ACCORDING to market analyst Gartner’s predictions for IT in 2012, cloud computing is set to top the business agenda along with social computing, mobility and information management. Enterprises are already embracing the value of cloud both as a more cost-effective delivery mechanism for IT and as a vehicle to provide additional functionality and services that can have a positive impact on profitability and growth.
According to the Cloud Industry Forum, 29% of SMEs already use cloud-based accounting and research also shows that accounting and payroll is currently the most popular area of IT that is taking advantage of the cloud. By 2013 accounting and payroll is predicted to represent the largest chunk of IT applications supported in the cloud at 20%. This is closely followed by other areas such as ‘collaboration’ and ‘data back-up/storage’.
Why is the accounting function popular for cloud deployment?
Over the last few years an FD’s role has become more strategic and central to an organisation. Not only do they need to manage the books they also need to offer that catalyst that will foster an environment to help a business grow. Focusing on transformation rather than transactions is now a common mandate for all aspiring FDs.
The introduction of cloud-based technology has the potential for getting considerably more out of your assets and people, so it makes sense to gauge its success on an area of the business where you can directly see and measure the transformation as soon as possible. Typically, with cloud-based accounting you should be able to appreciate any difference in functionality or ease-of-use within the first few months – after six months you should be in a position to measure the impact on the finance department and the ROI to the business as a whole.
As the FD, adopting cloud first not only gives you the opportunity to practise what you preach – ‘be more lean and efficient’ – you begin to realise new benefits for the finance function as well as create a blueprint cloud strategy for the rest of the organisation.
Key reasons to use cloud-based accounting
• Lower CAPEX – solutions are typically charged on a monthly subscription basis, allowing you to pay for what you use e.g. volume of transactions
• Improved cash-flow – Taking advantage of new and extended functionality such as real-time dashboards will give you more up-to-date information to make better informed decisions in areas such as cash position and aged debtors
• Greater security, business continuity & peace of mind – All finance and transactional data stored and backed up remotely so if you lose your data internally this can be restored quickly with minimal downtime
• Reduce spending on IT infrastructure – You no longer need to buy the hardware to support the application in-house
• Reduce headcount – Fewer support personnel required to manage the system, liberating staff to be re-assigned to more productive activities such as strategy or budgeting
• Support for ‘Anywhere Accounting’ – Accounts can be accessed remotely, anytime and anywhere on many devices from an iPhone to iPad
• Sweat your IT assets through greater IT integration – with sophisticated cloud accounting solutions you can get other applications such as your CRM to update information automatically so all systems are in sync with each other
• Speed of deployment -A new on-premise accounting solution can take several months to install and get fully trained on the system, but with a cloud-based option, you can be up and running much faster
• Take advantage of other outsourced services
As your data is stored remotely, this also gives you the opportunity to ‘outsource’ some of your more time-consuming tasks such as data entry or reporting to a third party. This can be extremely cost-effective and also frees up your key staff to concentrate on more bottom-line activities.
Other factors for consideration
The reasons for adopting a cloud-based accounting strategy are convincing, yet there is often reluctance to move from an on-premise solution that is managed in-house because of security fears. Thankfully providers are likely to offer at least the same if not better protection of data than you could internally, however you need to be vigilant about where and how your finance data will be stored, as you could be contravening data protection legislation if it is held somewhere overseas.
Integration should also be a talking point because ultimately you and the IT team are likely to roll out other core IT applications into the cloud, but you need to be convinced that you will have the level of support from your supplier so that all your systems work together. What you want from integration is the ability to blend and share data simply. In theory this should be easier to achieve in the cloud than in-house due to the open standards of cloud-based applications.
Download our Whitepapers
However you should be prepared to ask some searching questions of a potential vendor. You need to be sure that you can realise the benefits of cloud and protect any significant investment you have already made in existing systems. Ideally you want a cloud supplier that gives you the freedom to pick and choose what software you want to integrate with cloud apps – be wary of vendors that don’t offer this flexibility.
The ‘suck it and see’ approach of cloud means you are not being forced down an irrevocable path. By piloting accounting in the cloud you can clearly judge and understand both the financial and the operational benefits and ultimately navigate a path to a more comprehensive company-wide cloud strategy in the future.
By Julian Sayer, sales and operations director at accounting software vendor bluQube