Is online accounting software right for your business?

It’s becoming very common for businesses to replace traditional software with online services which you log in to on the internet.

These services are a form of cloud computing. One area which is growing fast is online accounting software.

These services perform the job of traditional accounting software, but work over the internet. So, is online accounting software right for your business?

Online accounting software explained

Most businesses accept that they need some form of accounting software, especially if they’ve been going for a while. It can make it much easier to perform jobs like invoicing, and helps you keep on top of your record keeping.

A common accounting software set up is to have the accounting system running from a central network server on your premises. The people who need to use the system can then log in to the server to access it.

Online accounting software works in a similar way. The main difference is that instead of the data being stored on a server in your business, it gets stored on a server (or servers) which you access over the internet.

Pay by the month for online accounting software

That means, of course, that you need an internet connection to log on and access your financial information. But it also means that you can log in from anywhere (as long as you have an internet connection).

Using online accounting software can therefore offer more flexibility. You don’t need to be in the office to use it – you can catch up on your bookkeeping or invoicing from home or on the road. In fact, many online accounting software packages even allow you to log in from a smart phone.

Unlike traditional packages, there’s not usually a big upfront charge for online accounting software. Instead, you typically pay a flat monthly fee. This could be as little as £5, depending on what features you want from your online accounting software.

It doesn’t automatically mean that online accounting software is cheaper. But it does help to avoid big, one-off expenses – and with most services having no minimum contract, you can always cancel if it’s not right for you.

What’s more, the monthly fee usually includes all updates, upgrades and so on – unlike with traditional software, you won’t be forced to pay again when a new version is released.

Online accounting software helps your accountant too

Additionally online accounting software enables both you and your accountant to look at the same information at the same time but from different locations. This improves your communication and saves time.

One of the principal advantages of online accounting software is that teams working together have instant access to real-time data. It’s ideal for multi branch operations.

But is online accounting software secure?

Businesses usually have one main concern when considering online accounting software: security and backup. With your data stored on an external server, how can you possibly know it is safe?

The answer is to take the same security precautions you would for any cloud computing service. When choosing a provider, do your homework carefully.

Make sure your chosen online accounting software has a good track record of keeping data safe. Look for an ‘uptime guarantee’ or ‘service level agreement’ too – these promise that the system will be available when you need it.

Check for specific information about how and where your data will be stored. Ask the online accounting software provider how often they take backups and where they’re stored. If the answers to your questions are vague, think carefully before signing up.

Having said that, it’s worth comparing the risks of an online accounting software package with those of running software in-house. For instance, if you had a fire or server crash in your business, it could cause serious disruption.

When you weigh up these factors, you may find that using online accounting software will actually reduce the risks. After all, most small businesses have a bunch of assorted servers in an old broom cupboard and are historically bad at keeping back ups!

Cloud computing for business goes mainstream

Cloud computing has been an information technology buzzword for many years. Now it is going mainstream.

Bryan Kinsella has a problem. As chief information officer of business services provider Rentokil Initial he looks after a widely dispersed and mobile workforce.


Email is a key management tool but as the company grew it found itself with 40 different email systems across 50 countries for 20,000 employees, with another 15,000 staff offline.


Setting up a new single email system with a global server infrastructure would have meant a massive capital expenditure.


Instead, he settled on a "cloud" solution, rolling out Google's enterprise email across the company. It's saving Rentokil about 70% in expenditure, he says, with lower support costs on top of that.


The Cloud explained


But what is cloud computing? In the simplest of terms, it is IT-as-a-Service. Instead of building your own IT infrastructure to host databases or software, a third party hosts them in its large server farms. Your company has access to its data and software over the internet (which in most IT diagrams is shown as a cloud).


Cloud fans claim five key benefits:

• Cheap: your IT provider will host services for multiple companies; sharing complex infrastructure is cost-efficient and you pay only for what you actually use.
• Quick: The most basic cloud services work out of the box; for more complex software and database solutions, cloud computing allows you to skip the hardware procurement and capital expenditure phase - it's perfect for start-ups.
• Up-to-date: Most providers constantly update their software offering, adding new features as they become available.
• Scaleable: If your business is growing fast or has seasonal spikes, you can go large quickly because cloud systems are built to cope with sharp increases in workload.
• Mobile: Cloud services are designed to be used from a distance, so if you have a mobile workforce, your staff will have access to most of your systems on the go.

