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Counting on technology: accountants add more prowess to their computers and access more sophisticated software.

Accountants continue to play technology catch-up - upgrading to more powerful computers and software, adding more peripheral equipment and, most important, using this high-tech gear to work more efficiently and effectively.

That, in a nutshell, was the conclusion drawn from the latest Journal of Accountancy technology survey in which we examined the hardware and software CPAs use.

We surveyed 256 CPAs at four professional conferences last year: The American Institute of CPAs microcomputer, national industry and private companies practice section (PCPS) conferences, and the accountants computer users technical exchange (ACUTE) conference. We selected those four because their attendees represent a wide spectrum of technological sophistication. The ACUTE conference generally is attended by techsavvy CPAs. The microcomputer conference draws a mixed bag: Some are very savvy and others are seeking to get on the technology fast track. The industry and PCPS attendees represent a spectrum of the average CPA with a generally light-to-moderate interest in and knowledge of technology. Thus, our goal was to assess how each of these representative groups was using technology.

Some of the data surprised us. For example, a similar survey published by the Journal last year disclosed that computer novices tended to use relatively out-of-date hardware and software, while the more computer-knowledgeable tended to work with the latest tools. This year's study indicated that that gap has virtually disappeared. Most of those surveyed - novice or expert - were using fairly advanced hardware and appeared more discerning in their software choices. Thus, we surmised that more accountants have gotten the message: It pays to invest in computer technology. Most CPAs, whether in small CPA firms or in large corporations, were using hardware that was at least powerful enough to do their work effectively. Further, their use of peripherals such as modems, scanners and CD-ROMs was accelerating at a rapid rate - another sign of the catch-up effort.


In recent years nearly all personal computers sold have had Windows preloaded, but few CPAs ever typed in the WIN command that evokes Windows. As recently as 1990, only about 5% of accountants used Windows for any applications. Last year's Journal survey indicated that Windows use - at least for some application programs - had jumped to 60%. And this latest survey shows (see exhibit 1, page 61) that Windows use, either running on a network or as a stand-alone, has risen to 77% for CPAS both in public practice and in industry. And of those who are not on Windows, 11% said they planned to make the switch within a year - possibly waiting for Microsoft's new Windows 95, a true Windows operating system that will replace DOS.

For all CPA firms and for smaller corporations, Windows was configured to run most often (by a nearly 3:2 ratio) as a stand-alone, rather than on a network. As expected, the one exception was for very large corporations in which the network application was almost double that of the stand-alone.

486 AND UP

It was no surprise that the 486 computer had made inroads in both CPA firms and in industry. What was surprising was the extent of those inroads. As exhibit 1 shows, 39% of all computer in accounting firms were 486 models. Compare that with the industry numbers: Only 31% were 486s. That gap is due to the fact that in industry more than half of the computers are workstations networked off a minicomputer or a mainframe.

The size 6f an organization did not appear to affect its investment in new computers. Smaller firms (those with 5 or fewer professionals) and those with 51 or more were about equally invested in 486s. The trend was somewhat different in industry. Smaller organizations had a higher percentage of 486s, but larger organizations leaned more to workstations that run off a large server.

Another surprise: No Pentiums were reported in any of the categories, probably because the survey was taken last year, when the Pentium was still too new and too expensive to gain favor among CPAs.


Laptops are coming on strong, too - stronger, in fact, than we had expected. CPAs in both public firms and in industry are discovering the convenience of having a portable capable of tackling any chore a desktop model can handle. As exhibit 1 shows, 486 laptops outnumbered the 386 models in all but a few categories.


The two most popular minicomputers were the AS/400 and the S/36, both made by IBM. Some 22% of the accounting firms and 37% of the companies used a mini either as their only network server or in conjunction with PCs.


The laser printer, despite its speed and shrinking price tag, was only slightly more popular than the slower but economical dot-matrix printer. The statistic that especially intrigued us was the ratio of printers to computers, which measures how many CPAs had their own printers as opposed to those who shared one. The defining factors were the size of the organization and whether it was networked. In very small organizations - whether in CPA firms or in industry - most CPAs had their own printer. But for CPA firms with 6 to 25 professionals the ratio suddenly jumped to 1:2; for CPA firms with over 50 professionals the ratio jumped again, to 1:4.


