us organized and on time,” he says, “but it holds all of us more accountable.”
Bringing it on board
When you’re ready to implement a formal KM program into your accounting firm, there are several options to consider. According to Davis, the first step in the implementation process is to identify the types of information your firm wants to collect, whether it’s forms, processes, procedures or otherwise. The second step is to develop the processes for collecting and maintaining that information. Next, after reviewing and ensuring compliance of the KM use policies, Davis says that it’s critical to continuously add and maintain the information.
From an employee acceptance perspective, however, it’s important to keep in mind that for team members to maximize the benefits of a KM program, it has to be easy to use and frequently updated. Because knowledge and employees’ skills change over time, a KM program should be treated as a constantly evolving business practice.
“While the large majority of firms have not implemented KM systems at this time, it is mature technology that is relatively easy to implement,” Davis says. “Firms that do not use it could be leaving a lot of money on the table.”
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