A Career of Technology Milestones from Terry Lister, CPA

Written by Marty Bird, Director of Marketing at Leaf Software Solutions

A Career of Technology Milestones - Terry Lister, CPA

I recently sat down with Terry Lister, CPA and manager of the Dynamics GP practice at Leaf Software Solutions. Terry offers a glimpse into his journey through the technology landscape starting in 1975 as he embarked upon his accounting career.

How did you get started in the accounting field?

I attended Ball State University starting in 1971 not knowing exactly what I wanted to do as a career. Thankfully, a Career Day was offered where I walked the booths and spoke with people who represented the various degree offerings at Ball State. I came across the Accounting School and liked what they were offering. I moved in that direction – and four years later – I had a degree in accounting!

What was your first job in the field?

My first job was with a small CPA firm in Indianapolis. I did a lot of bank auditing, which gave me excellent, well-rounded experience since I touched most every aspect of accounting by doing audits.

What technology where you using at that time?

Remember, this was 1975 and there was not any of the technology like we have today. Banks were using the old proof machines for check processing and Burroughs Posting Machines – computers were not there yet. Everything was handwritten in a 13-column accounting ledger.

Tell me more about the auditing process.

We would walk in to start the audit, and the first step was to count all the cash. We took over the vault and all the teller windows. The bank had what they called “ledger cards” where they posted the transactions. Using those cards along with a 10-key calculator, we would do the addition to make sure the loans and deposits balanced with the ledger cards. Then, I’d get to work on the paper ledgers with the 13 columns and the 4-column journal entries. At this point in my career, this is the way things were done, and I had no idea there would be a better method coming soon.

Help me understand more about how businesses kept their books at this time.

Businesses kept their books using a sales journal, purchasing journal, checkbook, and general ledger – and all of it was on paper. Once you wrote a check, you transferred that information to the purchasing journal, then at the end of the month you’d total up the purchasing journal with a 10-key adding machine (the kind with the roll of paper tape) and transfer that amount to the general ledger. There was (and it still exists today) a system called One-Write where you could write a check and it would create the purchasing journal entry using carbon paper. This was our form of automation and was a popular way to increase accuracy and to save some time.

By the time I finished at this small CPA firm in 1978, I had also done taxes and bookkeeping for several clients, and this contributed to my increasing level of experience.

What was the next stop in your career?

I moved over to Katz, Sapper & Miller and worked in the Audit department. As the early 80s were upon us, we started to see the spreadsheet program Lotus 1-2-3 and we started using that software in our practice. We had IBM computers (all DOS based, no Windows yet) with the larger floppy disks, and this was the first time technology touched what I was doing.

Can you recall a time where technology significantly improved your day to day?

I was assigned to do a lot of audits for construction contractors. One was a very large company where I went in and put all the construction jobs on the 13-column paper ledger. There were so many jobs, I had to tape together three ledgers and enter all the information for each job – such as budget, actual cost, profit, and percentage complete. You can see how a computer would have helped cut down the time this job took. A big change occurred in about 1982 and we had a computer in a suitcase we could take on site to these construction companies. I would enter all the information into that computer (using Microsoft Excel at that time) instead of onto a paper ledger.

I was able to make all the modifications to the construction project in the Excel spreadsheet to make the construction job projections align with the actuals. What used to take 2 or 3 days on paper now happened immediately during the client meeting when we secured the actual numbers. I was able to make the changes as we were talking with the client and the computer did all the calculations for me. That was my first real game-changing experience with computer technology.

Tell me more about this computer in a suitcase.

That’s exactly what it was – it was self-contained, kind of like a sewing machine. You opened it up and it had two disk drives, a keyboard, and a small monitor. We carried an extension cord and plugged it in. There was no phone line needed or network cable – all the data would write back to the floppy disks. We would label the disks with the client’s name and place them back in the client’s file along with all the printed reports that were stored on those disks.

What kind of training did you receive once computers entered the picture?

At that time, you pretty much trained yourself by using the machines, and by reading books. The software replicated what we were doing with the paper ledgers, only it automated the calculations and cut way down on the time it may have taken to track down a mistake. The software just became your electronic 13-column paper on a computer.

How would you describe your attitude towards these changes?

It was exciting! It took what used to be a 3-day job down to just a couple hours. When I had the computer with me, we had the totals by the time we finished meeting with the client. There was no more erasing, writing in new numbers, doing all the calculations over again – the software did that for you. It was very neat – it was very cool.

How did your clients react to the changes in technology?

The clients loved it since we were still billing based on hours. Through this automation, we spent less time with the client and that was reflected in our billing. Our work was costing the client less money than we were charging before the computer became standard practice.

What other changes were occurring at this time?

The Lotus 1-2-3 spreadsheet program was gaining popularity, but Microsoft had entered the market as well with Excel and their other Office products. The shift in usage by CPAs from one software program to another came when Microsoft started a marketing blitz to give away Excel to any CPA who requested it. All you had to do was send a request into Microsoft and they’d send you the disks to install the program. It could be run on a DOS or Windows machine like an IBM 8600 or Compaq. It was evident that a shift happening because people were starting to use Excel and Word within the Office software programs.

When did the more comprehensive accounting software programs become available?

In the mid-1980s there were several DOS-based accounting programs available like Great Plains Accounting. GP at that time was a computerized accounting system with general ledgers and journals. It wrote checks, and you could enter your cash receipts, and it would accumulate those totals for you and give you financial statements at the end of the month.

