The technology used by high-tech CPAs.

Except for two areas--spreadsheet and tax preparation software--most CPAs have been relatively slow to use computer technology. But that's changing. These days, with productivity the byword of business survival and technology the proven tool to increase it, accountants are playing catch up, acquiring the latest hardware and software technology to work better, faster and more efficiently.

But which technology best serves the profession's needs? What combination of the vast array of available hardware and software best performs the jobs most CPAs need to do? While some recent surveys polled the general accounting audience to determine what technology most CPAs use, the Journal of Accountancy turned instead to a small group of experts--accountants who specialize in adapting technology to their firms' or organizations' needs. We figured these pros did extensive testing before settling on their technology tools and readers would want to know their decisions.

To get these data, the Journal surveyed accountants who attended recent high-tech professional conferences. One was the American Institute of CPAs microcomputer conference in Boston in June 1993; another was the AICPA software users conference in New Orleans last October; and the third was the Accountants Computer Users Technical Exchange (ACUTE) meeting in San Diego, also held last October. A total of 143 accountants completed questionnaires, 84% from public accounting firms and 16% from corporate or not-for-profit organizations.

While the survey numbers were small and certainly didn't represent a scientific sampling, we still believed it was valuable to share the results with readers. However, because the sample was too small, in many cases we did not quantify the results for fear it would be misleading to do so. This was especially relevant when we polled CPAs on the brands of professional software they used. In such cases, instead of listing the percentage of returns we listed the products mentioned by respondents in alphabetical order.

WHO DOES WINDOWS?

The survey found that 60% of the responding CPAs were using Windows. By comparison, a 1990 AICPA survey of computer usage by a broad cross-section of CPAs estimated Window usage at only 5%. However, a significant number of respondents to the more recent survey still didn't use the graphical environment exclusively; most still ran some DOS applications, either under Windows or independently, because in many cases there still weren't Windows-based application programs that adequately replaced some old, tried-and-true DOS programs.

A statistic that was even more meaningful than the 60% figure was the percentage of CPAs who ran Windows on their office networks. Running Windows on a network suggests a much greater commitment to the graphical environment than running it as a stand-alone system. The latest survey revealed that 35% of the public accounting firms and 43% of CPAs in commerce and industry ran Windows on networks. Although the 1990 survey did not ask that question, it's safe to speculate that just a few years ago hardly any CPAs ran Windows on networks because the hardware and software just weren't up to it.

What's behind the rapid swing to Windows? Survey respondents said they had switched from DOS because Windows was so much easier to learn and use and because it was more powerful. They cited such factors as Windows' ability to switch between multiple programs easily and its cut-and-paste leature, in which data from one application could be cut or copied and pasted into another. In subsequent interviews, we discovered that even most of those CPAs who remained loyal to DOS conceded reluctantly that the program-switching and cut-and-paste features were valuable assets they wanted; they simply believed not enough professional Windows products were yet available (for more on Windows, see "Opening Windows for CPAs," by Robert L. McCullar, Jr., JofA, Dec.93, page 35).

But the biggest lure remains the outstanding software that's been developed in the past few years and continues to be developed for Windows--databases, spreadsheets, fax-modems and contact-management programs, to name a few. As Windows products move into the accounting field-- which they are at a rapid pace-- CPAs are discovering it's easier to switch than to fight. Many new software products are being designed only for Windows (or for Macintosh, OS/2 and Unix), but no longer for DOS.

WHO'S ON ALAN?

Accountants' use of local area networks (LANs) also has been soaring. Another Journal-sponsored survey, conducted a year ago ("How CPAs Use Computers," by Rebecca A. Gallun, Cynthia D. Heagy and Howard C. Lindsey, JofA, Jan.93, page 38), found that 34% of CPAs in public practice and 48% in commerce and industry were on LANs. Our most recent survey found that, among the cognoscenti at least, 78% of public accountants and 70% of commerce and industry accountants were networked.

As expected, the larger an organization, the more likely it was to be networked. For example, 52% of CPA firms with 5 or fewer professionals were on LANs. For those with 6 to 25 CPAs, the share jumped to 81%. More than 94% of larger firms were networked.

