Recently, consulting concern Saugatuck Technology released a report that found that through 2014, use of Software-as-a-Service applications will continue to dominate IT spending, including social networking and mobility solutions. It also showed that integration and workflow in the cloud - primarily with on-premise systems - would remain a critical capability for accounting practices.
In addition, the Saugatuck report revealed that by as early as next year, many of the fears associated with the cloud, such as lack of standards, and transaction and data/security integrity, will dwindle. That winnowing will come about, according to Saugatuck, because users will realize that the value of the cloud lies less in cost savings and more in its ability to provide increased levels of service and compliance for small and midsized firms.
Another recent survey on cloud computing conducted by Hubspan revealed that over 60 percent of respondents stated that moving to the cloud for applications, infrastructure, integration and other solutions is a key strategic direction for their organizations.
Despite statistics to the contrary, many firms remain skeptical that the cloud is capable of everything they need to run their practices.
But that doesn't mean they aren't trying.
Calvetti, Ferguson & Wagner, a Houston-based firm with a current staff of 30, made the decision to place some of its operation into the cloud five years ago. At the time, the firm was smaller and could not afford a full IT department, so a server hosted the majority of the firm's applications. When it went down, which was with some frequency, it would halt much of the firm's operations.
Today, the firm uses offsite companies to supply many of its applications and services. One such service provider is Intacct, which the firm uses to provide outsourced accounting for clients. In October 2010, the firm launched AcctTwo, an affiliated business venture that provides outsourced processing of primary accounting functions through Intacct, including accounts payable and receivable, general ledger, fixed asset accounting, inventory tracking, and payroll.
The firm already claims some early success with this business, but founding partner Marcus Wagner maintains that the cloud still poses privacy and connectivity concerns. "To me, the biggest requirement of using a cloud solution is it has to be available - it has to be 100 percent or near to it," he said. "For CPA firms, there's so much specialized software out there that we use and the software is great, but the big [tax and firm software makers] tend to be outdated with their technology, so we've had problems running it in a hosted environment. I am a proponent of the cloud, but there is still fear of the unknown [among some CPA firms] and hesitation when looking at Web-based solutions because they feel it's not secure."
Wagner also noted that once more accounting firms take the time to see how secure many cloud vendors are, it may help assuage those concerns.
For a smaller firm like San Jose, Calif.-based Carson & Crew, with a staff of six, being in the cloud made financial sense, and the firm currently runs nearly every facet of its practice online. The firm has a large payroll practice using Intuit Online Payroll, and it uses portals to exchange documents through ShareFile. The practice is managed through database software provider QuickBase.
The firm also works extensively with other CPA firms, as Carson does not do traditional tax returns, but does bookkeeping. Managing partner Pat Carson often preaches the benefits of the cloud to other firms and to clients, and understands some of their reservations. "Some firms just aren't ready to part with the paper. They always know where it is, so I understand that. I also feel developers need to get it right first; dealing with bugs can be problematic. All the cloud products I've worked with had some access issues at one point, but they do get resolved," said Carson. "For my clients [who are resistant to the cloud], my sell is that I can save you time and money. We charge for travel time, and even though we don't have to do that as much these days, we explain that we can do this in five minutes here or charge you to go there and back."
ACCEPTANCE OVER TIME
There are many who claim that total cloud acceptance in the CPA profession will simply come with time, much in the way that they eventually accepted Windows over DOS, and between that and some positive experiences the profession will move towards embracing Web-based accounting over desk-based.
Mickey Payseur, managing partner at Gastonia, N.C.-based Butler & Stowe, remembered many of the changes that the profession has endured, and recalled that none of them were easy. That said, he was pleased to join a firm that was always forward-looking, and understands the industry's reservations about this latest wave of doing business, but is confident that they will all see the benefits that his firm did.
"[Before] I came to this firm in 1977, I didn't have a computer and did [everything] by hand with pencils. When I came here they not only had [a computer], but one of the partners wrote a tax program and updated it every year," said Payseur. "Eventually we got servers and hosted a lot of what we used, but got tired of being in the business of babysitting servers. We are able to do more work with less people. We can thank the technology for that."
Payseur said that it's not uncommon to spend $60,000-$70,000 on a server and then have to purchase a new one in three years. He said that eventually more firms will do this math, in addition to realizing that cloud-based applications and services are far more secure than anything in their offices.
Many of the vendors and service providers targeting CPAs also recognize the profession's concerns, but are seeing some improvements in their attitude towards moving their business to the cloud. Even so, they too realize that in the end, time and education are what will ultimately move more of the profession forward.
"It used to be that firms not trusting having their data elsewhere was the main argument, but that's not the crux of the conversation anymore. Once they understand the significance of the security environment [we have], they get it," said Trey James, chief executive of Xcentric, which specializes in providing information technology solutions and secure networks for CPA firms. "Economics sometimes play in their favor, sometimes not. A small firm on the edge of hiring an IT person or with one they are unhappy with, you are looking at about $7,500 a month in IT staffing versus $7,600 a month - initially - to go to cloud. You will ultimately save in the cost of network replacement every three years, plus you will replace a weak and insecure house network."
The issue of data being stored outside of a firm has also become less serious for automated tax preparation and workflow provider Copanion, at least for the midsized to larger firms. The company has admittedly had some challenges converting firms from doing taxes the way they are used to doing them to the cloud, but CEO Ed Jennings understands their reservations.
"The idea of taking desktop tax [preparation] and shifting it to the cloud is a harder prospect than some other firm functions. Changing something that is working is going to take longer," said Jennings. "We skew medium-to-larger [firms] mostly, and it seems smaller firms, even if there's potentially greater benefit, have been slower to adopt with us. The objections are legitimate; we can't expect we are going to lose sight of how important being secure is and we can't take our eye off the ball. Ultimately this is going to help drive [the cloud] forward."
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