Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Key Contributors:

Randolph (Randy) P. Johnston, CEO and FounderNetwork Management Group Inc. and K2 Enterprises

Mark McAndrewVice President, Consulting ServicesXCM Solutions

2 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

3 Introduction

4 ProcessDrivesProfitability

5 WorkflowPlatformsDriveStandardization&Scalability 6 ImpactofVariousSoftwareProductsonthePractice

7 ValueofUsingWorkflowAutomationPlatformtoSupportWorkflowProcesses

8 UseofMetricsandFinancialMeasuresforOptimization

8 ManagingforResultswithDataAnalytics

11 Conclusion:WhyYouShouldUseaWorkflowTooltoManageYourFirm

12 AboutCPA.com

12 AboutXCM

TableofContents

3 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Howcanyourfirmoperatemoresmoothlyandgainreal-timeinsightstoimproveperformanceasitadaptstothenewworldofwork?Traditionally,ouranswershavecomefrompracticemanagementandafter-the-factreporting,butthatisnolongerenough.Real-timereportingthatenablesfact-baseddecision-making,andretainingqualifiedstaff,arebecomingmoreessentialasclients’requirementsincrease.Assuch,manyleadingfirmsimplementedreal-timeworkflow,includingcalendarandresourceallocationschedulingsoftware,over10+yearsagotohaveaccesstooperational data and analytics in real time.

Whileoptimizingworkflowremainsanopportunitytoimprovefirmefficiencyandproductivity,gainingvisibilityintoyourownoperationsandthoseofyourclientsisthefuture.Thistransparencyenablesmanagement to make data-driven decisions based onchangingbusinessconditions.Historically,thistypeofinformationhasnotbeenavailabletomostpublicpracticefirms,asonlythemostsophisticatedandproperlyimplementedERPsystemsproducedthistypeofmanagementinformation.Eventhen,theKPI’s(KeyPerformanceIndicators)ormetricstrackedbythesesystemswerefocusedonprimarilyinternalperformanceoperationalmetrics.Thesemetricsfacilitatedidentificationandreactiontoperformanceissues,whichkeptstaffandmanagementfocusedonoperationalexcellence.However,thesesystemslackproactiveinsightstoincreasefirmproductivityandalso lack any external comparisons to peer groups and industry best practices.

Introduction

Real-time Reporting

KPIs

Analytics

Insights

Visibility

4 LeanSixSigma+AutomatedWorkflowTechnology

Ifyouhavenottakenadvantageofworkflowmanagementplatformsasoneofthedriversofprofitability,youmaybefallingbehindandmissingouton a real-time view into work-in-process and a more efficientwaytotrackengagementtasksforeveryclientandstaffmember.Thesebenefitsaredifficult,ifnotimpossible,toaccomplishusingonlyprojectmanagement,scheduling,orchecklists,asthesetoolstypicallydonotintegratewithclient-facingportalsorstafftools.Byusingproven,integratedworkflowplatformssuchasXCM,firmscangeneratereal-timebenchmarkingdata,providingtransparencyintocurrentandpreviousyearengagementperformanceandhighlightingareastoincreaseprofitability.

Whileitisimportanttoseeallprojectsassignedtoindividuals,teams,oroffices,itiscriticaltohavevisibilitytoaccurateinformationtoanswerclientquestionsaboutprojectstatusinreal-time.Properlyimplementedworkflowmanagementsystemseliminatetheuseofpaperroutingcontrolsheetsandspreadsheets,whichdon’tcontainstructureddatainawaythatcanbesummarizedinrealtime.Whenproperlyimplemented,workflowsystemsexposeprocess inconsistencies and undocumented “personal preferences”thatmayhaveresultedinaneedforprojectstoberedone,whilealsohelpingfirmsdelivermore consistent results.

Workflowcanimproveprofitabilityinthefirminotherareas, too. For example, business development is oftenaprocessthatisexecutedbypartners,directors,managers,andmarketers.Astructured,well-designedprocessallowsallqualificationstepstobecompletedeasilyandinthecorrectorder,whichhelpsyourteamselecttherightclientsandtherightopportunitieswhilegivingeveryonespacetosharetheirinput.Ifyourfirmisprovidinginnovativeserviceofferings,you’llneedtoworkthroughthestepstobeeffectivewiththedeliverables,andthereisnobetterplacetotrackthisthaninaworkflowsystem.

Usingaworkflowsolutionprovidesconsistencyacrossthefirmandmakesiteasiertohandleexpectations.Whilewerecommendconsistencyamongstpartnersinprocessanddeliverables,thesesolutionscanguidemanagersandstaffthroughthediscoveryprocesstoidentifyadditionalengagementopportunitiesforthefirm.Theseamlessandconvenientinteractionsavailableinmanysystemssurprisesomefirmswithunexpectedbenefitslikeincreasedservicedeliverycapacity(e.g.moreefficientoperations)becauseoftheincreasedfocusonthetasksathand.

