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Formulating a computer consulting service plan.

The business community is quickly moving towards a totally electronic environment - an environment where information and data are recorded, stored and managed with a computer. Small- to medium-size companies are beginning to look to their current (or a competing) accounting or business consulting firm for special help with their computer problems. To remain competitive, accounting firms must develop the expertise to assist clients with these problems or risk clients turning elsewhere for help.

As a firm begins to explore the advantages and disadvantages of expanding the services it offers to include computer consulting, it must: 1. Analyze the competition and evaluate its ability to

generate new engagements. 2. Deliver and administrate the service. 3. Provide follow up service to ensure clients are maximizing

the use of the equipment and software.

Furthermore, the firm must realize that not only is computer technology a very dynamic field, but that computer consulting requires different skills and expertise than the accountants received in their traditional accounting training.

Because of this, if the firm decides to expand its practice into the computer consulting area, it must invest in initial and ongoing employee training, especially in the use of currently available business software. If the firm decides to target a specific industry, training must also focus on the use of that specific industry's software. The extent of the training depends on the services the firm decides to offer, i.e., hardware and software selection, installation and implementation, record conversion, personnel training and ongoing support. The selection of services to be offered depends on the competition in each area, the fees charged by competitors and the need for the services or improved services in the local business community. Current research by Toback and Co. indicated of 6,000 Arizona small business owners, only 58% used PCs for wordprocessing, 56% used PCs for spreadsheets and 50% used PCs for general ledger accounting. Very few of them used PCs to manage accounts receivable, inventory or for job costing and desktop publishing. An accounting firm may decide to target one of these less developed application areas and utilize other consultants to provide other related services.

Areas in which the firm decides not to offer service can be provided by other consultants (i.e., a hardware retailer could reciprocate by referring customers that need help in installing and implementing a computerized accounting system). The accounting firm should enter into a cooperative engagement agreement with the other consultant that prohibits them from offering or providing service to the client which the accounting firm provides. Also, the accounting firm needs to consider obtaining dealerships from hardware and software manufacturers, allowing the firm to provide computer products at competitive prices, while still making a profit on the clients' purchases. The Toback survey revealed that small business owners choose IBM or compatible over Macintosh 10 to one. For wordprocessing software, WordPerfect was selected twice as often as WordStar. Lotus was selected 74% of the time for spreadsheets, dBase for data management, and Page Maker or Ventura for desktop publishing. For general ledger no program dominated, but Cyma and Peachtree were more frequently used than others.

Market Penetration

Once a firm has decided on the services it will offer and its targeted market, it must begin formulating strategies to penetrate the market. In today's competitive environment, marketing the firm's service is part of the business, even though many accountants consider the marketing of accounting services unprofessional. Usually the easiest market to penetrate is one where the firm has an existing relationship - its current clients that need computer consulting services. For firms in areas that have a high concentration of companies in a particular industry, it is feasible to develop computer expertise that is unique to that industry and direct their marketing effort towards companies within that particular industry. A reputation within the business community for systems expertise within a particular industry could also increase a firm's audit and tax client base.

If the firm decides to launch a marketing campaign to attract new clients, most of the strategies discussed below are appropriate for use with a new client. As computer consultants, accountants will help clients answer many critical questions including: 1. Will computerization work for

them? 2. Should the client purchase a turn-key

system or design their own

system? 3. Should a mini or microcomputer

system be installed? 4. Which computer would best suit

their needs? 5. Will ready-made software fulfill

their information requirements

or should custom software be


However, the issue is how to identify and communicate to potential clients that the firm offers computer consulting services. Whatever combination of marketing campaign strategies are selected, they must be coordinated and presented in a professional manner.

Promotional items containing misspelled words or grammatical errors, or poorly presented seminars with amateurish video aids, will do more harm than good. Whereas, professional brochures mailed to potential clients, followed up by a phone call or mailing the firm's newsletter describing the benefits clients can possibly receive from the service, may awaken potential clients to their needs.

