April 2000

E-business Offers Practice Opportunities for CPAs

Considerations for a Client Meeting

By Bruce H. Nearon, CPA

This article is the first in a series by the NYSSCPA Emerging Technologies Committee to educate and inform CPAs about opportunities to expand their practices and improve client services by offering e-business consulting. Many people confuse e-business with e-commerce and assume the two terms are synonymous. They are not. E-commerce generally involves a sales transaction conducted on the Internet; e-business, however, encompasses much more. The distinction is important. According to IBM, the term "e-business" means the transformation of key business processes through the use of Internet technologies. The e-business series of articles will provide practical information that practitioners can use to advise their clients on using Internet technologies to increase their companies' value.

Planning for an E-business Meeting

An e-business engagement begins when a client requests advice on how to increase the value of his or her business with Internet technologies. Hopefully, the engagement will be ongoing as the client's e-business grows. E-business is constantly evolving and CPAs need to continue to help the client innovate to increase the value of his or her business. CPAs can help develop an e-business strategy and implementation plan and provide budget control. Some of the work may be done in-house by the CPA consultant or outsourced. CPAs can bill for this work on an hourly or project basis. Currently e-business consulting engagements pay a premium over accounting, auditing, tax, and traditional consulting services.

CPAs needs tools when preparing for an initial e-business meeting with clients. While practitioners have checklists for audits, reviews, and tax returns, e-business does not have the 100 years of history that these other services do. See the accompanying checklist to help prepare for the initial meeting with a client.

Do Your Homework

Before the initial consultation, familiarize yourself with the latest e-business news. Be aware of the issues of the day--for example, the recent hacks of popular Internet sites such as Amazon, e-bay, and Yahoo; the debate over Internet taxation; and the proposed merger of America Online and Time Warner. Talk to other practitioners, local VARS, and software vendors to find out what packages they use and their experiences with them. Review related articles in accounting technology periodicals for an overview of the e-business functionality of the various packages. Substantial information on e-business is online, so an Internet search is a must.

Know Your Client

Evaluate the technological expertise of the client's management and information technology staff. Make sure the in-house capabilities are at a maximum including hardware, software, and the company's intranet. Gauge the client's time and financial commitment to ongoing technology upgrades and any necessary additional training. Consider whether the client should begin with a marketing strategy that becomes progressively more interactive over time. There is no cookie-cutter approach or standard work program when implementing e-business. The procedures used depend on the nature of the client's business. Determine which tasks in building and maintaining the site the client and CPA can perform in-house, and which to outsource. This is valuable advice to clients. Too often companies go in way over their heads when it comes to technology and waste a lot of money.

Back to Basics

The biggest secret of e-business success is that companies face the same management challenges that have always existed; only the tools have changed. The same guiding principles and concepts used in the 20th century as taught by management gurus such as Peter F. Drucker, Robert H. Waterman, and Dale Carnegie still apply today. We just have new names for them.

The "e" in e-business is not the issue. Instead, building a solid foundation to implement business practice and technology is the challenge. Companies that fail in their e-business implementation can trace their problem back to poor planning--the same classic blunders that have always put companies out of business. Implementing e-business will not help companies that have marketing, sales, and management problems or cannot anticipate demand.

Implementing e-business is no more or less a challenge than point-of-sale systems or any other all-encompassing control system. Companies are no less concerned about hackers defacing their homepage or accessing proprietary or private information in their internal network than they are about employee or customer theft. Security is a constant requirement of any system, manual or automated.

Helping clients increase their company's value with e-business is about strategy, not tactics. It calls for strategic analysis of strengths, weaknesses, opportunities, and threats that we learned in business college. E-business is about business planning and analysis, not the details of the technology itself. Technology only offers the tools to achieve the objectives.

Unique Requirements

CPAs should caution clients not to enter into an e-business implementation lightly. There is more to it than just putting up a static web page. If you build it, there is no guarantee that they will come. A corporate website is a universal recommendation, but CPAs must advise clients that they need to update their sites frequently to attract users regularly. If individuals revisit a site and the content has not changed, they are unlikely to visit again. Users return to sites that continually change because people always want new and useful information.

Once the client has a well-visited site with customers placing orders, an e-business has to plan for efficient and scalable purchasing, warehousing, distribution, and customer service. A business has to be able to move from a static web page to e-commerce to integrated
e-business in Internet time. Once clients commit to e-business, they have to move fast. If not, by the time they implement a long drawn-out plan, the Internet market will have blown by it. A recent Forbes article quotes a prominent Silicon Valley venture capitalist saying that there is not just one e-business plan out there to steal your customers, there are 10. The accepted business wisdom today is that if you are not moving in Internet time, you will be out of business within five years. There are numerous steps between having no website and making Internet technologies the core of a business. How the client gets there is in the details of the strategy, implementation, and budget control services that CPAs can deliver.

Moving Forward

The greatest challenge practitioners face is helping clients remember how to "do business." Regardless of how the customer places an order or the company delivers it, the cash ultimately has to hit the bottom line. CPAs and clients need to be aware of current solutions but should not throw common sense to the wind because of e-mania. However the orders come in, goods have to go out, and profits eventually must follow. *

Bruce Nearon, of J.H. Cohn LLP, is chair of the e-business subcommittee of the NYSSCPA Emerging Technologies Committee. The following subcommittee members also contributed to the article: Menachem Bazian, sole practitioner; Gregory S. Garritano, sole practitioner; Stanley Hellman, sole practitioner; Ford Levy of Maxwell Shmerler & Co.; Marc Niederhoffer of Buchbinder Tunick & Co. LLP; and Jason Palmer of Palmer Computer Services.