Evaluating Cloud Based Accounting Software - Before You Buy
Cloud computing is a hot topic these days, creating widespread interest from CEOs, CFOs, and CIOs who are curious about the impact on their business.
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This widespread interest has brought forth two camps, the cloud computing evangelists who hype its benefits and the fear mongering traditionalists whose business models are now at stake.
The business world is slowly transitioning to cloud computing, and budget pressures have only accelerated this move away from traditional on-premises systems. The enormous economic advantages of cloud computing coupled with other benefits—such as nearly ubiquitous access to applications and data, device independence, etc., making it a very attractive option for businesses of all sizes and shapes. Cloud computing is particularly advantageous, however, for small and medium businesses (SMBs) because of its low Total Cost of Ownership (TCO). In a way, SaaS and cloud-based offerings level the playing field for SMBs, putting them on par with larger enterprises when it comes to technology access.
Simply put, cloud computing is the delivery of computing resources as a service over the internet. This goes a long way to relieving the user of the complexity of IT. The key differentiators between cloud computing and traditional on-premises systems are:
With no capital expenses and reduced operating expenses, cloud computing users can save significant money on IT costs.
Scalability and elasticity
Cloud computing is infinitely scalable and offers an easy way to scale up and scale down based on demand.
Device, location, and time independence—use the system 24x7 from anywhere you can find an Internet connection.
The computing resources can be provisioned by users without requiring human intervention on the side of the vendor.
Billing is based on consumption, a pay as you use model.
There are numerous advantages to cloud computing, chief among them the potentially tremendous cost savings. Cloud computing generally offers a lower TCO, higher reliability, and better availability than traditional computing resources, as well as zero IT maintenance, better sustainability, better automation, and better security.
Evaluating cloud based accounting software
Cloud or SaaS applications are software applications accessible through a user’s web browser. There is generally no software to be installed or maintained and the application and data are hosted at centralized locations, accessible from any device with Internet access. Support is exactly like traditional enterprise software support, with the caveat that, with your permission, the support analyst can log into your system to see exactly what caused the issue—speeding the resolution of your problem. SaaS vendors also handle all, performance tuning, backup and recovery, security, auditing, disaster recovery and all other ongoing operation related to running, optimizing and maintaining the system over time.
Unlike traditional software where you generally have to pay for software licensing up front, SaaS applications generally use pay-per-use and subscription-based models. This can be structured, for example, as pay-per-user, pay-per-transaction, or other usage-based model.
The very fact that user data is stored on third party servers in third party datacenters brings into focus issues like security, privacy, and data ownership. In fact, these issues are some of the reasons that there is a degree of reluctance to move towards cloud-based accounting software. These concerns should not adversely impact the decision to move towards SaaS, however. In reality the security and privacy offered by all major SaaS vendors exceeds that which the vast majority of their customers can afford to themselves. It is still important, though, that customers ask the right questions of their prospective vendors. By asking the right questions and assessing the answers, organizations can mitigate risk and benefit from the advantages of cloud-based accounting software.
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