clouding over

32 accounting today | January 2013 technology accountingtoday.com

Clouding overPuns aside, the cloud is finally living up to its promiseBY DAVE MCCLURE

Almost from the outset of the commercial Internet, in early 1994, technologists and businesspeopie used a styiized cloud as a metaphor for the Internet. Diagrams routineiy depicted sets ofcomputers connecting through this "cloud" over long distances. As the Internet evolved, so didthe concept of this "cioud," eventually settling into a broad set of appiications that include Soft-ware-as-a-Service, Infrastructure-as-a-Service, Piatform-as-a-Service and more.

But every new technology stiffers throughsimilar growing pains, and these problemsdid not slow the steady expansion of cloudservices among early adopters. And today'sarray of cloud services for accountants hasvastly improved over the first generations adecade or two ago.

"As technology evolves, it is natural forthe costs to go down," said Kacee Johnson,executive vice president of Cloud Nine RealTime. "But also for it to smooth out some ofthe more 'clunky' aspects of the delivery ofcloud applications. For example, we havebeen able to eliminate the need for connec-tion managers, reducing costs that increasedservice provider fees, while at the same timemaking the cloud experience more seamless,vth quicker access to data."

For accountants, concerns about cloudcomputing in the past decade have focusedon four areas:

Security of client data. The first andmost critical concern for accountants was thesecurity of their cent data. Data integrity,data theft and data loss were the largest ofthe issues, and revolved around the problemsof maintaining security across a distributednetwork. In addition, there were questionsof how to deal with data security in an envi-ronment in which cloud servers are locatedin countries that do not have sufficient safe-guards for security.

^ Privacy of client data. Privacy is a sepa-rate but related issue. Privacy includes theability to keep client data out of the handsof those who are not entitled to see or use it,including law enforcement agencies wishingto peruse the data without a warrant. Thisissue related to how well the cloud companykept effective walls around the data of eachaccountant.

Costs of adoption. Whe the long-termcosts of moving operations to the cloud rep-resent a net reduction for most accountingfirms, the upfront costs for early adopterswere suhstantial. In addition to the costs ofconnection managers, research into down-load and print managers, due diligence of the

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Part of this evolution was an extensioninto accounting applications, and by thelate 1990s a handful of pioneering compa-nies were moving their operations into thecloud. Other accounting software and servicecompanies hegan to shift individual products particularly services such as bookkeepingand payroll that require close communica-tion and coaboration with clients.

"This has been one of the great transfor-mations in accounting, in the same manneras the introduction of personal computerstransformed the industry," said Erik Asgeirs-son, chief executive officer of CPA2Biz, whichpartners with leading vendors to promotecloud solutions to accountants. "The trans-formation has shifted the industry from anera of data management to an informationera in which collaboration becomes moreimportant than computation."

"Collaboration on this scale is driving in-creased productivity and profitability," saidChandra Bhansa, president and co-founderof AccountantsWorld. "The largest gain is inthe area of payroll processing, where over 70percent of recently surveyed users reported asignificant improvement in processing time.And half of those users reported a gain of 10percent or more."

Jamie Sutherland, president of U.S. opera-fions atXero, noted that, "The cloud not only

provides efficiency gains for a pracfice, butalso provides a way to drive new leads. Moreand more clients are looking for an account-ing partner that understands cloud tools tohelp their business."

In fact, research firm International DataCorporation calls cloud computing the foun-dation for the technology industry's next 20years of growth.

GROWING PAINSSfill, the transition to cloud compufing, for allof its benefits, has not been without its prob-lems. In the early years, there were problemswith printing from cloud applications, thecost and complexity of accessing cloud ser-vices, the security of data, and the additionalcost of compliance in order to ensure the pri-vacy and security of data in the cloud.

Other problems arose as early adoptersstruggled to make an economic justificationfor the use of cloud services at a time whenthe investment costs were at their highest.Though early adopters were able to reducetheir direct IT costs, those savings were oftenoffset by necessary investments in new soft-ware and services. And while cloud comput-ing has been cited as an example of "greencomputing" for its lower cost of sustainingservers, there is virtuay no research to quan-tify this claim.

techbriefsSMARTVAULT BOOSTS ITSPORTAL, NOW WORKS WITHQUICKBOOKS ONLINEHOUSTON Cloud-based documentmanagement service provider SmartVaulthas added key enhancements to its clientportal, and is also now integrated withQuickBooks Online.

SmartVault's client portal users cannow view a variety of file types instantly,including Microsoft Office documents,PDFs, Outlook e-mail messages, andmore than half a dozen other graphic fileformats.

In addition, SmartVault's Toolbar tech-nology for QuickBooks has been extend-ed to support the popular accountingpackage's online version. The integrationallows QuickBooks Online users to at-tach and view source documents such asreceipts, bills and invoices directly fromwithin QuickBooks Online.

