Vol. 24 I No. 15 I Nov. 15-Dec.

12, 2010

accountingtoday.com

choosing a broker-dealer p .10

With demand recovering, broker-dealers are reaching out to help CpAs get into financial planning

2010 pacesetters p .24

Our annual list of top-flight accounting and ERp resellers shows them surging back

payrolls changing p .35

New rules make payroll more complicated; new tools make it more profitable

A look forward

AICPA Fall Council focuses on private standards, new regs and the future
by liz gold / new orleans Approval of a resolution to support the creation of a GAAP model for private companies and a separate standards board, a revamp of the CPA Vision project and the election of the new 2010-2011 chairman highlighted the Fall Meeting of Council of the American Institute of CPAs, here. At the meetings spirited opening session, members of the Blue Ribbon Panel, whose task is to discuss standard-setting for private companies, held a panel discussion updating its work so far. It would later set the stage for a resolution that Council ultimately See AICPA on 53

Filing season issues emerge

Tax prep vendors get ready for e-filing mandates and more

on the rise
See page 8

reselling is just the start for booming tech consultancy net@work

Bridging the generation gap in tax season

ICPAS chief Elaine Weiss speaks out on keeping younger staff engaged and working
by liz gold This month the Illinois CPA Society is launching a new program, Generating Results from Your Generation Y Staff , that is geared to help young accountants understand how to deliver a better return on investment for their firm through bridging the expectation gap and better communication between themselves and their senior partners especially during busy season. In a tough economy where most partners are focused on keeping their firms afloat, it can be challenging to deal with a new generation that is casual in attire, casual in communication and casual in their approach to the workplace, according to Elaine Weiss, president and chief executive of the Illinois CPA Society. Whats important to point out, she said, is that this new generation is every bit as dedicated to doing a good job. It is not accurate to say the younger generation is not committed professionals wanting to do the very best and serve the client, she said. I truly think it is communication and different values. For Weiss, partners who roll their eyes at this issue or, worse yet, sweep it under the rug, are doing themselves a grave disservice. For those who think this isnt a priority, I think thats short-sighted, because the economy is going to remain challenging for a very long time and you need to keep the best and brightest staff in order to keep your business and clients happy. Its very much a bottomline issue. Accounting Today talked with Weiss about her thoughts on the generations Baby Boomers and Gen Y specifically and while its the partners who she often hears sharing concerns about their younger staff, she is quick to explain that the relationship goes See gAP on 51

by roger russell Continued growth in the do-ityourself tax prep market, ongoing federal and state e-filing mandates and the Internal Revenue Services discontinuation of a debt indicator to facilitate refund anticipation loans will affect both preparers and their software providers during next years filing season. Last filing season the growth in the DIY market was 10 to 12 percent, while the year before it was 20 percent, noted Gene Goldenberg, vice president of marketing for CCH Small Firm Services. Our research indicates that people who are doing their own returns are moving back and forth between DIY and using a paid preparer, he added. The percent of taxpayers using a paid preparer held steady this past season at 62 percent. The demographics of the do-it-yourself market remain See ISSueS on 52