When I left Katz and went to work for a CPA firm in Lafayette, we were using Great Plains there. GP was installed on a DEC (Digital Equipment Corporation) computer. I came into that company and continued to use Excel spreadsheets mostly – since many clients were still doing their books manually. My primary function there was to build their auditing department and to achieve industry certification. We had a department dedicated to working with Great Plains Accounting. It wasn’t until I left public accounting and started to work in industry that I started working on the early stages of what are now called ERP systems (Enterprise Resource Planning).

How did your career progress from there?

My next career move was as CFO of a rent-to-own type company that had several locations across multiple states. When I came in, they had already developed a UNIX based software to run their point of sale, but they had no accounting system. This was when I first started working with automated systems. With developers reporting to me, I was able to direct them to start an inventory tracking system using UPC codes and scanners. We found an accounting module we were able to plug into the UNIX point of sale and we developed a sophisticated warehouse management system to track when rentals went out the door and when they returned. We depreciated these rental assets using the software.

The true highlight of my career was when the IRS came in and tried to classify our sales as installment sales and we proved them wrong. We classified our revenue as rent (only recognizing revenue as payments were made) because the same asset came in and out the door so many times it would not make sense to be classified as an installment sale where revenue is recognized up front.

We benefited from technology by connecting our locations via T1 internet lines and we centralized purchasing. When a warehouse manager would make a purchase, the PO would automatically print on the warehouse floor, so they knew something was coming in. Upon receipt, the purchase was logged and accounted for properly, closing the loop automatically. I was interested in getting better reports out of the software, and I directed the developers to do just that. We eventually evolved to enjoy daily sales reports by store, along with accurate inventory reports of what was available to rent at each location. We used automation to change the way the business operated.

Are you saying the role of the CFO was changing due to this computerized automation?

A major shift was happening right in front of me. Yes, that shift was the role of the CFO. With the information we had, we were able to prove to the owner of the rent-to-own company that the number of contracts on rent was not the number that you wanted to track. We showed him how to track the dollars that is left on rent. This fundamentally changed the way the business operated. This proved that the CFO is a role that helps make important decisions in the direction of the company.

In the early 1990s, I left the rent-to-own company. It was easy to see that technology was booming everywhere. I went back to work for some partners of Katz at a manufacturing company in Peru. We were using a system called Made2Manage, and I was learning something which expanded my knowledge and background. This software was one of several around at that time. Made2Manage was designed for manufacturing specifically and integrated all departments within the company.

Fast forward a few years, and I started working for General Hotels. I was brought in to implement a hospitality management software system (Sulcus Hotel Management software) to bring visibility into the various areas of the operation including rooms, restaurants, and banquets to departmentalize financials. We put in budgeting tools and empowered department managers to participate in the budgeting process. Empowering those managers greatly improved the budgeting process. That was my second foray into industry where I implemented software to run the accounting side of the business.

In 1998, after six years in the hospitality business I went back to a spinoff company that Katz formed, called KSM Systems Group. We represented Great Plains, Solomon, and Sage accounting products. We had plenty of business since this was leading up to the year 2000 where everyone was upgrading their computer systems. KSM Systems Group decided to focus solely on the Great Plains business, and this was my area of specialty. Great Plains was still independently owned until they sold to Microsoft in 2001. The first client I worked with was an assisted living place in Crawfordsville and included payroll and all the accounting functions. This loyal client stayed with us until they sold the company about a year ago.

While working with KSM Systems Group I developed the attitude and belief that “the software didn’t matter.” Our leaders truly believed and practiced that when you have the right people and develop trusting, problem-solving relationships with clients, the brand of software takes a back seat.

In August of 2001, Leaf Software Solutions purchased KSM Systems Group. The three employees representing the Great Plains business came over to Leaf, including myself. Our values aligned beautifully, and we’ve thrived since then with our GP practice at Leaf.

How has the accounting software market evolved?

Among the many fractionalized software businesses (many still exist) there are just a few mid-market ERP systems that generally operate the same way. Sage Intacct, Oracle NetSuite, Microsoft Dynamics BC, and Microsoft Dynamics GP all offer a core financials package that can be used as-is.

Many businesses find they have special needs that are best handled by a product that plugs into these software systems built by an Independent Software Vendor (ISV) installed and managed by a specialized software consulting firm. This model uses the strengths of the major software companies while allowing smaller firms to thrive by offering specialty products designed for verticals which require additional functionality.

For example, I’m now working with a Tier 1 Auto Industry manufacturer using GP and the GP manufacturing module, but they don’t use it to its fullest capabilities. The way they conduct business is very specialized and required a third party to customize the resource planning (such as forecasting and inventory management) and install it on top of GP. The market now allows for this type of third-party business to thrive by providing specialized solutions on top of the core functionality of the major ERP systems. Can GP do resource planning? Yes, but not to the sophistication needed by this manufacturer.

This shaped the model we have today. Core functionality supported by independent software vendors meeting the needs of the marketplace. The value-added model also drives revenue to custom software companies like Leaf to implement and support the software. The bigger players are very happy with this model, as they don’t have to specialize and hire all the labor – they concentrate on a core package that can be modified while allowing other companies to come in with their special focused expertise. Since every business is different, they realize that they can’t make an accounting software that meets the specific needs of every business. This has been the evolution.

What are you most happy to not have to do any longer?

I used to spend hours, weeks, even months trying to figure out what went wrong when the numbers didn’t add up. We wrote final numbers using ink in the ledgers for audit purposes and finding and making changes often was very frustrating. I don’t have to worry about that any longer!

Can you say technology has improved the life of a CPA?

Technology has improved the lives of CPAs by changing the role of the CPA from a number cruncher to an analyst and strategic leader. With all the automation and sophisticated tools from advances in technology, CPAs have much more information at their fingertips and can now instantly contribute to the management and strategic planning of the business.

Final thoughts?

It’s been fun – it’s been a great ride!