PAYCHEX BUYS EXPENSE REPORTSOULUTIONS VENDORROCHESTER, N.Y. Payroll and humanresource services provider Paychex Inc.has purchased expense report automa-tion product maker ExpenseWire fromRearden Commerce Inc. for an undis-closed sum.

Paychex first partnered with Reardenin October 2008 when ExpenseWirewas selected to power Paychex ExpenseManagement, a Web-based offering thatprovides clients with tools to readily man-age and control the expense reportingprocess, including approval, reimburse-ment and reporting.

The acquisition is geared toward al-lowing Paychex to further enhance itsPaychex One-Source workforce productsuite, as well as add a development andclient service team with knowledge of theexpense management market.

COUPA AND OB10 PARTNER ONELIMINATING PAPER INVOICESLONDON/SAN MATEO, CALIF. Cloud-basedspend optimization product maker CoupaSoftware and electronic invoicing networkOB10 have formed a strategic partner-ship that will provide Coupa customerswith seamless integration to eliminate theneed for paper invoices.

As a result of the partnership, invoicesfrom suppliers' billing systems will flowinto Coupa's cloud product, with the goalof reducing invoice processing timeand costs.

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CloudingFROM PAGE 32cloud provider and other startup costs, therewere additional issues around the real returnon investment dtiring the period in which thefirm adopted and "settled in" to a new para-digm in their workflow and operations.

Integration of applications. The abil-ity to use the best accounting and practicemanagement tools has heen hampered bythe fact that many of the tools were propri-etary, while others did not integrate well withapplications from other vendors. This wasparticularly the case with the earliest cloudplatform and software vendors, who by na-ture were focused on delivering an effectivesuite regardless of how well the applicationswithin that suite were ahle to integrate withofferings from other vendors.

But cloud proponents believe those con-cerns have largely been resolved or addressedas the industry has evolved.

"We wish every accounting firm fully un-derstood that the hest cloud solutions pro-vide superior security and controls for fi-nancial data," said Vishrut Parikh, director ofmarketing for NetSuite. "We work constantlyto maintain stringent, world-class securitystandards, and the access controls in cloudsolutions mean that audit trails are extreme-ly easy to create and trace when necessary.It would be impractical and infeasible formost companies to duplicate the enterprise-grade security and access controls that wemaintain as a matter of course for even thesmallest customers."

"Too often, accounting firm leaders seeinvestment in the cloud as costly and out ofreach," said Scott Fleszar, vice president ofstrategic marketing for the Tax and Account-ing business of Thomson Reuters. "Primar-ily because they don't know how to factor inthe tremendous and real cost savings ofoperadng their firm in the cloud: fewer hard-ware expenses, with much-reduced serverand workstation replacement costs; less timespent on IT tasks; greater staff productivity;and much more. If firms understood the con-siderable time savings and producfivity gainsthey'd experience by moving to the cloud,they wouldn't hesitate."

"The issue of integration between appli-cations, and associated problems with dataentry and maintenance within different pro-grams, have been a universal problem for ac-counting firms," said Brian Diffin, vice presi-dent and chief technology officer of CCH, aWolters Kluwer business. "A key to solvingthis issue for accounting firms is to leveragea cloud platform offering and an administra-tion management application to enter andmaintain common data across an applica-tion suite, as CCH is offering. The prohlems ofdisparate data and redundant data entry arelargely solved hy operating in the cloud."

NEW BENEFITS FROM THE CLOUDBut if many of the concerns of early adopt-ers proved to he wrong or could he solvedthrough evolution, the cloud has also pre-sented benefits that were not originally en-visioned. In particular, cloud computing hashelped to respond to trends and events notenvisioned in the 1990s.

"Hurricane Sandy has done much toawaken a sense of urgency around businesscontinuity and disaster recovery topics asbusinesses have faced extinction in its wake,"said Roy Keely, director of market strategy forXcentric. "Cloud companies will continueto produce services and features centeredaround giving firms peace of mind relatedto operating amidst disasters. Disasters willhappen, and will unfortunately give manythe opportunity to learn how to better survivethem using cloud-centered strategies."

"I see cloud-to-mobile connectivity asthe 'next hig thing,' said Thomson Reuter'sFleszar. "The ability to connect to mobile de-vices like smartphones and tablets not onlyfor the accounting firm, but for their clientsas well will create many more ways to beproductive, stay connected and serve clients.Increasingly, people are managing every-thing from their mobile devices banking,music, travel reservations, even the hooksthey read. So naturally, they want to do husi-ness with companies who reach the devicesthey carry."

"Another key area is analytics," noted VijayRamakrishnan, director of product market-ing for Intacct. "The cloud will enahle betteranalytics by mashing up data from multiplecloud applications without users having to doany of the data integration work themselves.And all of that new information vll be putto practical use by businesses, since it will bereadily accessible."

