Introduction: Understanding the Basics
When the cloud started becoming a big thing almost a decade ago, organisations of all types and sizes were quick to jump on the bandwagon with their desire to remain at the cutting edge of innovation. As with any hasty and poorly executed technology strategy, the initial enthusiasm was often met with a multitude of problems, such as poor compatibility with existing systems, security and compliance issues and a lack of in-house expertise needed to get everything up and running smoothly.
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Today, cloud computing is far more developed, and we’ve moved beyond the one-size-fits-all approach to accommodate specific industries and the unique challenges they face. In the context of accounting firms, these include factors such as security, data accuracy, workforce flexibility and non-negotiable deadlines. That’s why cloud accounting has been hailed as the new way to drive efficiency and help practices overcome their technology challenges.
Cloud Computing and Virtualisation
Cloud computing and virtualisation are two very important technologies which often work together to create a flexible, scalable and manageable computing environment. The cloud simply refers to a distributed form of computing whereby IT resources are delivered over the internet from a remote server, thereby reducing your dependence on in-house servers and other hardware and software resources. Easily the simplest example is web-based email, which businesses have been relying on for decades.
Virtualisation is often confused with cloud computing, but they refer to quite different things. They are not necessarily used together. Virtualisation refers to the creation of virtual, rather than physical computing resources, such as desktop workspaces, storage networks and even entire servers. In other words, it defines computing resources on a software level so that a single physical system can perform more simultaneous roles, such as running different operating systems. This enables businesses to reduce costs by using their available resources more efficiently.
By combining virtualisation with a cloud-based infrastructure, you can access your computing resources from anywhere. In other words, you can have a virtual desktop computer, which functions much like a standalone workstation back in the office, no matter where you are. For busy accountants, that presents a tremendous advantage, particularly during periods like month-end closings, which traditionally meant having to spend many hours of overtime stuck in front of an office desk.
Who Can Benefit from Cloud Accounting?
Any accounting firm, from solo practices to firms with hundreds of employees, can benefit from cloud accounting. In an industry where there’s no flexibility regarding deadlines and data accuracy is paramount, the cloud provides a centralised system for consistently managing your applications and data. Smaller firms, which generally cannot afford to build and maintain their own dedicated IT departments, will find the cloud to be particularly beneficial when it comes to reducing costs and increasing efficiency.
How Should You Choose a Cloud Provider?
Recent years have seen cloud providers explode in number and popularity, but most of them make a poor job of satisfying the unique needs of specific industries. While there are many major public cloud providers, such as Amazon AWS, Google Cloud and Microsoft Azure, accounting firms should always go for a provider with industry-specific knowledge that fully understands the needs and challenges of accountants.
Furthermore, you’ll also need to choose a provider that offers integrations with all the applications your firm uses, such as MYOB, Reckon APS and Handisoft. After all, migrating to the cloud shouldn’t have to mean starting from scratch with a portfolio of systems and applications that your team are not familiar with. Other considerations include specialised customer support, security and compliance and accessibility. For more information, please refer to our article “8 Questions Accounting Firms Should Ask When Evaluating a Cloud Provider”.
How the Cloud Is Transforming the Australian Accounting Sector
Cloud adoption is booming in the Australian accounting sector to the extent that it’s transforming the industry by enhancing efficiency and meeting the expectations of the modern workforce. With a market penetration of 32%, MYOB is leading the way in accounting practice management software, with Xero following close behind at 30% and Reckon APS at 15%. Moreover, around 7 in 10 accountants now use cloud-based practice management software, and over three quarters plan to increase their investment in cloud computing in the near future.
Despite the increasing popularity of the cloud, around 60% of accounting firms still maintain their own in-house servers as well, although many are gradually making the move to external cloud providers. Among the key priorities of accounting firms of all sizes, from sole practitioners to Australia’s biggest practices, consider moving additional applications over to the cloud and taking advantage of workflow automation to be their highest IT priorities. Here are some important facts illustrating the rapid growth of the cloud and how it is helping firms achieve their IT goals:
- The global public cloud is expected to reach a value of $178 billion in 2018.
