By Rick Sommer
Does putting my business’s accounting data in the cloud hold water?
One of my favorite movies is My Cousin Vinny. Much to my wife’s displeasure I can watch it over and over every time it is on TV. In a pivotal scene towards the end of the movie, Joe Pesci asks Marisa Tomei, does the defense’s case hold water? Her character takes over the scene with a performance worthy of her Academy Award for Best Supporting Actress.
We have more and more clients approaching us asking about moving their accounting systems and software to “the Cloud.” They are essentially coming to us and asking “does moving my accounting software and data to the cloud hold water? After many discussions with clients it is clear that the term “the cloud” means different things depending on the context of the particular situation. Many articles have been written about “the cloud” the impact it may have on different systems and technology that a company uses. I will focus on the accounting/ERP systems and related data.
In a traditional software purchase and implementation the customer will purchase the software and hardware. This model is typically referred to as an “on-premise” solution. The hardware has to be configured in their infrastructure and the software has to be installed and configured for their environment.
Changes to this setup even if unrelated to the accounting software can create errors. In addition to supporting the environment, over time the operating software needs to be updated, hardware needs to be replaced, the accounting software needs to be upgraded and the data needs to be secured and backed up. All these moving parts are removed when your accounting software is in the cloud.
In my opinion true cloud based accounting software utilizes a structure that is commonly called Software as a Service. A “SaaS” solution is where the developer of the software provides the complete hardware infrastructure and multi-tenant software to the customer.
The pricing is generally subscription based which means you pay as you go based on the functionality and user counts you need. The developer will leverage local Value Added Resellers to work with the customer to identify needs, configure the system to achieve them and provide ongoing support. Updates to the software happen on regular intervals with advanced notice of timing and new features. Extensive consulting services are not required to move to the next version, as updates are automatic. The developer provides all backup and disaster recovery functions for the customer’s data.
I am seeing a trend with CFOs and Directors of Finance where their opinions on the cloud have changed and continue to evolve. Being a CPA I admit that our profession is conservative and can be somewhat resistant to change.
The historical view has been that it is better to have my system down the hall behind a locked door in our internal server room. I can see our systems and our internal IT staff or outsourced provider support and manage them. But the reality is as great as the IT team is they are generally not security experts. The changing trend I am hearing from my colleagues in the profession is that we are doing better due diligence to properly secure and protect the financial assets of my organization by moving it to the cloud and into the developers professionally managed data center.
The redundancy of power, internet connection, security and monitoring are now becoming the standard to gauge internal systems. This, of course, is cost prohibitive for most companies to deploy themselves.
The trend I am hearing is, that as CFO, I might be doing a disservice to my company and not fulfilling my fiduciary responsibility by not moving my accounting systems to the cloud. While every client’s situation is different the cloud is something that we are seeing our clients ask about. Companies looking to change their accounting systems are considering the cloud, the traditional on-premise software purchase model and hybrid deployment models that are in between. Does moving your accounting systems to the cloud hold water? I would say that depends on the specifics of your organization, the bucket you have and where you are trying to carry it to. One thing is sure is that there are many options that should be considered. I enjoy having these discussions with our clients and prospects and would welcome a discussion with you as well.
Rick Sommer is the President of Intellitec Solutions a Gold Certified Microsoft Dynamics and Intacct Partner. Rick is also the current President of the Technology Forum of Delaware, Treasurer of the Delaware Society of Certificated Public Accountants and Finance Committee member of the University and Whist Club. He is also a member of the American Institute of Certified Public Accountants. He is past President of the Philadelphia Chapter of the International Association of Microsoft Certified Partners and past Board Member and Treasurer of Canine Partners for Life. Rick can be reached at rsommer@intellitecsolutions.com or 302-656-7050.