In other words: information technology becomes a utility, consumed like electricity, water, or even outsourced HR or payroll services, says Chuck Hollis, chief technology officer at information management company EMC. This year, he exhorts companies, "is the year to get your cloud strategy together."


Bear in mind, cloud computing is not new. Most of us are using the cloud already, through services like Hotmail, Flickr, Blogger and Facebook. It's business that has been slow in the take-up.


Using the cloud


For Bryan Kinsella, the cloud strategy is paying off at an enterprise level. So far his team has moved close to 10,000 staff on to Google's email services; another 10,000 will have migrated by the end of the year.


"We never went into this to get cost reduction," says Mr Kinsella. It was about "unifying the business... to operate and collaborate on a global basis."


Now he is rolling out Google Sites to share documents across Rentokil and create intranets for both the global company and its many divisions.


It's this easy scaling that makes cloud-computing attractive. Insurance giant Aviva, for example, moved all its enterprise content management and business intelligence tools online, using Microsoft's Sharepoint online service.


Logistics firm Pall-Ex can grow fast and cheaply by moving much of its IT to UK hosting firm Outsourcery.


Universal Music is using the cloud computing services of e-commerce provider Venda to roll out its online store model across Europe.


"It's so expensive to build a world-class e-commerce platform, no single retailer can build it by themselves unless they are the size of Amazon," says James Cronin, chief technology architect at Venda.


Competition boosts cloud computing


Cloud computing can be applied nearly anywhere: the small retailer that needs a secure e-commerce website quickly and cheaply; the ferry operator that has huge computing spikes in May and June while 90% of its IT system idle the rest of the year; the fire service that needs extra computing power to predict the movement of forest fires during the summer.

Cloud services range from fulfilling single business functions, say calculating payroll taxes, to outsourcing heavy-duty computing for complex 3-D modelling.

Many firms "have not moved significantly to cloud computing yet," acknowledges Cassio Dreyfuss at technology consultancy Gartner. But he predicts that "more dynamic" industries, "where business models change very fast, where competition is very hard... will move more quickly."


Right now, the cloud computing market is worth almost $2.4bn, says Gartner and predicts that by 2013 this will have grown to almost $8.1bn.


Get ready now and map your company's IT needs, says Mr Hollis. "If IT is your company's differentiator you may want to keep it in-house." But most IT is just another service that "can go the same way as other corporate functions like finance, logistics and manufacturing".


Storm clouds


Cloud computing is not without problems.


For starters, to be cheap cloud computing tasks need to be standardised. While traditional applications have many little-used features to cope with specialised needs, customising a cloud service costs extra.


For firms on a tight budget this may result in a few standard network solutions. However, it does not mean a standard look and feel. "I challenge you to spot that our customers' websites run on the same platform," says James Cronin at Venda. Plus most Software-as-a-Service (SaaS) providers roll-out newly developed features to other customers as well.


Usability is another issue. Some people, firmly wedded to "their" software, whether it's Lotus Notes or Microsoft Outlook, are reluctant to switch to plainer online applications. Rentokil's Bryan Kinsella counters that his migration team received few complaints.


Connectivity is another worry. The City of Los Angeles wants to move 34,000 employees to Google Apps, but there are complaints about speed and reliability - problems that may be rooted more in the city's internal network than Google's service.


But what if you go offline? Well, most SaaS providers offer resilient offline solutions. Microsoft - a late-comer to the cloud computing party - likes to point out that it offers proven offline applications like Microsoft Office that integrate with its new suite of online applications.


In cloud we trust


Security concerns are a much bigger issue. Will your corporate and customers' data be safe? What about data protection? Can you meet all legal compliance requirements?


"There are enormous security [...] and auditing risks that have not been addressed yet," says Gartner's Mr Dreyfuss.

"Cloud computing," warns a top expert for business security, "is the concentration of corporate risk in one single place."

