We all have heard about cloud computing, cloud accounting, big data and all the other buzz words being talked about over the last few years. Some argue that marketing forces are to blame for all of this hype. Others attest this is the new age of computing. What cannot be denied, is that there are more options available for accounting software to run your business now than ever before. The question most of us are asking nowadays is: should I install accounting software on my desktop or subscribe to a web based solution?
The answer to this question is unequivocally, yes!
There is no one solution that fits all scenarios. It is a question of fact. Each business has unique system and business requirements that must be evaluated in coming up with the right answer. For many businesses, a cloud accounting solution makes the most sense. Yet for many others, a desktop installation provides the optimal solution. In some cases, a hybrid model provides the best of both worlds.
This article will discuss some key considerations that may help you decide which option is best for your business.
Performance and Usability
For most of us performance is a key consideration to choosing an accounting solution. Typically, a desktop accounting application will outperform a cloud solution in terms of speed. This can have an impact on our productivity, especially for those of us who enter large volumes of transactions. With a desktop application our data does not have to leave our computer. Calculations are performed and the results are rendered locally. With cloud accounting solutions our data and our user interface must be sent to our computer through an internet connection. The slower the connection, the longer we have to wait.
Yet, the performance gap is getting smaller every day with increasing internet bandwidth coupled with advances in web-based technology. Cloud accounting solution providers are refining their software architectures to make use of local data caching, transmit data more efficiently, and to create more elegant user interface designs.
Security and Privacy
Many of us worry about storing data in the cloud, and these concerns are justified. The privacy and security of our personal and financial data should be an overriding factor in the evaluation of an accounting solution. What might surprise the majority of business owners is cloud accounting solutions are potentially far superior to desktop accounting solutions in terms of security.
Solution providers of cloud accounting software tend to invest millions of dollars into infrastructure and security protocols that make our data safer in the cloud. This doesn’t mean we should trust just any cloud accounting solution with our data. It is important to understand the security measures and service levels that are provided for by any solution we consider.
It is true that some online systems are breached from time to time. However, the data residing on our desktops is also susceptible to unauthorized access since the typical small business does not have a large budget to invest in infrastructure and security.
Availability and Convenience
When it comes to availability each option has some advantages over the other. For cloud based solutions, the availability of our system and our data is only as reliable as our internet connection. When our internet connection goes down, we temporarily lose access to our accounting information. For mission critical situations reliability can be enhanced by provisioning a secondary internet connection or by maintaining a continuous backup of our data on premise.
One advantage of a cloud based solution is that we can access our data from any computer from anywhere in the world where the internet is available. This is great where we have a mobile workforce or multiple locations. And while it may be true for some of us that business and pleasure do not mix, for the rest of us knowing we can access our system while vacationing in Punta Cana gives us much needed piece of mind.
Another advantage of a cloud solution is that we typically do not have to worry about backups and recovery; the solution provider takes care of that for us (I can recall far too many occasions where a customer had lost all of their accounting data because of a hard disk failure). While the risk of data loss can be mitigated for a traditional desktop solution with proper backup procedures, things do not always go as planned. Not to mention the additional effort and self-discipline that is required.
The one thing that internet based solutions have in common with desktop software is this; both systems need to updated and maintained on a regular basis. We can all appreciate how a rapidly changing industry such as accounting can drive changes to the functional requirements of our accounting software. Some of these changes are driven by accounting policy while others are the result of regulatory changes in sales taxes, payroll taxes and other government programs.
In this arena, cloud accounting solutions present a distinct advantage because the solution provider can roll out these updates without any action required on our part. We don’t have to worry about downloading and installing updates at least twice a year. We also do not have to worry about compatibility issues with other programs running on our computer, or the need to repair or reinstall accounting software to get it working again. On the other hand, with cloud solutions we are at the mercy of the solution provider with respect to the timing of these updates. We give up some control.
What is interesting about all of the things we have discussed here is this: cloud solutions are gaining more ground as compared to desktop based solutions every day. It is only a matter of time before cloud solutions completely replace desktop-only solutions. In the meantime, we can observe the use of hybrid models that move us gradually from desktop-only solutions towards cloud solutions.
Several hybrid solutions are available today. At the low end of the spectrum, we have our traditional desktop applications that we can run on a virtual server in the cloud. At the high end, we have the new app model where the application interface runs on our tablet or smartphone and connects over the internet to our data residing in a world class data center. These hybrid solutions often provide us with the advantages from each model. As we adopt these hybrid solutions we are in fact adopting cloud based technologies.
To decide which solution is best for our accounting needs, we should reach out to a professional who understands this space. We can talk about our own specific needs and concerns, and gain an understanding of the pros and cons of the solutions that are becoming available. Wait too long and we may be forced to make a change before we are ready.
What do you think? Are there any advantages or disadvantages that you have experienced by moving to a cloud based accounting solution? I look forward to learning about your experiences!