The most popular LAN software among these computer experts was Novell NetWare, with over 90% market penetration. The remainder of the market was shared by LANtastic, Bayan VINES and a handful of proprietary programs. Of the CPAs on networks, 89% were connected via a personal computer (PC) server and 11% via a minicomputer, suggesting how far the swing to smaller, less costly PCs had progressed. The swing appeared to continue, with 23% of the respondents reporting that their organizations were moving from minicomputers to PCs.

Only 11% of the respondents were on wide area networks (WANs) and they mostly were large multioffice organizations.

SOFTWARE OF CHOICE

While many respondents said they were not totally pleased with their current software choices, few were willing to switch to a different brand. The three oft-heard reasons for this hesitation were the time and money required to make a switch and the reluctance to learn a new system. If computer mavens are hesitant to learn new systems, it's easy to understand the resistance of the average computer user.

It's this hesitancy to switch to new software that, in the long run, may inspire even more CPAs to overcome their initial resistance to Windows. That's because one of the unique properties of many Windows products is the similarity of their interfaces--that is, the part of a program with which users interact is similar, even in competing products. Thus, the learning curve for a new application is shorter than it is for most DOSbased products.

The one area of the software market where three-quarters of the survey respondents said they would be willing to switch, because of dissatisfaction with their programs, was practice management software--especially time and billing products. They conditioned the switch on finding an acceptable replacement product.

Following are the results of the accounting products segment of the survey:

Accounting. Some 85% of the CPAs used accounting software, and more than half (52%) worked with either in-house packages or software designed for specific industries. The commercial products mentioned most often were Computer Associates International's ACCPAC, Creative Solutions, DacEasy, Macola, One-Write Plus, Open Systems, Peachtree, Platinum, Prentice Hall, QuickBooks, RealWorld, Solomon and State of the Art's MAS-90

Tax preparation. Some 85% of the respondents worked with tax software. The leading products were Arthur Andersen's A-Plus Tax, CCH Computax's ProSystem fx, ChipSoft's TurboTax, CLR Fast-Tax, Lacerte and Pencil Pushers.

Some 80% of respondents who prepared business tax returns worked interactively, 55% manually and 12% in batch mode. 0nly 2% mixed interactive and batch processing. When working on individual tax returns, 70% worked interactively, 23% worked in batch mode, 5% worked manually and, again, 2% mixed interactive and batch processing.

Electronic filing. While only 23% in the survey said their firms were involved in filing income tax returns electronically, 15% said they planned to add this capability in 1994.

Tax planning. This type of software was used by 61% of respondents. Most said they used either BNA or CCH.

Auditing. Some 56% of the respondents used auditing software. Since one of the conferences was an AICPA software users gathering, the Institute's Accountant's Trial Balance (ATB) and Interactive Data Extraction and Analysis (IDEA) were well represented. Other products mentioned were Prentice Hall's FAST! Advantage and Sequel McGladrey's ACE.

Write-up. The same AICPA bias turned up in this area. A total of 71% of respondents worked with write-up software. The leading commercial products were ACCPAC, ATB Write-Up, Creative Solutions, MAS-90, Prentice Hall and Unilink.

When working on financial statements, 5% worked interactively, 27% manually, 19% in batch mode and only 1% mixed interactive and batch processing.

Fixed assets and depreciation. Some 77% of the respondents performed this function, and the leading products included ATB, Best's FAS1000, BNA, Creative Solutions, Depreciation Solutions and Pro-Ware's Asset Keeper.

Business planning. Some 14% used software to do business planning. Of those, 35% did the job with the generic spreadsheet Lotus 1-2-3 and a few used Excel. BNA was the only specialty commercial product mentioned.

Business valuation. This function was performed by 17% of the respondents. Only two specialty products were listed, Essential Software and ValuSource. Some 16% set up their own scripts using Lotus 1-2-3.

Financial planning. Only 12% used a commercial financial planning product. BNA and Financial Navigator were the only products mentioned.

Due date. Some 44% of the respondents used such software. The only specialty commercial product cited was Practitioners Publishing's Trackker. Many CPAs used Lotus 1-2-3 or dBASE.

