Cloud Computing Accounting Software Considerations: Part 1
Switching to a cloud solution from your desktop application is more like going from driving a car with an automatic transmission to riding a motorcycle. It is a major shift in how you operate.
Recently, a CFO group I’m a member of went through a conversion from the desktop to cloud version of the same software and our treasurer had major challenges with the process. This is an organization of financial executives so you can only imagine what the average business owner or small business Controller’s experience might be.
In this post, I’ll provide an overview of the major differences between desktop and cloud computing accounting software, and in my next post I will give you some considerations to review before making this change. Hopefully, my group’s painful experience will help you avoid the same pain.
Cloud vs. Desktop Accounting Applications
Some of the principle differences of cloud-based accounting software compared to a desktop application are as follows:
- The ability to connect to your office from any device and any location (as long as you have a reliable internet connection).
- The ability for multiple users (if you purchase a multi-user license) to work from remote sites at the same time, while working from a common cloud-based database.
- Easier use of version control since everyone is working on the same version and database so there should be no issue with a “different version of the truth.”
- The vendor maintaining data ownership. In the case of the small software vendors, this means if they make changes you have no choice but to accept them, whether you like it or not! Moreover, when you convert to the cloud, some data may not be able to be retained.
Pro Tip: Check the license to see who owns the data and where your data resides. Is it on a server farm in a foreign country or on a shared server with a Chinese or Russian company? Ask what controls and disaster recovery are in place to protect your data and determine your backup plan should your internet access goes down for a day, week or month.
- A lack of internal controls in applications like QuickBooks, whereby the cloud version may not have the same segregation of duties or workflow for transaction approvals that exist in both desktop and cloud-based instances of a Tier 1 application (Microsoft Dynamics, SAP or Oracle). Typically, the larger vendors have role based security pre-configured (e.g., Accounting Manager, Sales Person, President, Billing, Inventory, Procurement, etc.).
- Potentially higher costs over a 3 to 5 year time frame and no opt out capability. If you stop paying, your screen goes dark. On a desktop, you can install the license and possibly set up as many companies as you wish, but in the cloud the software vendor has total control over your access to the application and your data; and can more closely control your access and its revenue stream.
- Last, and most important, you will be using lesser functionality in the cloud. Many vendors say the functionality is the same, but in reality the cloud version is less mature and works differently. Make sure you understand the functional differences and test them before flying off into the cloud.
I hope this post has helped you gain a better understanding of the high level differences between cloud and desktop applications. In the next post, we will evaluate the out of the box functions and attempt to better understand 3rd party “plug in” applications.
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