Returns e-filed (mns), by end of April

60 54 48 42 36 30 2010 2009

DIY creeps up

Tax pros

Self-prepared

Source: IRS

practiceprofile
Net@Work: On the rise
BY seth fineBerg

 accounting today | Nov. 15-Dec. 12, 2010

webcpa.com

The firm has grown from fledgling VAR to high-volume IT concern

databases and the SalesLogix Cloud Edition from smart phones, and, shortly, Blackberries. Net@Works On The Go app currently has a user base of 500 and growing. going mobile Once I explain the app idea [to potential users], rather than just trying to sell it, everyone [we showed it to] got on board, said Sheridan. The eye-opener for us was when we saw the amount of app downloads in areas like Asia and Australia. Were on 60 blogs now. People are surprised its free; you have companies charging $30 to $40 for their business apps. We wanted it to be a compact offering and we built it so we could get feedback and expand on it. But the app itself, and any similar ones to be developed in the future, are just the surface of what the firm envisions. Alex explained that the biggest part of the effort is that the firm is currently receiving requests to build mobile apps for other companies and resellers, either for a particular vertical they are in or for an existing application. From a product perspective, it currently allows [resellers] to sell more SalesLogix. Now we are getting validation and we need to finish other versions, but overall this represents a major new focus for us, he said. We will look for gaps in the market and fill those gaps with our own applications. recession pressures Despite its overall success, Net@Work did not escape the stresses of the economic crisis, particularly over the past 18 months. The owners admit that it was one of the few times they had to be introspective. After years of double-digit year-over-year growth, Net@Work saw the pace begin to ebb and decided, first and foremost, that it did not want to downsize its staff or trim service. Specifically, Alex claimed that the firm had been on a growth path of between 15 and 30 percent every year for nearly a decade, and when that pace slowed, they realized that growing a business was not about just size. Things like being a debt-free organization were also very important, and we learned what to invest in and we are now able to capi-

Firm: Net@Work Headquarters: New York City co-presidents: Alex and Edward Solomon no. of staff: 139 no. of offices: 7 (due to increase soon to 10) revenue (2009): $22.3M year founded: 1996 services: IT consulting; reselling, implementing and supporting accounting, ERP, CRM and document management solutions; systems integration; Web and mobile application development; Web site design and development

at a glance

Alex (left) and Edward Solomon

ver the nearly 15 years since its founding, Net@Work has evolved from a simple network support company to a full-service IT consultancy and one of the countrys largest Sage resellers. Now, the New York-based company stands poised to expand nationally pending a soonto-be completed acquisition, and will focus on growing its publishing portfolio of original applications. With approximately $23 million in revenue and a staff of roughly 140, Net@Work ranked No. 9 on Accounting Todays 2010 Top 100 VAR rankings. Co-presidents and brothers Alex and Edward Solomon never envisioned their companys current scope while they attended business school and were running both a catering business and a paper distribution company before founding Net@Work in 1996. Over the years, the companys growth has come primarily via M&A, the Solomons revealed. It has also added many of its own proprietary offerings to provide a full range of IT services and solutions, including accounting and CRM software, custom application

development, document management and information security services. When we got into this business, we were in school. We didnt have a business plan and we didnt have a tech background, but our leg up was the fact that we were business people and surrounded ourselves with the right [tech] people, explained Alex. We thought that not only would we be a great service company, but we would be a developer with our own applications. We had some big years and never got into developing our own apps. We did add-ons, but never became a publisher until now. The next step in the firms evolution lies in developing mobile applications and services. Toward that end, the firm officially assembled its On The Go team in August to support its mobile strategy. The team currently consists of marketing director Marc Mandelbaum, CRM practice director Danny Estrada, and developers Ronan Sheridan and Sergey Morozov. One of their key developments has been the release of an On The Go mobile application for iPhones and Android phones that allows users to access Sage SalesLogix 7.52 CRM

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practiceprofile

Nov. 15-Dec. 12, 2010 |

accounting today 

talize by owning smaller businesses, said Edward. Years ago, we were so busy doing deals and doing business we didnt have the time or need the time to take a look at how we can be better. Last year, we looked at what we can do better. ... We are now that much stronger. During the economic downturn, Net@ Work also took the time to look into other areas that had significant growth potential one of which was document management. Paul Chapman, the firms document management practice manager, revealed that Net@Work currently receives approximately three to four document management inquiries per week. Our customers are savvy and know what its going to take to survive in a down market; they want to route documents effectively to cut down on FedEx and UPS bills, he said. They want to see information online, electronic approvals, full accountability, auditing, and controls in place so they know where the money goes. Document management is the plumbing of that house. Every software package we sell has the ability to store documents, and many midmarket businesses we serve have reached a point where the future of their business is predicated on their ability to save costs, be nimble and do more with less. Document management and workflow is all about that, and we are seeing rapid growth in this area. Net@Work also operates Docutrend a sister company created in 2002 that targets a certain level of document management, focusing on copier sales, service, supplies and leasing for all makes and models of copiers, printers and faxes. The company has partnered with the likes of Canon USA, Ricoh, Sharp and others. A build-or-buy strAtegy Much of the firms growth came, and likely will continue to come, through acquisition. It is still averaging approximately two to three purchases per year. At press time, Net@Work was in the final stages of its acquisition of Sage and Deltek reseller Forepoint LLC, which will officially make it a national firm. Forepoint has between 350 and 400 customers and three owners, with offices in Seattle, Oregon and Wisconsin, and services clients in those areas as well as California, Hawaii, Alaska, Idaho, Montana, Colorado, Wyoming and Illinois. Admittedly, growing a firm through acquisition has its challenges, particularly with different cultures and locations. Net@Work