The firm may also establish its reputation as an expert in computer installations and operations through public speaking engagements (civic clubs are always looking for speakers) and/or writing articles for professional and trade journals that potential clients may see.

Other means to advertise the firm's expertise in the computer area is through conducting seminars at the firm's office, at trade shows or conducting joint seminars (with a bank or investment firm) that potential clients and/or existing clients and their guests are invited to attend. Finally, there is direct advertising.

Offering Consulting Services

The following suggests an approach to extend computer consulting services to existing clients successfully. The steps are: 1. IDENTIFY clients who would

benefit from computerizing their

offices (clients whose offices are

cluttered with paper and are disorganized,

businesses that are

manually preforming repetitive

tasks and companies that are

unable to generate important

data for business decisions) or

from expanding their use of computers

because of idle capacity or

any of the above reasons. 2. MEET with selected clients to

discuss installing a computer,

expanding their computer uses

as well as reviewing the benefits

they would derive. 3. IDENTIFY accounting firm

members that will participate in

helping the client expand their

computer uses and define their

role on the team. 4. MEET with the client, and if an

agreement is reached for the firm

to provide computer consulting

services, send a confirmation letter

detailing the arrangement. 5. LIST the client's strengths and

weaknesses, problems and computer

opportunities. Request the

client's management and the

firm's accountants who have previously

performed services for

the client to participate. 6. SUMMARIZE the results from

step 5. 7. MEET with the client to review

results. Determine the client's

preliminary objectives and goals,

and the client's situational analysis. 8. PREPARE a report which reviews

these meetings and provides

the client with suggestions

and advice, including a cost-benefit

analysis of the hardware and

software recommendations. Distribute

the report to both the

client and team members. 9. MEET with the client to complete

the company's goals and

objectives for computerization

and begin developing the specific

strategies and tactics to accomplish

them. 10. PREPARE a plan that details

the objectives, strategies and tactics;

client's responsibilities for implementation;

the target dates for

completion; and anticipated constraints.

To avoid misunderstandings,

identify items that the

client has excluded from the engagement.

Distribute the plan

to both the client's employees

and team members. 11. IMPLEMENT the plan and meet

additionally with the client as

required. 12. FOLLOW-UP to ensure the

client's personnel are using the

hardware and software efficiently

(retrain as needed) and that controls

are in place and working.

Assessing the Client's Needs

Once a company has expressed an interest in computing consulting services, the accounting firm must assess the client's needs before it can make a formal proposal. The company must have a clear understanding of their long and short range goals and of the advantages and disadvantages of all the alternatives to a computer. This requires a review of the client's current system, its weaknesses, volume and timing needs, information and reports currently generated, and what management wants and expects from a computerized system. It may be possible that an existing manual system would accomplish the job.

In analyzing the client's needs the following areas need to be examined.

General areas of computer business applications including: 1. Conversion of a manual to a computerized

general ledger system

including maintenance of special

purpose journals and sub-ledgers. 2. Financial modeling applications

to prepare financial statements

and special reports. 3. Wordprocessing and spreadsheet

applications to perform complicated

mathematical calculations

quickly and accurately (i.e., loan

amortization schedules, depreciation

schedules). 4. Payroll system programs to maintain

all payroll records, calculate

pay, benefits and taxes, and prepare

payroll checks. 5. The need for desktop publishing.

Special computer applications to solve business problems including: 1. Accounts receivable aging and

analysis, including automatic

statement generation. 2. Maintenance of a database of customers

and suppliers names, addresses

and telephone numbers

for many applications such as

advertising mailings to select

groups of customers. 3. Inventory control applications

to assist maintenance of inventory

levels to prevent over and

under stocking of goods. 4. Financial modeling to assist planning

and budgeting including

"What if" scenarios, critical path

analysis; forecasting; market

analysis, including plotting

trends and markets; and modeling.

