What’s needed is a way to design, build and implement the perfect app stack for a 2024 accounting firm. But there’s plenty of debate around the best way to achieve this goal.
Here at Active, we’ve been conducting research to find out what Top 50 accounting firms think their ideal app stack will look like – and how they plan to approach building this stack.
But let’s start by looking at why a new app stack is needed and why your legacy practice software might be looking a little long in the tooth.
The differences between modern and legacy practice systems
There’s no escaping the fact that accounting technology is evolving at a fantastic pace. Even looking back to practice technology from a decade ago, the limitations of these once cutting-edge systems are becoming increasingly apparent.
The good old days
In the good old days of the 2000s and 2010s, you had what might be called ‘islands of data’. Software-based computer systems were in common usage, but each system stood on its own as a totally independent silo of data. These disparate systems weren’t well connected, had poor visibility between systems and, more often than not, were part of a wider ‘suite’ of software.
The good old days meant:
- Islands of data
- No connectivity
- No visibility across systems
- Hyper-reliance on ‘the suite’
Today, in a fully digital world
If we skip forward to the present day, we now have connected apps, application programming interfaces (or APIs) to connect up tools, and our systems all hosted in the cloud. Fundamentally, the accounting tech landscape has changed, bringing firms the benefits of discreet apps for specific tasks, full connectivity and the ability to build your own ‘app stack’ – your bespoke, tailored collection of connected and fully integrated apps.
Today, we have:
- API connectivity, with combined data
- Cloud-based solutions
- Fully accessible data and records
- Data-visibility across the whole system stack
Two key options: a closed suite, or an integrated app stack
We live in a new world of apps and APIs, where you shouldn't be choosing your software stack in the same way you were ten years ago. The landscape has changed and the key decision factors you might have based your thinking on a decade ago are fundamentally changed.
In 2024, there are now two significant options when thinking about designing an app stack:
- One big suite – Option #1 is to have a single big suite with a few point solutions. You might opt for a big suite that does everything, but where you may have a separate payroll solution, or a separate Anti Money Laundering (AML) tool around the edges. This is a closed suite that does most of the things that you need, but that doesn’t integrate especially well with any other software tools.
- A set of well-integrated apps – Option #2 is to choose a set of apps that can connect into one stack. These disparate software tools will work well together, but there's no dominant player. This is a democratic collection of integrated apps, that create your own bespoke app stack – a stack that’s tailored exactly to yours and your clients’ needs.
What do today’s firms want from their practice systems?
The best way to gauge the current mood around practice systems is to talk to the IT partners who must make these software decisions. So, over the last couple of months, we’ve been chatting to 14 IT partners from a cross-section of Top 50 accounting firms.
We’ve asked them:
- How will you design your app stack?
- What’s your approach for choosing the right software options?
- Why is a change needed and what’s the key goal of this tech upgrade?
We got a variety of responses from the IT partners we spoke to, with differing viewpoints on what a perfect practice software solution might look like.
Let’s take a look at some of the outputs from the research, to understand if there’s a consensus around building a app stack:
1. One big suite with a few point solutions
Of the IT partners we spoke to, only two wanted one big suite to run their systems. Given the ageing nature of the ‘one suite solution’, this is not unexpected, but there are some clear reasons why these firms want to go the all-in-one route.
- “I want as few pieces of software as possible, but at the same time I don’t want to go back to something that does it all, but is very clunky.”
2. A Product Data Management system with other point solutions
Only one IT partner gave us this response, but it’s an interesting idea to think of having a Product Data Management (PDM) system, around which all the other systems revolve. This focus on data is sensible, but possibly discounts the value of a fully flexible stack.
- “The idea I think would be better is that our PDM system would sit in the middle, and then we would have an outer layer around it.”
3. A small set of well-integrated apps
The vast majority of the IT partners we spoke to want to go the tech-stack route, using a selection of well-integrated apps and specific accountancy focused tools to build a stack that’s designed precisely to their firm’s needs.
They were also clear that the days of the ‘one big suite’ are over, and that the ability to choose your apps offers a far greater range of options around data flexibility and connectivity.
- “I don’t like being reliant on a suite. As providers, they try to bolt on other offerings, and they just never seem to work very well.”
- “I would rather have specialist software – so long as it all integrates. The key for me is not really what that looks like; it’s that we have one source of data in the middle.”
- “The problem with the one big suite software is that they tend to be behemoth software that are probably over-egging the pudding.”
- “What we’re trying to do is build connectivity with the legacy software. Almost what we’re trying to do is get the connectivity before we build anything.”
4. Not sure/Undecided
As with any research around software decisions, there will always be those people who haven’t yet reached their final conclusion. Achieving the best of all worlds is an admirable goal, but as any practitioner will tell you, the utopian ideal solution to your practice woes is unlikely to appear without doubling down and making some tough decisions.
- “I think it’s about looking to see what the best solutions are, not in a fragmented way, but what gives the best solutions for both our team and for our clients.”
- “I think you’ve got to look at it in departments, so that one solution will be the most appropriate.”
Getting an app stack up and running: what are firms waiting for?
From our research, we now know the key software aims of these Top 50 firms, and what the main drivers are for upgrading to a more modern software solution.
But what’s holding them back from biting the bullet and putting a new system in place?
- Waiting for incumbents to create cloud versions – some firms have legacy systems that they know and love, where they’d rather wait for that provider to develop a cloud-based version of their existing software. Going the ‘better the devil you know’ route might seem sensible, but it locks you into one provider and their cloud timescale.
- Waiting for new cloud suites – other firms know that a cloud-based suite is what they want, but haven’t found the right fit for their firm yet. Choosing a closed suite can have benefits. But, again, you're tied to one provider, their finite number of practice tools and their timescales for upgrades and new features.
- API-driven combinations – the majority of firms want some form of API-driven stack. This allows them to choose their own favourite apps, connect them all together and have data easily flowing between solutions. This kind of app stack is an endlessly changeable proposition, where apps can be swapped in and out, as and when needed.
Active: a new option for forward-thinking digital firms
Here at Active, we know that being stuck between the binary choice of a closed suite or a DIY app stack is not ideal. We’ve already begun revolutionising the worlds of working papers and ledgers & reporting in mid-tier accounting firms. But we’re now on a mission to create an innovative third option when it comes to building your firm’s perfect app stack.
Our mission is to evolve Active into a platform that covers all your accounting basics – accounts, tax, workpapers and compliance – but without tying you into one closed software suite.
We know how valuable it is to have the flexibility, connectivity and integration possibilities of a practice app stack. So, this isn't a ‘private party’. It's going to be perfectly viable to have Active as the base-layer in your app stack, and to then be able to layer up and down your firm’s choice of additional apps, depending on what your firm needs.
If your firm is looking for a new, innovative solution to the app stack issue, come and talk to us.