Clearly, accountants' offices are being wired for networks at a rapid rate. A 1993 Journal survey indicated that., on average, 34% of CPAs in CPA firms and 48% in industry were networked. The current survey showed that today 81% of CPA firms and 53% of management accountants are networked. But an even more meaningful statistic is this breakdown: 71% of very small (less than 5 professionals) CPA firms were wired; the rate continued to rise as the size of the firm rose. Interestingly, that rising curve does not fit the business model: 46% of very small business were networked, 57% of small, 69% of medium and only 38% of large.

By far the leading network hardware is Ethernet, which was used by 76% of the CPA firm respondents and 64% of the corporate respondents. And for network software, Novell remained the most popular in each category of organization. The only product that seriously competed with Novell was LANtastic, a system designed for a smaller office; it was used by 23% of very small CPA offices.


Fax/modem: One reliable indication of CPAs' growing technical sophistication was their use of modems - not only to send and receive faxes but also to access electronic bulletin boards and the Internet and to connect to their computers from remote locations. Some 62% of the respondents had Modems (see exhibit 2, pages 64-65). And of those, 55% had them installed in their desktop machine only, 19% 4n their laptop only and 26% in both.

Of those accountants with modems who work in CPA firms, 39% used their modems to link up with remote computers - either to transfer or analyze data. In industry, the rate was lower - 21%.

Another reliable sign of technology growth was the use of CD-ROMS. Seventy-nine percent used them overall, and they were accessed more often by CPA firms (93%) than by CPAS in industry (41%).

On the net: Nearly one-quarter of the CPAs accessed the Internet - either directly (8%) or via a commercial gateway (92%). Bulletin boards were not as popular: Between 12% and 15% access them.

Data transfer: How do accountants transfer data from their desktops to their laptops? Some 39% did it the slow, simple way - swaping diskettes - while 29% used interconnecting cables and 11% swapped via docking stations.

Data-compression: In general, 22% of the respondents used software utilities to pack more data on their hard disks. But accountants in CPA firms used this technique three times as often as CPAS in industry (27% vs. 10%), which may suggest that CPA firms are more frugal.

Getting the picture: Scanners are used about equally by accountants in CPA firms (22%) and those in industry (24%). CD-ROMS were installed in the computer of 93% of accountants in CPA firms and only 41% in industry. Document imaging - still an infant technology that converts documents into electronic images in a move to the paperless office - was used by only 2% of CPA firms and not at all by industry. However, when asked if they plan to add this technology, 7% of the CPAs in accounting firms and 4% in industry responded positively. E-mail was in use by 41% of CPA firms and 22% of CPAs in industry. (For which e-mail brands they used, see exhibit 2.)

Back-up: In our last survey, only 83% of the respondents said they backed up their hard drives regularly. We expected the number to be 100% - figuring no professional would risk lost data. In this survey the overall back-up percentage rose to 90%. However, only 61% back up daily an only 30% performed back-ups automatically. Some 70% of the respondents reported they stored their back-up data offsite - the only really safe way to guarantee data security in the event of a local disaster such as a fire or flood. Uninterruptible power supplies-which protect against sudden power outages-were used by 70% of the respondents.

It may be that many of those who didn't back up data or have uninterruptible power supplies believed computers were getting more reliable and, as a result, were becoming more confident that back-ups and power protection were less important. Computers are getting more reliable, but all it takes is one crash and the subsequent loss of all a computer's data to change one's thinking.

Electronic data interchange - in which purchase orders, invoices and payments all are made electronically - is still an infant technology. Overall, only 8% of the respondents used it: 16% in industry and 5% in CPA firms.

Some 76% of CPA firms said they recommended software to clients, and 17% said they levied a surcharge over and above their regular accounting fees to cover the added cost of technology. Levies took several forms - from a percentage of the total fee ranging from 5% to 25%) - to a flat per-hour dollar amount (from $2 to $12 an hour).


Despite the, hardware and software upgrades that many organizations initiated in the past year, expenditures for this technology held the same as last year's figure (between 3% and 4% of total revenue) for CPA firms of all sizes, except for small organizations (those with 6 to 25 professionals): Their investment rose to 5%.

Part of the explanation for the seeming inconsistency between an increase in upgrades and stability in investment costs is the fact that both hardware and software generally cost less today. For example, a computer that cost nearly $3,000 just a year or two ago is available today for under $2,000. The price of printers, modems and other peripherals has fallen, too.