ProcessDrivesProfitability

5 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

WorkflowPlatformsDriveStandardization&Scalability

Asbusinessneedschange,newtechniquesareadopted,andregulationsareissued,workflowsolutionsofferusersasingle“sourceoftruth”whereeveryteammember’s tasks, priorities, notes, deadlines, and points livewithintheonesystem.Thebestworkflowsystemsareconfiguredtoworkthewaythefirmworks.Theinformationandinsightsthatresidewithintheworkflowplatformprovidethebusinessintelligenceandreportingtoolstohelpfirmleadersandenablestafftocontroleveryaspectofthefirm–CAS,Tax,Audit,Admin,andnichepractices.Alldepartmentsandpositionsinafirmbenefitfromhavingaccesstoaworkflowsystemthatsavestimeandresultsinmoreefficientinternalandexternal communications.

Workflowsystemsfacilitatequick,structuredcommunicationsforroutineitems,reducingthenumberofe-mailmessagesandmakingworkmorecollaborative,transparent,andorganized.Standardizationhelpsmanagersandstafffocusonprovidinghigher-valueservicesandencourageshabitsthatwillhelpstaffbemoreefficient.Whilemanyfirmsthinkofworkflowsystemsasprimarilybeingusedbythetaxdepartment,thereareopportunitiestoimproveauditvisibility,evolveyourClientAccountingService(CAS)business,managerecurringtasksandduedates,andsimplifyadministrativeteamfunctions.

Asanexample,foraudit,arobustworkflowsystembringsallthekeycomponentsrequiredtoperformmany engagement types into a single productivity platform.Additionally,yourteamcanoptimizeitsbusinessprocessesfromaLeanSixSigmaperspectivetosimplifyoreliminatestepsonaperiodicbasiswhenwork processes evolve.

6 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

ImpactofVariousSoftwareProductsonthePracticeWhileworkflowprovidesoperationalandprofitabilitybenefitstoyourfirm,withoutexperiencingtheadvantagesforyourselfitcanbehardtounderstandhowthesesolutionswillimpactyourfirm’sproductivity.Vendorswhoonlyhavepracticemanagementproductswithmodulesorchecklistsmaytrytoconvinceyoutheirpointsolutioniseffectivewhencomparedtoaworkflowmanagementsolution.Bewary,asyourteamwillnotrealizethefullproductivityefficiencies.

Oneofthefirstconsiderationsistoreviewtheoptionsinsideeachproduct.Directlyevaluatingfeaturesandbenefitsmaybetime-consuming,buttherearekeyfirmandclientneedstoconsiderwhenpursuinganynewworkflowsystem.Theseneedsinclude:

• Flexibilityofconfiguringworkflowsbasedonchangingbusinessneeds

• 360°visibilityintotheWho,What,Where,When&Whyofengagements

• Resourceallocation(especiallyusefulintaxandclientaccountingwork)

• Scheduling(usefulinacalendar-based, multi-resourceengagementssuchasauditand/orcorporatetax)

• Availabilityofbestpracticeworkflowsasastartingpointforyourpractice

• Analytics(helpfultoestablishadata-drivenapproachtoproductivityoptimization)

• Implementation • Mobile approvals

7 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Accordingtothe2018 Accounting Firm Operations and Technology Survey results, firmscontinuetostrugglewiththeadoptionofanall-in-onesoftwaresuite,ascomparedtousing“bestofbreed”solutionsfromdifferentvendors.Asadoptionofnewgenerationtechnologyprogresses,choosingthe“one-sizefitsall”singlesuiteapproachseemstobreakdownevenmore.

Wehaveconsideredtheimpactofintegratedworkflowproductsvs.standaloneproducts,aswellasdifferentapproachessuchasDMS-centricorPracticeManagementcentricapproaches,andwhileyoumaybesatisfiedwithachecklistapproachbecauseofsimplicity,itisnearlyimpossibletogarnerusefulmanagementinformationfromthetoolsusedtoaggregatedatafromachecklist.

