One of the interesting things about technology is that as new technologies are developed and disbursed into the world at large, people find new uses for them.
For example, when personal computers like the Apple II and TRS-80 first appeared on the scene in the late 1970s, the initial use for them was gameplaying. While gaming and other forms of entertainment still comprise a huge component of computer and smartphone use, so do business applications and personal utility.
Today's smartphones and tablets can do things that were only a dream in the days of minicomputers. We no longer have to wait until the 24th century for Star Trek communicators or data tablets. The ones that are commonplace are considerably more advanced than what was imagined for the future.
The same holds true of "the cloud." It's only been a few years since the term was coined, and yet the cloud has turned from a nebulous concept into a part of everyday life.
We use applications hosted in the cloud, store files and photos there, and listen to music and watch video emanating from somewhere in the cloud.
PC technology evolved because of the need to provide ready access to applications and uses that were undreamed of when mainframe and minicomputers were at their heyday. The cloud is evolving because of a desire and need to share and store information and to make this information readily and easily accessible.
The cloud has allowed us to move from a model where the applications were merely accessible into a more workflow-oriented approach. Today's business environment is about sharing.
Still, as commonplace as the cloud is becoming, there continues to be a good deal of confusion and uncertainty about where it fits within an accounting practice.
To gain a better perspective, we went to the source -- vendors who actually provide cloud-based hosting and/or applications.
Our virtual roundtable (appropriate for a story about the cloud) consisted of: Dr. Chandra Bhansali, president of AccountantsWorld; Kacee Johnson, executive vice president of Cloud9 Real Time; Eric Asgeirsson, president and CEO of CPA2Biz; Teresa Mackintosh, software executive vice president and general manager at CCH; Adam Stern, CEO of Infinitely Virtual; Jim Torpey, vice president of sales and business development at InsynQ; Amit Walia, vice president of product management at Intuit's Accounting Professionals Division; Phil Romine, CTO, Right Networks; Frank Swierz, senior director of technology in the Tax & Accounting business of Thomson Reuters; and Roy Keely, vice president of of market strategy at Xcentric. We also invited James Bourke, a CPA and partner at Top 100 Firm WithumSmith+Brown,who is considered one of the top experts when it comes to the use of technology in an accounting practice.
Here's what we asked them:
Should the cloud be approached application by application? Not surprisingly, our respondents were of split opinions on this question. From the vendor point of view, none of the companies we queried actually offers a totally complete cloud-based set of solutions (accounting plus all other applications needed by the firm) without at least some degree of integration.
Several vendors took the view that mix-and-match application placement was an acceptable option at present.
"The journey to the cloud is individual best-of-breed applications that are seamlessly integrated with each other to help make it easy for customers to meet their business goals, saving time and helping them grow," Intuit's Walia said.
CCH's Mackintosh took another tack: "Industry views on the 'best-in-breed' or the 'best solution' approach shift around over time. We advise our customers to make decisions based on optimizing their workflow, because at the end of the day that's what matters the most."
"What we are seeing in the market," Mackintosh continued, "is that firms are looking to move away from cobbling together a myriad of applications and favoring going with a single vendor that offers a fully integrated solution that meets their needs."
Thomson Reuter's Swierz added, "I think that the beauty of the cloud-based applications is that they are immediately accessible by other applications."
Regardless of the approach, moving from one medium to another is something that shouldn’t be approached lightly. “Whether moving to the cloud or staying within the office, a business should carefully consider its strategy whenever changing applications,” Right Networks’ Romine pointed out. “Changing applications can require data conversion, retraining, an overhaul of workflows and substantial changes to the way employees work together. The process can be disruptive, but companies need successful ways to move forward.”
What kind of application integration is available (not just between accounting applications)? Most of the hosting vendors have the capability of integrating applications that were initially developed to run in a stand-alone environment, and are constantly refining it. But that's just as true in the non-virtual world as well. Today's practice models require an efficient workflow that regards non-integration as a bump in the workflow road that needs to be smoothed or eliminated.
Cloud 9 Real Time's Johnson is bullish on integration. "Application integration is a key factor in building a customized cloud solution and it doesn't stop at tax or accounting applications" she said. "It extends to CRM systems, Microsoft Office, time & billing programs, as well as inventory control systems. Ensuring that all of the client needs work cooperatively together in a single cloud environment is just as important as making one run."
Johnson continued, "Providing secure backups, storage and document management are key foundations of cloud computing and should, of course, be integrated into any cloud solution."