We did not include computer investment by industry and nonprofits because, for the most part, the respondents did not have a handle on what their organizations spent in this category. And, unlike at CPA firms, there was not a consistent relationship between such an organization's income and its computer investment.


For an analysis of the application software accountants use, see exhibit 3, pages 66-67. In analyzing the data, two things intrigued us. Of the spreadsheet users, about 15% (nearly all of whom were Lotus DOS users) said they planned to switch: An equal number were moving either to Lotus for Windows or to Microsoft's Excel.

The CPAs who said they planned to switch their databases (10%) are nearly all moving from their current brands-dBase and Paradox-to Microsoft's new database, Access, which has received very strong reviews in the computer press.

Whether it's hardware or software, one thing was clear from the data: Today's CPAs are much more savvy about the technology they use, and they are keeping up with the latest advances.


* ACCOUNTANTS CONTINUE to upgrade to more powerful computers and software, adding more peripheral equipment and, most important, using this high-tech gear to work more efficiently and effectively. * THAT'S THE CONCLUSION drawn from the latest Journal of Accountancy technology survey in which we examined the hardware and software CPAs use. * THE HARDWARE GAP between novice computer user and expert has virtually disappeared. Most of the respondents were using fairly advanced hardware and appeared more discerning in their software choices - indicating that more accountants now realize it pays to invest in computer technology. * WINDOWS USE CONTINUES to grow. As recently as 1990, only about 5% of accountants used Windows for any applications. Last year's Journal survey indicated Windows use jumped to 60%. In this latest survey it rose to 77% - with 11% saying they planned to make the switch within a year. * LAPTOPS ARE COMING on strong, too; most are 486 models. * ACCOUNTANTS' OFFICES ARE becoming increasingly networked: 81% of CPA firms and 53% of management accounts.



There was a time, just a few years ago, when few small enterprises-either small CPA firms or small businesses-used any technology at all. And what they did use generally was inferior to that used by larger enterprises. Their computers were vintage models; their software consisted mostly of stripped-down basic versions; and few, if any, small organizations had either fax machines or computer modems.

Cost was one factor. A decade ago a basic computer cost nearly $5,000-and that. was in 1985 dollars. Today, an economically equipped Pentium can be purchased for about $2,500 and a top-of-the-line Pentium for under $5,000.

But there were more significant reasons small enterprises trailed in technology:

* Lack of knowledge about this burgeoning new technology: The old DOS-based computers were difficult to set up and even more difficult to operate. Few knowledgeable people were available to teach these new skills.

* A resistance to change: Despite the fact that more than any other innovation - save for the mechanical pencil and the photocopying machine-the computer has offered accountants a revolutionary improvement in how they prepare balance sheets, income statements, tax returns and just about every other accounting process, until recently many have resisted embracing technology in other aspects of their work.

The new technology - consisting of smarter, more user-friendly software, preprogrammed computers and networks - has changed all that. Resistance to the new technology is fading fast. As even a cursory review of the statistics in this article proves, the technology spread between big organizations and small ones has shrunk. In fact, in some cases, small organizations outpaced larger enterprises with top-of-the-line technology. For example, 64% of very small CPA firms were using 486 laptop computers, compared with only 54% of large firms. In the desktop arena, 32% of the CPAs in very small businesses used 486s as opposed to only 25% of those in large organizations. Similarly, 84% of CPAs in very small businesses had color monitors, but only 71% in large outfits had them.

Thirty-one percent of accountants in very small enterprises used CD-ROMs, but in large businesses only 25% used them. Use of CD-ROMs by accounting firms varied from 86% in very small firms to 97% in large firms.

How did different-sized organizations differ when it came to the job of backing up computer data? CPA firms rated over 90%, with very small firms leading with 97%. Businesses, on the other hand, were generally not as good about backups: While 81% of very small businesses backed up, only 75% of large businesses did.

There were, of course, exceptions: Small organizations were far less likely to use scanners, e-mail or electronic data exchange. But when we compared this year's data with earlier years', it was clear that small organizations were beginning to catch up.

PATRICIA E. KHANI, CPA, is 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. We also wish to thank KATHLEEN CUNNINGHAM, a graduate assistant at New Hampshire College, for her assistance with the article.

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 special committee procedures, due process and deliberation.
COPYRIGHT 1995 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Author:Zarowin, Stanley
Publication:Journal of Accountancy
Date:May 1, 1995
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