Considerthefollowingillustrationwhichshowstheimpactofworkflowacrossvarioussystemsandfirmfunctions:

ValueofUsingWorkflowAutomationPlatformToSupportWorkflowProcesses

Chart Legend

• Workflow

• Practice Management

• Document Management

Real-time 3600 view of tasks, resources and projects

Ability to coordinate, schedule and allocate resources

Productivity enablement platform for increased capacity

Configurable implementation within 45 days

Due date management

Practice Management

DocumentManagement

WorkflowControl of time and billing

Quality and compliance management

Reporting

Ability to share information and/or documents

XCMisacloud-basedworkflowsolutionthathelpsaddressthesechallenges,andmore:

8 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

UseofMetricsandFinancialMeasuresforOptimization

ManagingforResultswithDataAnalytics

Real-timereportingisessentialformanagingyourfirmtoitshighestpotential.Firmsthatmanagetheirbusiness solely on practice management reports and historicalfinancialmeasurescannotproactivelytakecorrectiveactionsuntildays,weeks,orevenmonthsaftertheproblemoccurs.Usingareal-timeworkflowmanagementsystemprovidesyou360°real-timevisibilityintotoday’sproblemswithimmediacyandhelpsyoufocusyourteamresourcesongeneratingresultsforyourclientandthefirm.

Workflowwithmetricsandanalyticsprovidesvisibilityintowhatneedstobedone,whathasbeendone,whoisdoingwhat,andwhatneedstobereallocated.Ithelpsleaders proactively eliminate bottlenecks to complete workthatdrivesrevenueandpreventsanydelaysthatimpactcashflowand/orclientrelationships.Predictivedataanalyticshelptrackthekeyperformanceindicators(KPIs)foroptimallymanagingafirminthemodern environment.

Beyondtheprocessimprovementbenefitsofaworkflowsystem,thereareadditionaladvantagesfirmscangleanfromtheperformancemetricsitproduces.Thesystemsproducea“digitalexhaust”ofreal-timestructureddatathatcanhelpidentifyshort-termandlong-termissueswithyourteam,yourprocesses,andyourclients.Theworkflowsystemdatacanbecombinedwithotherperformancemeasuresandfinancialresultstohelpincreaseoverallproductivity,optimizeefficiencies,andelevateoverallemployeeeffectiveness.Thedatacanalsobeminedtoidentifygapsinperformance,processimprovements,andopportunities to scale and grow your business.

Ifaworkflowmanagementsystemisusedtomeasurebusinessdevelopmentprocesses,youcaneasilyseeifyouaretargetingtherightclients,offeringtheservicesthoseclientswanttobuy,andrewardingtherightstafffortheirproductivity.Youcanalsoproactivelyidentifypotentialobstaclesastheyevolveinboththebusinessdevelopment/salescycleandinthedeliveryoftheactual service.

Awell-designed,properlyimplementedworkflowmanagementsystemcanhaveapositiveimpactonvirtuallyeverydepartmentandcriticalfunctioninyourorganization.Ifyouattemptedtomapadetailedanalysisofyourprocessesusingpapercontrolsheets,Excelspreadsheets,standalonechecklistsorbuggy

customdatabases,youwouldfindthatyourteamcan’tusetheseimprovisedtoolstooptimizeyourprocessesefficientlyandeffectively.Ifyouaren’tusingastructured,real-timeworkflowsolutiontoday,youprobablyhavelesseffectivemanagementinformationandinconsistentoperationsthanyourcompetitors.

9 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Figure 1:Filteredpiechartanalysisofwork-in-process(WIP),andtask,client,andfirmmetrics

Figure 2:Taxproductionandoutputvs.prioryear,withbenchmarkingagainstlargerdatasetofpeergroupfirms(Top100),asofMarch1,April1,andMay1forbothyears(notetheinteractivefiltersandcontrolsatthetopofthescreen)

Real-timemeasurementsfromworkflowandprocesstrackingsystemshelpyoumanagethepracticeandprovidegreaterinsightintodecision-making.Consider the following examples from XCManalytics as a Service®:

10 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Figure 3:Dailyprogresschartingoftaskmovementthatprovidesfirmleaderswithaholisticviewofday-to-dayactivityinthefirm.Whenclicked,eachchartdirectstoanotherdashboarddrillingdownintothedetailsrelatedtothesummarizedcontentinthisview.

ContinuingwiththisXCManalyticsasaServicesystemasanexample,therearemanykeyperformancemetricsyoucanchoosetouse.Whilethisisnotintendedtobeacomprehensivelist,considerthefollowingsampleofavailablereports:

1. MyClientTasksvs.FirmTaskProgress2. Year-Over-YearPreparation&ReviewCycleTime Averages3. Year-Over-YearExtensionComparisons4. DailyStatusComparisonsPY(PreviousYear)vs.CY (CurrentYear)5. TaskAgingBasedonPriorYearStart

First,thefirmneedstoidentifythemetricsthataremosthelpfultomanageproductivityandprofitability.Next,youcancreateareportordashboardwiththeinformationinXCManalyticsasaServicetoprovidetheinsightstooptimizeyourfirm’sperformance.Ifyouneedassistanceindevelopingproductivitymetricsforyourfirm,XCMconsultantsareavailabletoprovideguidancetogetyoustarted—thisisincludedwiththeXCManalyticsasaServiceproduct.Justlikeworkflow,metricmeasureschangeovertimeasyourbusinessevolves.Whatismeasuredcanbemanaged,anddataanalysistoolslikethisoneprovideyouwithmetricstoeffectivelygrowyourfirm.

