By Mike Hickson, Director of LSA Systems
There are many benefits to using cloud based accounting software, however as with most things in life, along with benefits come potential pitfalls.
This document is intended to highlight what, in my opinion, are the main advantages, and to detail the potential dis-advantages so that the reader is in possession of all the facts and thus can make an informed decision.
Benefit - Anywhere anytime connection for remote working is without a doubt the biggest advantage. This will allow employees to access their specific areas of the system from anywhere that an internet connection exists. External sales staff will be able to process orders, discuss account balances and agree terms with their customers on a “face to face” basis whilst out on the road.
Tele Sales staff can be employed on a “remote worker” basis, Accounts staff will be able to work from home and business managers will be able to monitor the performance of their business areas even when not in the office.
Benefit - Cost can be another significant benefit. Capital costs for the purchase of the software and potential new hardware is effectively replaced entirely by subscription based charges. This can be an enormous benefit to business cash flow, with the added advantage of reducing expensive ongoing administration costs in the areas of IT equipment maintenance and support.
Benefit - Flexibility of computing resources and software licences are again areas that can bring significant benefit especially to businesses that operate with significant seasonal trends. Many providers allow simple scale up of bandwidth and user licences during busy periods with reductions allowed during quieter periods.
Benefit - Data Backup & Disaster Recovery at least for the accounting system is no longer of concern. This will be the responsibility of the service provider who will have in place a far superior backup and DR facility than most small businesses can afford.
However along with these benefits come potential pitfalls. When contemplating switching to a Cloud based accounting system, the same considerations need to be applied as with any other cloud based application:
Drawback - Communication lines within the business will need to support the decision to run your accounts in the cloud. This effectively means that all users within the business premises will now be carrying out their day to day financial tasks on the internet and the line speeds must be able to cope with this demand.
There are few things in a working environment that users find more frustrating than slow PC applications. If the correct communication lines are not in place when the system goes live, the user experience will be extremely poor, with long periods of delay when logging on to the system, running reports, printing documents or waiting for a screen refresh when displaying large volumes of data.
Drawback – Communication line failures do happen, and sometimes, for an extended period of time. What will be the impact to the business if the main line fails?
Most broadband lines are supplied without any Service Level Agreement, and no guaranteed fix times, so serious consideration must be given to the impact of an “outage” to the business. Users will not be able to process sales orders, printing of documentation will not be possible and thus despatches could be halted
Best practice dictates that a 2nd line from a different service provider be provisioned. Thus in the event of the main line failing, internet (cloud) traffic is switched over automatically to the 2nd line and the business continues to operate.
Drawback – Data Centre location is for some industries a major consideration. Where in the world your data is stored and under whose jurisdiction it falls needs to be given serious thought.
Cloud providers will utilise data centres to host their applications and these data centres can be located anywhere in the world. Data Protection laws throughout the world, vary from country to country and the location of the data centre will dictate to a degree, which country’s legal jurisdiction applies. This is not always the case however, US organisations for example, must, irrespective of data centre location comply with US law. For many UK based companies this is now becoming a big concern.
Data protection law is obviously an enormous subject, and one that is far too complex to cover in this document. The best advice would be, if in doubt, make sure the data centre is UK based and that the data centre owners and the hosting provider are all UK registered companies. That way you can be sure that you will not be breaching any UK and/or EU regulations. Failing this, you should consult your legal/financial advisers for guidance.
Once you have satisfied yourself with answers to all of the above, the final step is to select the right accounts package for your needs, the selection criteria for which, should be the same for on premise and in the cloud.