Thursday, February 17, 2011

Is the Cloud Ready Yet? Let's Ask the Accountants

This is a guest post from Hunter Richards of Software Advice. His original post comes with a survey about accountants' impressions of the cloud. Vote here: Is the Cloud Ready Yet? Let's Ask the Accountants.

Recent interviews with accounting professionals have revealed some lingering hestitations about cloud computing. Accountants aren’t yet fully convinced, but their doubts can be answered with improved products.

“I’m a firm believer in [the cloud] - I really am,” says Carolyn Duffy, who directs business advisory services for Hein & Associates. “But if I had some special legacy system, I would have to look at the integration issue.”

Similar concerns from accounting firms should get the attention of software makers, given these firms’ history of influencing the software-purchasing decisions of their clients. The list of may initially seem troubling for the cloud, but vendors are releasing new services and products that suggest future improvements.

“If you have a secret sauce in how you want to handle some orders or how you handle your pricing, then often times the cloud might not be the best way to do that,” says Doug Wiescinski, a partner at accounting firm Plante & Moran. 
Accountants often cite customization problems as a reason to avoid the cloud, but software vendors such as NetSuite and Intacct have already gotten the message and have built customization tools. As more of these hit the market, the process could be easier in the cloud than it’s ever been for on-premises systems.

Data Integration
“Every additional outsourced app brings another set of steps to go through to create and delete accounts and a new ID and password for the employee to have to remember,” says John Neall, chief information officer of accounting firm UHY. “That may not seem like a lot. But when you multiply that by the number of apps that employees are required to run, it becomes very time consuming just to maintain operations.”

loud applications have typically offered limited application programming interfaces (APIs), middleware and other integration tools that are widely available for on-premises systems. But a number of new middleware offerings, such as Informatica, SnapLogic and Dell’s Boomi, are beginning to fill the void with mature APIs and other products - so integration is also becoming more convenient.

“The pricing models [of the cloud] have been inconsistent,” says David McDonald, a senior managing consultant at BKD, another accounting firm. “Usually, once you get to the five-year range, your TCO is higher for the cloud versus on-premise. And you own nothing.”
Some accounting professionals warn that cloud systems can incur a higher total cost of ownership (TCO) than on-premises alternatives, despite its ability to save money with lower up-front costs. But the on-premises approach is often not an option for smaller firms without the up-front cash for professional IT resources. The nature of smaller, recurring payments actually empowers these businesses to use software when it’s otherwise impossible.

IT Staffing
“The added benefit of a team of [in-house] IT professionals that care about the business” can be much more valuable than services from “a vendor hosting thousands of other clients,” says UHY’s Neall. 
Accountants also recommend comparing outsourced IT services with the value of a dedicated in-house team. Businesses have a love-hate relationship with IT, so they may prefer to shift that function to the software vendor; this concern is unlikely to have a major deterrence effect.

Software selection is never easy, but moving to the cloud is looking better and better. If accounting firms’ current hesitations are any indication, then the doubts about cloud computing are more vulnerable than ever.