Thomson Reuters' Swierz made another point about integration: "Some of the best integration opportunities made possible by the cloud have more to do with device-to-device integration, rather than application-to-application integration."
Does it make sense to have the entire firm's practice hosted in the cloud? AccountantsWorld was one of the first vendors to move its offerings completely to the cloud. And while it may not offer all of the additional software, such as CRM or an Office Suite, that an accounting firm may require, the vendor is very positive about this approach.
"While it may not be practical for a firm to move its entire practice to the cloud in one shot," AccountantsWorld's Bhansali said, "we believe that, to take full advantage of the power of the cloud, firms should plan to move their entire practice to the cloud as quickly as possible."
Infinitely Virtual CEO Adam Stern pointed out another cloud benefit: "It also offers other, perhaps less intuitive strategic benefits. Once you're in the cloud and all computing capacity is in one place, you can, for instance, hire employees far outside your normal geography."
While you could also gain this benefit using a standard client/server model, Stern uses a term that underlines a major benefit of cloud computing - Infrastructure-as-a-Service.
From an accounting practice's point of view, WithumSmith's Bourke was blunt: "If a vendor does not offer an SaaS solution, quite frankly, I'll stay away and place the future of my firm in the hands of a vendor (or vendors) that understand the importance of this type of solution for our industry."
Does your company approach cloud use significantly differently from other vendors? Just about every vendor answered "Yes" to this question, and proceeded to give an answer similar to every other vendor.
One thing that Jim Torpey from InsynQ pointed out, which may be true for other hosting vendors besides his company, is the prevalence of applications that require SQL or other large databases. "I think smaller companies that succeed and grow end up needing larger and more labor-intensive apps," he said. "But they don't want to run them and maintain them in-house."
Xcentic's Keely pointed out another area that some hosting vendors don't address: "We replace the need for having an IT infrastructure (and sometimes people) in-house. We take on workstation management, Internet monitoring, and other aspects, along with the cloud side of things." Keely continued, "Most cloud providers take bits and pieces to the cloud, leaving the firm to still deal with the IT burden at large."
Are there applications that currently don't exist in the cloud that you expect to see implemented? Many of the vendors we queried are aware of the cloud as a vehicle for delivering subscription-based applications, something that the industry has been working toward for years. Perhaps one of the largest vendors to push this subscription-based approach is Microsoft, as Office 365 is only available in this format.
Numerous vendors in the accounting applications industry, including Intuit and Sage, are moving in this direction as well. As far as rental options, InsynQ's Torpy told us, "I expect these will be more common in the future and we will see more developers give hosting providers the ability to rent their software. It makes software adoption less painful for users, and rental options seem to drive a whole new market of users."
CPA2Biz's Asgeirsson is forceful in his views of the future: "There are virtually no new applications being developed for the premise-based world. Everything new is cloud-based. Coupled with the undeniable trend toward specialization, we're seeing more and more industry-specific solutions emerging to make basic cloud applications even more powerful."
A FEW LAST THOUGHTS
One compelling reason for moving many, if not all, transactions into the cloud is the simplicity and lack of expense in storing and accessing this data. For many applications, all that is necessary is a browser and a device that allows you to access the Internet. With the affordability of tablets, Chromebooks, and inexpensive laptops, cloud-based applications are, for the most part, operating-system- and device-agnostic.
The downside of being completely in the cloud is that many of the cyber-attacks that have occurred over the past several years have been aimed at cloud sites. And with Amazon leasing part of its cloud space to the Central Intelligence Agency, it is inevitable that the cloud will remain a target.
Still, at present, your data is actually both more vulnerable in the cloud, and better protected there. Your firm's data and applications are usually aggregated with that belonging to numerous other businesses. That presents a larger target to cyber-terrorists. The upside of this is that providers of cloud-based services are usually aware of this increased vulnerability, and are in a better position than most practices to install and maintain security designed to discourage such attacks.
But perhaps the most impassioned and compelling answer we received on moving to the cloud came from WS+B's Bourke. "Having gone through a major disaster a little over six months ago with Superstorm Sandy," he told us, "I can tell you with no reservation, if it were not for the ability to house our mission-critical applications and data in the cloud, we would have lost significantly more revenue than we did. The cloud model works and it works well!"
Ted Needleman writes frequently on software, hardware, and technology-related subjects, and was previously the editor-in-chief of Accounting Technology.
