The accounting industry is at a crossroads. As firms grapple with rapid technological advancements and increasing client demands, the question of whether to adopt a 'best of breed' approach or consolidate their tech stack has become a significant strategic decision. Especially given the fact that 90% of accountants expect technology to drive their firms' growth in the future.
This topic was front and center at the firm operations roundtables at the recent PrimeGlobal MegaWeek conference, where leaders from across the industry shared their challenges and insights.
Best of breed vs. consolidation: What’s the difference?
Before diving pros and cons, it’s essential to understand the two approaches:
- Best of breed: This strategy involves selecting the best individual software for each specific function, whether it’s for tax preparation, audit, payroll, or client relationship management. The primary advantage here is that firms can access the most advanced features and capabilities tailored to each task.
- Consolidation: A consolidated tech stack involves integrating all functions within a single platform or a tightly integrated suite of tools. The goal is to streamline operations, reduce complexity, and improve data consistency across the firm.
The allure of consolidation
For many accounting firms, the promise of having all operations under one umbrella is tempting, especially when considering potential benefits:
- Efficiency and streamlining: A consolidated platform can significantly reduce the time spent on training, maintenance, and troubleshooting. Instead of dealing with multiple vendors and systems, firms can streamline processes, leading to greater operational efficiency.
- Improved data flow: With a unified system, data flows more seamlessly between departments. This can lead to more accurate reporting, better client insights, and a more cohesive approach to client service.
- Cost savings: While the initial investment in a consolidated platform may be significant, the long-term cost savings can be substantial. Firms can reduce the need for multiple subscriptions, licenses, and the associated administrative overhead.
The shortcomings of consolidated platforms
However, the reality is not as straightforward. Many firms at the roundtables expressed frustration with the current state of consolidated platforms. In fact, 70% of finance software buyers regret their purchase, according to Capterra.
Here are some of the common shortcomings that were highlighted:
- Lack of flexibility: Consolidated platforms often sacrifice specialized features in favor of broad functionality. This can be a significant drawback for firms that need advanced capabilities in specific areas, such as audit or tax.
- Integration challenges: Firms have found that integrating various functions within a consolidated platform is not always smooth. Data silos and compatibility issues can arise, leading to inefficiencies. According to IBM, the cost of bad data to businesses in the US alone is $3 trillion per year
- Vendor lock-in: Committing to a single vendor can limit a firm’s ability to adapt to new technologies or shift strategies in response to market changes. This lack of flexibility can be particularly concerning in an industry that is evolving rapidly.
The best of breed advantage
Given these challenges, it’s no surprise that forward-thinking firms continue to favor the best of breed approach. This strategy allows firms to:
- Leverage cutting-edge tools: By selecting the best software for each function, firms can access the latest innovations and features tailored to their specific needs.
- Maintain flexibility: A best of breed approach allows firms to switch out tools as needed, adapting to changes in technology and business requirements without being locked into a single ecosystem.
- Optimize for performance: When each tool is chosen for its specific strengths, firms can optimize their operations for maximum efficiency and effectiveness in each area. On average, 31% of an organization's technology is made up of outdated IT systems, applications, or software.
Aiwyn provides the best of both worlds
During the firm operations roundtables, most firms expressed that they would prefer consolidation but there are too many shortcomings of existing platforms. That’s where Aiwyn comes in.
Aiwyn’s integrations with legacy practice management systems, coupled with its modular solutions, empower firms to adopt best of breed tools without creating data silos or disrupting processes across service lines.
What begins as a supplement to legacy systems – introducing advanced automation and enhancing client experiences – will eventually give firms the option to retire legacy sources of truth, with Aiwyn’s end-to-end PracticeOS platform. Firm’s that opt for consolidation will now have a more modern and advanced source of truth that seamlessly integrates with other key business systems across the entire firm.
Aiwyn is the first CPA solution to give firm’s the best of both worlds when strategizing whether to go with best of breed tools or consolidate. To see how Aiwyn’s modern platform will improve billing processes, speed up cash flow, and delight clients, request a demo today.