- 60% of SMBs view cloud technology as a way to increase productivity.
- 74% of businesses consider the cloud to offer a competitive advantage.
- 93% of businesses move to the cloud because it enables workforce mobility.
- 82% of businesses report significant savings by migrating to the cloud.
- Investing in cloud collaboration can increase productivity by up to 400%.
What Are the IT Challenges Facing Accounting Firms?
While the largest accounting firms have their own dedicated IT departments and can afford to maintain their own in-house computing infrastructure and private cloud, this is not likely to be an option for small- to mid-sized firms. After all, accountants are not likely to be technology experts as well, hence the necessity to build an infrastructure that can effectively look after itself. By partnering with a specialist provider that offers a complete virtual workspace tailored to the needs of accounting practices, your firm will be able to overcome the following challenges:
While every business deals with sensitive information, the success of any accounting firm is built on trust, and that’s why data security must be a top priority. When a client entrusts you with their financial data, you need to be absolutely sure that it’s secured both while in storage and in transit. That’s a lot less likely to happen when you’re still exchanging data, such as tax returns and invoices, by email or with portable storage devices. Other challenges include the need to conduct thorough cybersecurity audits to identify any potential vulnerabilities in your computing infrastructure and practices.
Imagine it’s the year-end closing, and your staff are working overtime to file away all those invoices from the previous year. The only problem is, your systems go down at the worst possible moment, leaving staff with nothing to do when they need to work within non-negotiable deadlines. In such cases, your only option is to call the support team to resolve the issue as quickly as possible. This dated break/fix approach also tends to cost a lot of money, stress and revenue. That’s why every accounting firm should take a proactive approach to downtime with 24/7 monitoring.
With every new technology comes a raft of potential security and compliance issues that accounting firms need to keep ahead of to safeguard their futures and avoid stiff penalties. However, it’s hard to keep up with your compliance obligations when you are not sure where your data resides, or which measures are in place to protect it. A common challenge that accounting firms face is ensuring that data is correct and up-to-date, which can be very difficult if your employees are entering data multiple times across different systems.
Constant changes in the technology landscape have left many accounting practices stuck with dated systems that don’t respond well to the constantly evolving workforce and the increasing demands of rapidly growing firms. However, that shouldn’t mean you need to redevelop your entire infrastructure to take advantage of the latest tech. Instead, practices need to find a way to accommodate and complement, rather than replace, their existing infrastructure through application integration.
One of the biggest challenges for any business migrating to the cloud is managing increased bandwidth requirements. For example, when you’ve moving a traditional desktop application over to the cloud to be delivered via a virtualised workspace, a common problem is a lack of adequate performance. After all, desktop applications are designed to be run from the computer in front of you, rather than using a remote desktop connection. That’s why migrating to the cloud requires a carefully thought-out strategy that’s tailored to the needs and limitations of your existing infrastructure.
As any business leader knows, change can be either disruptive or beneficial. Your job is to make sure that migrating to the cloud doesn’t mean having to deal with a raft of technical challenges that your team isn’t equipped to handle by themselves. After all, an accountant’s job description shouldn’t involve having to spend hours trying to fix trivial IT problems that are nonetheless severe enough to get in the way of their work. Furthermore, any major business transformation comes with the need for extra staff training, which is also something you’ll want to keep to a minimum.
What Are the Benefits of Cloud Accounting?
More and more accounting firms are realising the benefits of moving to the cloud, but a lot also find themselves being seduced by the promises of cloud vendors who don’t know the industry well enough to help them transform their practices for the better. If you’re still not convinced that the cloud and virtualisation are the perfect fit for your practice, the following should help set your mind at ease:
Traditionally, accounting firms were restricted by the limitations of software installed on the office computer. With the cloud, you can work over the internet anywhere and at any time. This enables, for example, your team to work from home during periods of increased demand or even get a head start on the day’s work while using a laptop or smartphone on the commute. Moreover, today’s workforce increasingly expects to have a degree of workplace flexibility, rather than being chained to the office desk.