claims that it does not go in to a buy with a plan to change things, but it is focused on getting the firms they acquire to see the bigger picture. The difference with going with us is if they want to provide a customer with an end-toend strategy, we are the best place for them to go. Its build or buy, thats the state of the VAR market, said Alex. If a reseller wants to cash out, they will maximize their earn-out with providing more than what they currently

The hard part of being this size is there are few companies to model ourselves after.
implement for their customers. Net@Work allows them to do that by the vast portfolio of solutions that we carry. Edward explained there are always cultural challenges that need to be met as well, but Net@Work has been successful in delivering its philosophy. I think the most important thing to note about us right now is that we are not [just] a VAR. We are a consulting firm and want to be an incredible trusted advisor for all technology needs to clients and be accountable for the entire solution, he said. The beauty of our business is that we run the business, we can focus on the big picture. And from a client perspective, the total cost of ownership is much easier with one company. With one company that you deal with that can do it all, its a lot more cost-effective. Not just locAtioN Net@Work claims its acquisitions are also focused on talent, and not just a client base or location. For example, in its recent purchase of Boston-based Fitzgerald Group, the firm saw much greater potential in owner Mike Fitzgerald than just having him run his exist-

ing operation. Not long after the acquisition in April, Fitzgerald was appointed director of inside sales and client care. Management recognized that what worked in a company with one or two offices and under 1,000 clients doesnt necessarily work with offices across the country and over 3,000 active clients, said Fitzgerald. Alex asked me to step in and take over the excellent team of account managers here who focus on making sure the needs of all our customers are being met and that the customers are maximizing their system investments. At Fitzgerald, we had a very strong focus on customer service, and Alexs hope is for me to bring this experience into an already strong customer service culture at Net@Work. Fitzgerald also noted that his single biggest change is the ability for former Fitzgerald Group staff to have conversations with customers outside of the basic Sage MAS 90/200 comfort zone they used to be restricted to. He also said that while there have been some operational changes to his former firm, they have been minimal, as the two firms had very similar cultures and strong talent. A look AheAd Looking forward to a five-year timeframe, Net@Work sees more international opportunities. While they may not be focusing on the international market as a strategy, they are admittedly being pulled into international opportunities as the upper end of the mid-market has such needs and, as Alex explained, Very few companies have the capability and bandwidth to provide a solution. That is why Sage put together a global group that partners up some of the largest national partners for global opportunities. In addition, its On The Go team is focused on the global market, and there is a possibility of offshoring some software development. Acquisitions may not slow down either, and Net@Work doesnt see itself getting swallowed up anytime soon. We have a lot of customers in the SMB market. For who we serve, there is no one bigger than us now that is privately owned and not a consortium, said Alex. The hard part of being this size is there are few companies to model ourselves after. Theres a lot of trial and error and figuring it all out. Its hard to look at larger consulting firms [for inspiration] because they dont focus on SMBs as much. We find ourselves looking at accounting and law firms to see what we can model after them. AT

Net@Works On The Go team (from left to right): marketing director Marc Mandelbaum, CRM practice director Danny Estrada, software developer Ronan Sheridan and lead software developer Sergey Morozov.

The firms directors: (above, from left to right) director of IT operations Eyal Golan; director and solution architect Chaim Cohen; director of business development Valentin Domange; and director of consulting services Vera Margarita; (below, from left to right) director of operations Sandy Needham; director of infrastructure practice Mathew Hegarty; and director of finance & accounting Robert Herman (not pictured: director of inside sales and client care Mike Fitzgerald).