Time and billing. This function was performed by 73% of the respondents. The leading products were MAS-90, Network Systems, Prentice Hall's Practice Advantage, Public Accounting Computer Software's PACS, Timeslips and Unilink.

GENERAL PURPOSE SOFTWARE

Word processing. Nearly all questionnaire respondents used word processing software, with WordPerfect garnering 73% of the tally. Microsoft Word for Windows scored 17%. The remaining 10% were scattered among several lesser known products.

Spreadsheet. Nearly all respondents ran spreadsheet software, with Lotus 1-2-3 the favorite, used by 62%. Microsoft Excel and Borland's Quattro Pro were used by 17% and 16%, respectively. What is interesting about these statistics is that only 5% of respondents used any other program.

Database. Nearly 60% of the respondents used database software. Borland's Paradox held a slight lead, with 20% of the market. It was followed closely by Borland's dBASE and Microsoft's FoxPro, each with 19%. Symantec's Q&A and Microsoft's Access each had 9% and Alpha Four had 6%.

Scheduling. This type of software was used by 32% of the accountants. In-house or special software was used by 67% of those surveyed. The leading commercial product, with 13% of the market, was Futurus (formerly called Right Hand Man); 7% of respondents used WordPerfect Office. Surprisingly, 13% of the respondents programmed Lotus 1-2-3 to handle scheduling.

Calendaring. This function was performed by 43% of the respondents. The most popular was Futurus with 30%, followed by WordPerfect Office with 16%, Spinnaker Software's Calendar Creator 13% and Campbell Services's OnTime 8%. A handful, 5%, used Lotus 1-2-3 and the rest used inhouse software.

Contact management. Some 17% of the respondents used this type of program, with Symantec's ACT! the most popular with 56%. Remote Control International's Telemagic scored 12% and the rest used other, little-known programs.

Utilities. Half the respondents used software utilities, with 46% of them working with Symantec's Norton Utilities, 21% with Central Point's PC Tools and 6% with Xtree. The rest used little-known programs.

Presentation and desktop publishing. Some 31% of the CPAs used this type of software, and the leading product was Aldus Pagemaker with 29%. Software Publishing's Harvard Graphics was next with 18%. Microsoft's PowerPoint and Xerox's Ventura followed with 9% and 5%, respectively. Some 14% of the users met their desktop publishing needs with WordPerfect.

ARE YOU SECURE?

Virus problem. Some 31% of the CPAs reported having had some trouble with computer viruses. The problem was three times more prevalent among CPAs in public practice than among those in industry. Of the 37% who used antivirus software, 68% used Norton and 14% used PC Tools. Others used specialty products.

A wide assortment of techniques was used to protect against viruses. The most popular, aside from scanning all diskettes, were prohibitions against using any software copies or shareware, using incoming disks except on designated "clean" computers, program sharing and using floppy drives (except by designated persons).

Security. To our surprise, only 40% used password protection on computers, programs or files.

Backup. Equally surprising, only 83% of the respondents had good backup habits. Considering the level of knowledge of the respondents, we expected all of them to perform backups regularly--or at least to claim they did regularly. Backing up critical files is like flossing one's teeth: Everyone knows how good it is for dental hygiene, but sometimes it's still overlooked.

Of those who did backups, 59% used software that performs the job automatically, with the remaining 41% doing it manually. The programs of choice were Colorado Memory System with 21%, Mountain with 13%, PC Tools with 8% and Maynard with 4%.

How regularly were backups performed? Of those who did backups, 80% said they performed the procedure daily, 16% said weekly and the other 4% did not answer-- apparently they were both too honest and too embarrassed to divulge their secret.

Tapes were the backup medium of choice for 86% of the respondents, and 73% wisely stored their backups off premises. The most widely used brands of tape backup systems were Colorado and Mountain.

CD-ROM drives. Compact disks were used by 73% of the respondents, with the market divided among NEC with 28%, Sony with 25% and Toshiba with 26%.

Research. More than 60% of those surveyed performed computer-based tax and accounting research, with 59% using CD-ROMs, 15% using on-line sources and the remaining 26% using both. The CD-ROM databases noted most frequently were RIA's OnPoint CD-ROM Tax Library, West CDROM Federal Taxation Library and the AICPA's CD-NAARS. The two on-line services mentioned were LEXIS/NEXIS and CompuServe.