The client should understand that computers alone cannot clean up a mess, and initially the installation and implementation of computers is going to be demanding on its personnel. There will be frustrations because many of the company's present methods of operations will have to be modified for computerization.

The client should make decisions based on current and future hardware needs, including the selection of manufacturers and vendors. This selection needs to consider not only the manufacturer's and vendor's reputation for service and support, but also the equipment's reputation, reliability and expandability. Most smaller client's needs can be satisfied with a microcomputer (PC) or, if multiple user stations are needed, a local area network (LAN). Whereas, larger or more sophisticated clients may need a minicomputer or a combination of a minicomputer with several PCs. The final decision on hardware selection depends on what functions are to be computerized, the software selected and the anticipated future needs of the client. The consultant, not the vendor, should carefully guide the client through its software and hardware selection. Useful guides for the consultant include Data Sources (a comprehensive directory of microcomputer product manufacturers) published by Ziff Davis Publishing Company, 1 Park Avenue, New York, N.Y. 10016, (609) 354-4999 and The Software Catalog: Microcomputers published by Elsevier Science Publishing Co., Inc., 52 Vanderbilt Avenue, New York, N.Y. 10017,(212) 370-5520.

Cost Benefit Analysis

The preparation of a cost benefit analysis is so common it almost constitutes a standard practice. It should include a comparison (using present values) of expected cash outflows (cost) with expected cash inflows or savings (benefits) during the estimated number of years of the original implementation of cost benefits. In addition to examining the tangible cost, the company must consider the intangible aspects of computerization.

Tangible cost and benefits are those that can be projected by the company's accounting personnel/firm and are indeed measurable in dollars. Tangible cost includes: hardware and software cost, personnel (including cost for training and orientation), and systems analysts (including consultants and programmer's fees). The tangible benefits are cash savings and include: increases in speed of processing, inventory turnover and calculating power and decreases in age of receivables, investment in inventory and space requirement.

The proposal should address intangible benefits and costs, so that the client can make a well informed decision. Intangible benefits include improving control over information processing activities and the decision making process, improving employee morale and becoming more competitive in customer service. The principle intangible cost is associated with computer breakdowns which can lead to customer dissatisfaction and frustrated employees.

Building in Security

In this era of computer automation and proliferation, numerous employees can have access to confidential data through the computer. The client may benefit from this increased availability of information, but the potential for increased abuse exists. Computer files can be lost or destroyed, data can be tampered with by disgruntled employees and departing employees can easily copy confidential data to take with them to their new job. While there is a need to maintain separation of functions and good internal control well as the need for cross training, access to certain files should be limited.

Depending on the client's desires, safeguards can be built into the computer system to prevent unauthorized use or tampering. They include limiting and restricting employee access to computers, disks and reports by using an automatically locking door to the minicomputer room and/or by installing locks on PCs that prohibit their use without a key (disk must also be locked up). Other safeguards include the use of identification and password software; software that permits access with identification, but restricts data entry; labeling and verifying contents of all computer disks, rotating computer employees and insisting they take a vacation annually; prohibiting computer personnel from making original, adjusting and correcting accounting entries; and requiring two managers'signatures (one outside the computer department) for software modification.

Regardless of what safeguards are installed, files should be backed up daily and stored in a safe place. Back-up data should also be stored off the premises and should be backed up monthly.


Successful implementation of a computer system requires the involvement and cooperation of owner-managers and employees; therefore, it is important to involve them early in the process. Discuss with employees suggested installation sites prior preparing the sites. Determine the employees' needs and preferences, but inform them of any site,limitations due to temperature, humidity or electrical requirements. During this process and hardware installation, explain to employees in a positive manner how easy it is to use computers and how it will enhance their job.

Prior to installation, manual procedures to be computerized need to be prioritized. Keep in mind that all procedures should not be converted at one time. Analyze which business procedures will have to be modified for computerization and develop any new manual procedures that will be required o interface with the new system. Finally, train the client's personnel prior to conversion. During conversion, set up the files and input he needed historical data so that the system is ready to record new transactions.