11 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Whilewehavetriedtoillustratethebusinesscasetouseaworkflowplatform,metrics,anddataanalyticstomanageyourfirmoperations,therearesomefinalpointswedon’twantyoutomiss.Arobustworkflowplatformprovidesyourfirmwithgreatervisibilitytoshowareturnoninvestment(ROI)andabilitytoincreaseproductivitywhilescalingyourbusiness.Aproperlydesignedandimplementedworkflowmanagement system will:

• Drivegrowthandscalabilityofthepracticeformaximumprofitability

• Increaseproductionandhumancapitalcapacity• Enhancecommunicationandcollaborationacrossoffices

• Offercompletevisibilitytoproductionmeasures,resourceallocation,aswellasschedulingrequirementsfordisciplinessuchastax,accounting,audit, client accounting services and operations

• Measureandreportperformancetooptimizeeffectiveness

• Manageclientexperienceandsatisfaction• Delivercontrolsthatensurehigh-qualityoutputsand

accountability• Integratewithcurrentimplementedtechnologiestoprovideonecentralrepositoryforinformation

Whywouldyouhandicapyourfirmbynotprovidingyourteamthebestmanagementworkflowtechnologiesavailable?Doyouhavebiggerproblemstosolvethanmakingyourteamaseffectiveaspossible?Ifyouwanttohaveaworld-classprofessionalservicesorganizationinthemodernenvironment,youmustuseworld-classmanagementtechnologies.Thebest-managedfirmsintheworldareusingworkflowandprocessmanagementplatformslikeXCMworkflow® to followthestatusofclients,engagements,prospects,and employees, and are using visual data analytics tools like XCManalytics as a Service to monitor and managethemallinreal-time.

Regardlessofwhetheryou’rejuststartinguporyou’vespent decades building your practice, you owe it to yourself,yourpartners,yourclients,andyourstafftoalwaysprovideprompt,efficientservice.JustasFedEx®,UPS®,andothercommoncarriersadoptedworkflowandprocesstrackingsystemsagenerationagoforpackagedelivery,world-classprofessionalservicefirmsareadoptingthesesystemstohelptheirteamsworkcollaborativelyanddeliverthebestservicepossibleforclients.Lastly,connectingyourpeoplethroughprocessandtechnologywillresultinhigherproductivity.

Conclusion:WhyYouShouldUseaWorkflowPlatformtoManageYourFirm

12 Using Operational Data & Analytics to Improve Firm Productivity & Profitability

Learn more: CPA.com/WorkflowCall: 781.356.5152

AboutXCM

XCM offersacompleteproductivityenablementandworkflowplatformthatempowersyoutomanagealltypesofwork—withinalldepartments,acrossmultipleoffices.

It’sanopenplatformsystemthatworkshorizontallyacrosstax,accounting,finance,audit,andoperationsapplications.XCMmanagesmillionsofprocessesperyear,enablingprofessionalstocompletemorework,inlesstime,withgreaterquality.Ourdeviceandbrowser-agnosticcloudsolutionsofferreal-timeanywhere,anytimeaccesstowork.

Thoughweintegratewithseveralpopulartaxandaccountingpackages,therealpaybackisthroughyourgreatestasset—yourpeople.XCMistheonlyproductivityenablementandworkflowplatformendorsedbytheAICPA,andcomplieswiththecontrolsandapplicablecriteriaoftheAICPATrustServicePrinciples.

Formoreinformation,visitXCM and stay connected on Twitter and LinkedIn.

AboutCPA.com

CPA.com’smissionistoempowerCPAsforthedigitalagebyprovidingtargetedtechnologysolutions,education and best-in-class strategic resourcestohelppositionCPAsandtheirfirmsforsuccessintoday’s digital world.

CPA.com’spartnershipwithXCM, a leading provider ofworkflowautomation,providesCPAsaprovenpartnerthatcanexpertlyconsultonbusinessprocessimprovementtoachieveproductivityenablementviaworkflowautomation.XCMhashelpedmorethan33,000+usersrealizethevalueofautomatingworkflow.

ExploretheresourcesCPA.comandXCMoffer,includingwhitepapers,successstoriesandeducationalwebinarsonhowtobuildafullyautomated,end-to-endworkflowinyourfirmandgetmoreoutofyourhumancapital.CPA.comisasubsidiaryoftheAmericanInstituteofCPAs(AICPA),theworld’slargestmemberbodyrepresentingtheaccountingprofession.Formoreinformation,visitCPA.com and stay connected on Twitterand LinkedIn.