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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.