Cloud Computing - the Future of Finance & Accounting?

With the American Institute of Certified Public Accountants (AICPA) pushing to accelerate adoption of cloud computing solutions among its 350,000 members, there can be no question that the subject has become a popular and widely debated topic among finance and accounting executives.  Defying typical business trends that normally see big business at the front of the pack, the use of cloud computing to lower accounting system costs has already gained popularity among small businesses, and is considered by many to have near-limitless growth opportunities.

Defined as a technology that delivers hosted services over the internet, cloud computing allows consumers and businesses to use applications without installing them onto their hard drive.  Information stored “in the clouds” can also be tapped from any computer with internet access.  It is an idea that has been present since the 1960s.

However, it was not until the birth of Salesforce.com in 1999 that the concept of delivering enterprise applications via a simple website was forged.  The service vendor paved the way for both specialist and mainstream software firms to deliver applications over the internet, while the advent of Web 2.0 has further fueled the growth of the cloud. 

“Cloud is a solution that has been around for a little bit, but is becoming more prevalent in the CPA community,” said Mark Albrecht, CEO, XCM Solutions, in an interview with Bay Street Group’s CPA Trendlines.  “It is the ability to always be able to access information at your fingertips, no matter where in the office you are, where in the country you are, and where in the world you are.  That information is accessible to you and will allow you to do the work that your clients are demanding from you, anywhere you have an internet connection.”

Founded by CPAs, XCM Solutions, LLC provides accounting firms with web-based workflow management solutions that increase efficiency, productivity and profitability.  In strategic alliance with CPA2Biz, a subsidiary of the AICPA, these workflow automation capabilities are now available through CPA2Biz’s Trusted Business Advisor Solutions cloud computing platform.

“Prevalent” may be a bit misleading, however.  At least according to a recent survey conducted by Kforce Finance & Accounting, which found that only 28% of responding businesses are currently employing cloud computing or Software as a Service (SaaS) for financial applications.  Even fewer (20%) are considering the future use of the solution for any aspect of business, financial or not.

As with any new business solution, a number of concerns are on the minds of executives.  Among those identified in the Kforce survey are upfront costs (35.7%), security (28.6%) and stability (21.4%) of uploading and accessing financial information from the internet.

But the AICPA sees things differently.  The organization first began endorsing cloud computing vendors years ago with their nod to payroll-solutions provider Paychex.  Since then, the frequency of their endorsements has increased and the organization has named partnerships with companies such as XCM; invoice management solution, bill.com; financial management and accounting software maker, Intacct; and tax-automation supplier, Copanion.

Before receiving an endorsement, vendors are thoroughly vetted by the AICPA to ensure its members are receiving information about only the most secure solutions. New federal and state regulations for protecting customer data add another level of protection to businesses employing cloud solutions. And to many finance executives’ surprise, once cloud solutions have been implemented in their company and they become familiar with the system, security issues are a thing of the past.

Adam Wiebe, president and CEO, Infowelders, a full-service certified Salesforce.com implementation partner, is currently utilizing Salesforce.com and QuickBooks for his company’s financial needs.

“I have been studying cloud computing for the majority of my career and am a firm believer in all it can bring to business,” said Wiebe.  “What concerns do I have with it?  None whatsoever.  I believe businesses will do nothing but benefit from the use of this software.”

Among those benefits, as identified by the 28% of the respondents to the Kforce survey that are currently using cloud computing solutions, are allowing room for business growth (28.6%), competitive advantages (14.3%) and cost savings (14.3%). 

Cloud computing generates cost savings through a steep drop in information technology costs, since applications are hosted by vendors and provided on demand rather than via physical installations or seat licenses.  Rather than paying to install software on each computer in a facility, and keeping IT staff handy to iron out glitches, software is now readily available to all employees, wherever they may be—in the next cubicle, or half-way around the world.

“With our company, I find that I can pay for the computing power I need, and do not have to worry about buying new software every few years,” said Wiebe.  “This has allowed us to focus more on business issues rather than technology upgrades and concerns.”

Cloud solutions automatically update via the internet and reduce the costs and stress involved with regular software updates. This allows businesses to focus on business, instead of technical concerns, and may reduce the need for a robust IT staff on-site.

Another benefit is the ease of system-to-system integration and the ability to connect with the data and content of other popular cloud services, including Amazon Web Services, Facebook, Google AppEngine and Twitter.

"Our experience is that integrating one SaaS application to another SaaS appliction is far easier than connecting a SaaS appication to traditional software,” said Wiebe. “Currently we have Salesforce.com and QuickBooks connected, which has freed up our time to focus on driving business value.”

While smaller businesses have embraced cloud computing, their larger counterparts have been less enthusiastic.  Many remain skeptical that SaaS is just the latest internet hype and will soon fade away. 

Hype or not, Infowelder’s Wiebe believes that cloud computing will provide endless opportunities for growth. 

“There’s this thing called the internet, and if you’re not constantly thinking about how it can benefit your business, you’re missing out,” he said.

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