"As more companies understand the ad-vantages of doing business in the cloud, we'reseeing more interest in using the cloud as acomplete e-commerce platform for runningthe entire business," added NetSuite's Parikh."That doesn't just mean retailers managingconsumer purchases in a cloud-integratedWeb store, but handling all B2B, B2C, andmachine-to-machine transactions through asingle, integrated cloud platform. That moveis motivating a lot of our innovation, and weexpect you'll see some exciting applicationsover the next two years."

"Since the nature of the cloud creates analways-changing dynamic for innovation, thefuture presents itself with endless opportuni-ties for growth," said Samir Khosla, directorof product management in the Account-ing Professionals Division at Intuit. "Firmshave come to expect instant access to theirclient's critical information, new streamlinedworkflows and reduced costs. There will hean increased expectation from clients thatthings are availahle 'as-a-service/ versus as a

physical product, and that their accountantwill be able to answer their questions anytimefrom anywhere."

MIGRATING TO THE CLOUDFor the accounting profession, computing inthe cloud has evolved from the introductionstage with early adopters to the early majorityof accountants.

"The issue for firms is change manage-ment," said CPA2Biz's Asgeirsson. "The firmhas to embrace the change and re-align theirpractice management, because the cloudcan't deliver hy itself. But if you do the changemanagement, and leverage the process, youcan see a dramatic increase in what you canachieve. But you have to have the right peoplein the firm, in the right positions, and a dedi-cation to better workflow in an ecosystemthat works together."

"The firms that go through the process oftaking advantage of better technology andcloud efficiency and find ways to eliminateduplication of work have had a great amountof success and increased profitability, notonly on their outsourced accounting en-gagements, but firmwide," said Amy Vetter,CPA programs leader at Intacct. "Our firmshave been able to enter markets they couldn'totherwise serve, as well as help their clientsachieve growth they couldn't have unlessthey had outsourced their accounting andhad the husiness intelligence access that weafford them."

"The most important thing every accoun-tant must realize is that the migration to thecloud is inevitable," said AccountantsWorld'sBhansali. "Just like in the past, when they hadto migrate to new, rewarding technologies from calculators to PCs, fiom DOS to Win-dows it is time to move from desktop to thecloud. While the destination is the same, thereward for those who migrate proactively isthat they position themselves to benefit fromthe migration, versus those who wait untilthey are forced into it."

"As the accounting industry continuesto evolve at a rapid pace, automation isreplacing manual data collection and in-put, and as a result, firms are able to betterserve clients and ensure business-criticaloperations," added Intuit's Khosla. "We wisheach accounting firm would start slow, butstart nonetheless. Move one client to thecloud and see how it goes. We believe thatonce you see the efficiency and time savings,security and client delight, you'll be eager tomove more clients and more workflow tasksto the cloud."

Asgeirsson summarized the transition tothe cloud in these terms: "There are threethings firms need to think about. The tech-nology itself. The talent within the firm thatwill implement the transition. The ability ofthe firm's leaders to manage change. And ofthese, the technology is the easy part." AT

varbriefsMASSEY LAUNCHES SOCIALMEDIA WEBCASTS FOR CPAS

RALEIGH, N.C. in December, MicrosoftDynamics and intacct partner iVlasseyConsulting launched an educationalwebcast series aimed at helping CPAs tobetter utilize the social media platform.

Titled "CPAs and Social Media," theseries is presented by marketing strate-gist Dawn Westerberg, who showcaseshow social media can benefit CPA firmsand sole practitioners the same way thatnetworking and word-of-mouth referralscan benefit business development. Thesession gave advice on how to enhanceonline presence with clients, prospectiveclients and professional associates usingsocial media sites like Google-i-, Linke-dln. Twitter and Facebook.

The sessions, which are eligible forCPE credit, are intended to be monthly,though there were only eight plannedat press time. It's free to attend, but regis-tration is required.

SWK AND ISM MERGER ON HOLDLIVINGSTON, N.J./PORTLAND, ORE. Theplanned union between major SageNorth America partners SWK Technolo-gies and Information Systems Manage-ment is on hold as both organizationswork to solidify their respective year-endbusinesses. Merger conversations areexpected to resume in the New Year.

SWK, a wholly owned subsidiary ofSilverSun Technologies Inc. and a recentNetSuite partner, signed a letter ofintent in early October to acquire ISM, 'effectively solidifying a more nationalpresence and adding more than $6 mil-lion in revenue.

FAYE BUSINESS SYSTEMS GROUPJOINS ERPVAR NETWORKDANA POINT, CALIF. Sage North Amer-ica, Intacct and SugarCRM partner FayeBusiness Systems Group became thelatest addition to the national resellermarketing network ERPVAR.com, withthe primary goal of promoting its variousintegration offerings for the publishersthat it represents.

The ERPVAR.com network currentlyhas approximately 30 members, consist-ing of accounting and ERP VARs fromaround the country that represent Sage,Microsoft Dynamics, Epicor, NetSuite,Intacct and Intuit products. Earlier inthe month the organization added SWKTechnologies to its ranks and was expect-ing another Sage partner. SoutheastComputer Solutions, to join as well.

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