The perceived security concerns of having your applications and data hosted outside of your own premises have long discouraged business leaders from migrating to the cloud. However, these concerns are largely unfounded. This is because dependable cloud vendors have reached an economy of scale that allow them to implement the most effective and cutting-edge security measures in the industry. For smaller firms in particular, it’s rarely possible to achieve first-class security with in-house systems.
The Australian accounting industry continues to grow, with new technologies offering more opportunities to small- to mid-sized practices thanks to the enhanced scalability they offer. With the cloud, the only limitations are those of your provider which, as we have discussed, are likely to be far above your own. In other words, the cloud grows with your practice so that you can scale up as demand increases. No longer will your business growth be stifled by the limitations of your budget or in-house IT hardware.
Previously, it was normal for business owners to communicate with their accountants at the year end, which led to massive workloads in one hit. However, thanks to the enormous collaborative potential of the cloud, it’s now possible for people to work as a team by viewing and editing the same documents and data in real time. Having all your apps and data hosted in the cloud means that everyone on your team will have access to the same information at the same time, while also keeps data consistent.
It’s not easy to stay organised when you’re trying to manage multiple systems across multiple locations. Consider, for example, the fact that desktop software often needs to be manually updated and data exchanged by email or portable storage device. If, however, you can manage everything centrally using a connected virtual workspace, there’s a lot less administration to worry about. That’s also much better for security, since it’s easier to look after one system than a fragmented infrastructure.
Accountants are busy people who shouldn’t have to waste time chasing and posting invoices manually. In fact, there are many everyday accounting processes that can and should be automated, not only to reduce workloads, but also to help eliminate problems caused by human error, which is common when it comes to repeated data entry. With a centralised, cloud-based system, you only need to enter data once, and that means greater accuracy in an industry where accuracy is everything.
Perhaps the most common motivation of all for migrating to the cloud is that it helps you keep expenses down to a predictable minimum. Instead of having to invest in new accounting software, servers and other infrastructure to stay at the cutting edge, you’ll be able to enjoy the latest technology for a set monthly fee. Furthermore, cloud computing for CPA firms is inherently flexible, so there’s no need to pay for resources you don’t need. Instead, costs are predictable and in line with your goals.
In Australia, accounting practices are legally obliged to keep their records for at least five years. Compliance obligations aside, it’s always in your best interest to plan for the worst-case scenario. After all, as Benjamin Franklin once said, ‘failing to plan is planning to fail’. Fortunately, by moving your apps and data to the cloud, you’ll be a major step ahead when it comes to disaster recovery and business continuity. That’s because any reputable provider should prioritise business continuity using redundant data centers, automated backup and automated record retention.
No longer must small- to mid-sized accounting practices struggle to keep up with the Big 4. That’s because the cloud gives you access to much the same infrastructure as the biggest players in the sector and, as every business leader knows, the ability to stay at the cutting edge of technology is imperative for remaining competitive. To that end, migrating to the cloud is largely about future-proofing your accounting practice so that it has space to thrive among the likes of PwC, KPMG and Ernst & Young.
There’s no denying it – the cloud is complicated, and that’s why you cannot afford to take a blind leap into the new era of innovation. Getting started with the cloud begins with choosing the right vendor and implementing a long-term strategy that aligns with the goals of your practice. With that in mind, here’s a checklist of the most important steps to take when making the move:
- Map existing business apps and services to identify areas of improvement.
- Understand where your business is going to be in three to five years.
- Calculate current operational costs to conduct a cost/benefit analysis.
- Determine your security requirements and conduct a risk assessment.
- Identify your key priorities, such as service uptime and data confidentiality.
- Choose the individuals in your team who will help oversee the migration.
- Select a cloud provider with expertise in the accounting sector and ask them for independent referrals you can speak to.
- Review the provider’s service level agreements and contractual terms.
- Adopt a cloud migration strategy per the recommendations of your provider.
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OneSpace is a cloud-enabled virtual workspace tailored specifically to the needs of accounting practices. Not only do we provide extensive industry expertise – we also guarantee a 99.9% uptime, enterprise-grade security, integrations with leading apps used by accountants and work anywhere-anytime accessibility. If you’re ready to get started on your cloud journey, talk to one of our experts today.