During this process progress reports detailing any problems should be made during group employee meetings. However, it is important that the accounting firm control the meetings and keep them positive. For several periods after conversion both the manual and computerized system should be performed. This will place a strain on the client's personnel, but until the complete accuracy of the new system is verified, it is a necessity.


Two potential personnel problems may arise during conversion: the relocation of displaced personnel and adjustments to the organizational structure. An orientation/training program should be prepared for all personnel that will have any contact with the new computerized system. If relocation is necessary, the personnel department should be involved in the process as soon as possible, since relocation may require a large adjustment on the employees' part. In addition, employees should be kept fully informed, so that rumors are reduced to a minimum.


To avoid interruptions, the client's personnel should be trained at the accountant's office. So that the trainee can relate he training to work, use customized training examples that relate to the client's business. Begin with transaction entries, then generate reports and finally over maintenance operations. Training sessions should be limited to two employees at he same skills level and not exceed three hours (including breaks) every other day, so the employees do not get behind in their daily work. Synopses of the material to be covered in each session should be distributed in the prior session and briefly discussed. A word of caution - it should be agreed beforehand that all trainees should know how to do manually what they are being trained to do on the computer. If not, the firm may find itself spending time in training that it may not be able to bill.

Concluding the Engagement

The accounting firm should not just tell the client's employees it is finished with the engagement. Instead, prior,to the completion of the engagement in a scheduled meeting with the person that authorized the engagement, review the original engagement letter and report on the implementation progress. Items that are incomplete need to be discussed, including reviewing and agreeing on whose responsibility it is to complete these. If the client wants or needs help that was beyond the scope of the original engagement, now is the time to sell additional services. This meeting should be summarized in a final report to the client.


Even if the engagement letter did not specify that the accounting firm review the client's progress at a later date, it is good business practice to do so. The purpose is to ensure that the system is performing as intended and that all controls are in place and working. The performance of the new system should be evaluated in terms of objectives that were stated in the feasibility and analysis phase. Relative items include user complaints, error rates, processing time and a comparison of the new system's actual operating cost with the estimated cost. After the review, the accountant should meet with the person that authorized the original engagement to report the findings. At this meeting it may be appropriate to discuss the need for additional training or expanding the current computer system.


As clients computerize their businesses, especially their accounting needs, accounting firms' compilation services will decline. This process does not have to result in decreased revenue for the accounting firm or the loss of a client to another consultant, if the firm substitutes computer consulting services and a review that results in continuous business planning for lost business. In order to effectively accomplish this, the accounting firm must review its strengths and weaknesses for performing such services, formulate and implement a marketing plan and follow up with quality service that will generate new referrals.


[1] Stewart, Michael M. and Shulman, Alan C. "How to Get Started with a Small Business Computer," U.S. Small Business Administration, (1988). [2] "PCs Underused by Arizona Small Businesses: Study," Accounting Today, (October 23, 1989), p. 24. [3] Carmichael, Cole, Pallais and Schechter, "Microcomputer Consulting Services," Guide to Small Business Consulting Engagements, Practitioner's Publishing Co., Ft. Worth, Texas, (September 1988):

James F. Hopson JD, CPA, is professor and dean of the College of Management at Lawrence Technological University in Southfield, Michigan. He is co-author of Income Tax Fundamentals(Irwin), and has published articles in tax, accounting and business journals.

Seyed-Mahmoud Aghazadeh, PhD, is associate professor and coordinator at the Business Department of the State University of New York at Fredonia.

Christine Taylor, MBA, CPA, is an assistant professor at the Business Department of the State University of New York at Fredonia.
COPYRIGHT 1992 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:electronic data processing consultancy
Author:Hopson, James F.; Aghazadeh, Seyed-Mahmoud; Taylor, Christine
Publication:The National Public Accountant
Date:May 1, 1992
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