Optical scanners. These devices were used by 22% of the respondents, with Hewlett-Packard the most popular brand, claiming 50% of the market. Some 18% said they intended to buy a scanner within a year.

Data compression. This technology was used by 40% of the respondents. The leading sources were Stacker's Stac with 21% of the market and MS-DOS 6 which uses DoubleSpace, with 6%.

Memory management. To our surprise, only 39% of the respondents used memory managers. We surmise that most of those who didn't report using separate memory managers probably are using such products now if they have switched to DOS 6 or Windows, which have built-in memory managers. For those who used separate memory managers, Quarterdeck's QEMM was the product of choice, with 24% using it.

Electronic mail. E-mail was found in 39% of the offices, with Futurus and WordPerfect Office the favorites.

Document image storage. A surprisingly large number of respondents reported using document image processing: 24%. Although we do not have access to any surveys that measured the use of this technology, our casual spot checks during the past year did not turn up widespread use of document image storage systems, suggesting that the swing to this technology is both recent and rapid.

Bar coding. This technology was used by 12%, with the most common application being inventory control.

Electronic data interchange (EDI). While only 6% applied this technology at the time of the survey, we expect it will grow quickly among business organizations in the next few years because most large companies use EDI, and many of them demand that their suppliers use it, too.

Laptops. Some 53% of the public accountants and 43% of the management accountants had laptops, with 56% using 386 models and 33% using 486s. The brands of choice were Toshiba (23%), IBM (16%) and Compaq (15%), with only 26% of respondents using color displays.

Technology assessment. One of the major problems faced by all accountants was the lack of an independent knowledgeable source to evaluate professional software and hardware. We asked the survey subjects if they would be willing to pay for such a service, and 35% said they would.

TECHNOLOGY INVESTMENT

How much was spent on technology? We could not get a handle on how much management accountants' employers invested in hardware and software, but we were able to get a good fix on CPA firms' spending. Their average investment in hardware came to about 3% of total revenue a year. For software, the investment totaled 2% of revenue.

Consulting. Only 55% of the CPAs in the survey responded when asked if they recommended software to clients. But of those who did, 68% said they made such recommendations. Most limited their recommendations to bookkeeping software, but 21% said they recommended all types of software--even products outside the accounting field.

As computer technology marches on, CPAs race to keep up or catch up. Despite the challenges of dealing with high technology, most accountants acknowledge it beats doing their work on an abacus.

EXECUTIVE SUMMARY

* A SURVEY CONDUCTED by the Journal of Accountancy found what types of hardware and software technology were used by accountants who specialized in adapting it for their firms or companies. The data came from CPAs who attended three technology conferences.

* WINDOWS WAS USED by 60% of the responding CPAs, suggesting the rapid growth of its popularity in the profession. Even more revealing was the discovery that 35% of the CPA firms and 43% of commerce and industry CPAs ran Windows programs on a network.

* USE OF LANS WAS GROWING rapidly, too. The survey showed that 78% of public accountants and 70% of corporate accountants were networked, with Novell NetWare used in over 90% of the systems.

* OF THOSE CPAs ON NETWORKS, 89% were connected via personal computer (PC) servers and 11% via minicomputers, suggesting how far the swing to smaller, less costly PCs had progressed. The swing continued, with 23% saying that their offices were planning to switch from minicomputers to PCs.

* WHILE MANY RESPONDENTS were not totally pleased with their current software choices, few were willing to switch to different brands. The three oft-heard reasons for this hesitation were the time and money required to make a switch and the reluctance to learn a new system.

* THE ONE AREA OF THE SOFTWARE market where three-quarters of the survey respondents said they would be willing to switch, because of dissatisfaction with the products, was practice management software--especially time and billing software products.

PATRICIA E. KHANI, CPA, is a professor of accounting at New Hampshire College's Graduate School of Business, Manchester. She is a member of the American Institute of CPAs, the American Accounting Association and the Institute of Management Accountants. STANLEY ZAROWIN is a senior editor of the Journal.

Mr. Zarowin is an employee of the American Institute of CPAs, and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation.