What do we mean by practice management?
[Author: ICAEW Practice Team]
Published: June 9, 2023
At ICAEW’s first Mid-Tier Tech Forum of 2023, representatives from over 20 firms discussed the burning topic of practice management software. While the discussion focused on mid-tier firms, the topics covered are relevant to practices of any size.
It is fair to say that, for most firms, practice management is a problem. Legacy applications that don’t talk to each other are increasingly a burden for firms who are looking to embrace cloud-first integrated solutions. After all, with the well-cited skills shortage, firms need to ensure their staff spend as much time as possible focusing on high-value tasks over data entry and admin.
At ICAEW’s recent Mid-Tier Tech Forum, one question came up which completely reframed the conversation: what do we actually mean by practice management? It turns out it is a rather ill-defined term, an umbrella categorisation of software used by firms that can cover anything from time and expense management, budgeting, resourcing and billing, to reporting, and even risk and quality management. There were, however, some common themes that emerged.
The glue in the tech stack
Through the course of the forum, there was a sense that ‘practice management software’ may not need to ‘do’ anything at all. Across each element of the process of practice management, there are tools available that deliver all the necessary capabilities: the CRM system could manage client onboarding; a dedicated time capture system could manage resourcing; budgets and billing could easily sit within a well-designed finance system. But crucially, all firms need a platform that brings these disparate elements together.
It could be argued that all practice management really needs to be is a database that sits in the middle of the array of systems and solutions involved in the management and delivery of client activities. That’s probably an oversimplification, but most firms need to integrate disparate solutions. Regardless of what a practice management solution actually does, most attendees agreed that something needs to be the glue that sits in the middle and connects to other applications. Whatever that is, it needs to be flexible, modular, application agnostic, and avoid trapping firms in any single ecosystem.
A single source of truth
Firms are dealing with vast amounts of data – on clients, staff, engagements, financial and non-financial metrics. No one system can possibly accommodate all of these. Building relationships between different sets of data requires a little overlap, but too much overlap can cause problems. The manual entry of the same data in different places leads to issues of data quality and inefficiencies. If client records are stored differently in the finance system and the CRM system, how do we know which one is right?
Ideally, people should be able to input key information once, in one location, and for this to proliferate to other applications as required. Even if a practice management solution isn’t the place where, for example, client contact details are recorded, if someone wants to understand all of a firm’s current activities with a particular client, it may be the practice management solution that provides that overview. Again, by being that focal point in the middle of everything, a good practice management system can be a hugely powerful tool in improving consistency of data across the entire organisation.
Reporting
While a good ‘single source of truth’ at the heart of the practice matters, it is meaningless if you don’t then do anything with it. This is where another key feature of practice management comes into play. Partners and staff at all levels and in all roles want access to good quality, timely management information (MI).
This means customisable reporting and dashboards that present different views depending on the information that individuals in different roles require – the ability to quickly and easily track KPIs, look at trends across portfolios, progress on individual engagements, and highlight areas for concern so that actions can be taken to address them.
Also important in the reporting space is the regulatory need. This can become very time consuming to compile, so the reporting from a practice management solution needs to be able to deliver that with minimum effort. As advisory services become more important to firms, the ability to report information relating to different services will help firms be more agile and responsive to their clients’ needs.
Lastly, clients themselves are increasingly keen to understand what their accountants and auditors are doing and what progress is being made on the services being delivered. The ability for a practice management solution to deliver some automated, client-facing reporting is becoming less of a ‘nice to have’ and more of a necessary feature.
Making the change
One of the key challenges in adopting a single practice management solution is that it can be very difficult to overhaul the solution, if or when the time comes to change platforms. When a single application touches all parts of an organisation and its processes, it becomes so intertwined in operational practices that any changes become a substantial undertaking.
On the other hand, it can be quite overwhelming to have to consider seven-to-10 different applications to meet the business needs. Keeping on top of the latest developments across all of them can seem a never-ending task. These considerations chime with some of the messaging coming out of ICAEW’s recent research into the mid-tier technology landscape, which will be released next month.
Ultimately, most attendees at the forum were either in the process of reviewing their practice management applications or planning to review them in the next 12-18 months. There’s clearly an opportunity for providers in this space to demonstrate why their solution is the one that solves the practice management conundrum, but there has to be a compelling case for change.
Solutions that offer more of the same aren’t going to grab people’s attention. Perhaps it is time to acknowledge that the landscape in practice technology is changing so rapidly that traditional ‘practice management’ solutions will need to evolve to meet the needs of the practices they purport to manage.