Not so, say the providers of cloud services. "We put together multiple points of replication... multiple lines of defence... multiple levels of sophistication... that a single company just could not afford," says Jean-Philippe Courtois, the president of Microsoft International.


His words are echoed by all his competitors. Dave Girouard, the man in charge of Google's enterprise solutions, says "trust" is the issue customers raise most often when they explore whether cloud computing fits their business needs.

"There are now enough proof-points, enough track record for it to go mainstream," he says. "Company data are much safer inside Google than in a company's data centre."


Pushing Cloud 2.0


If Marc Benioff is not the high priest of cloud computing, then he's certainly its televangelist.

Eleven years ago he founded salesforce.com. Today his "enterprise cloud computing company" is approaching annual revenues of $1.5bn.

Its key product, a cloud service for customer relationship management, is used by organisations ranging from small charities to computer maker Dell.


For years Mr Benioff has been repeating his "no software" mantra, arguing that the old IT and business models of companies like Microsoft, SAP and Oracle are broken.


Cloud computing, he says, is a total revolution of how we use and pay for software, and it is spreading fast.


His company now offers services like Force.com and Vmforce.com that provide developers platforms to build customised cloud services themselves.


Once belittled by rivals, he now revels in the fact that they all compete to prove their cloud computing credentials.


For Marc Benioff, though, one cloud is not enough.


These days he speaks about the transition to "Cloud 2.0". Just as he once queried why enterprise software was not more like Amazon, he now asks why it is not more like Facebook.

Mr Benioff promises that new software like Salesforce's new Chatter will do just that.

"We are going through a major shift in computing," he says, where enterprise computing gets both more social (think collaboration) and mobile (think tablet computers, netbooks and smartphones).


Rentokil may be a case in point. Instant messaging software like "Google Chat has become a very powerful tool for us," says Mr Kinsella, while using Google's Android phones has made the enterprise software mobile. His new intranet, meanwhile, is getting a touch of YouTube: "We are using it carefully, but we now send out video messages to all employees, and they have the ability to comment."


Microsoft's direction is similar. It's new Office 2010 software, to be launched next week, makes steps to integrate both "social connections" and online services.


"People are working more and more from everywhere... home and workspace are merging," says Per-Olof Schroeder at Microsoft's Office software division.


Helpful downturn


Cloud firms are upbeat.


"The growth of cloud computing is phenomenal," says Fabio Torlini of hosting company Rackspace. "In the downturn all enterprises are asking 'what's safe to put in the cloud, and how can I save in the cloud'."


And there are other opportunities for growth. As connectivity improves, cloud computing can bring high-end IT services to developing countries.


Right now, says Google's Dave Girouard, cloud computing is just at the start of its evolution.


"All business computing will be more web-enabled," predicts Mr Dreyfuss at Gartner. "For some [companies] it will reach the point where it will be totally web centric."


Source: BBC news (bbc.co.uk (Μαυ 5, 2010))

Cloud computing: Privacy and trust up in the cloud

Fifteen years ago people carried their documents around on floppy discs, then many people switched to memory sticks, and now a few are turning to the cloud.

Cloud computing means the ability to access, change and interact with data on any platform with a net connection, including on smartphones.

These online services require no software purchase and installation and most run via a browser. Users can pick from the growing number of cloud-based offerings, such as Google Docs and Amazon's Elastic Compute Cloud (EC2).

Evernote is another system where various pieces of information, such as webpages, business cards and text notes can be collected into virtual and searchable notebooks.

But there are concerns that storing personal data on a server somewhere in cyberspace could pose a major threat to the privacy of individuals.

Phil Libin, Evernote's boss, said his firm offers a two-tiered approach to security.

"Premium users have all of their data go over SSL [encryption], kind of like an online banking site. Free users currently are sending data back and forth just over http - the standard way that the web operates," he said.

"Your username and password is always kept encrypted. We don't see what your password is, we can't unencrypt it - no one will ever ask for it," he added.

Trust value

Dropbox has more than four million customers who can upload digital content which is permanently synced across a number of their devices.

Adam Gross, senior vice president of marketing for the storage service said the cloud needs the trust of users.

"I think with any cloud computing service, it's important that the provider have a trusted relationship with those people using the service," he said.

He believes the cloud is "helping people keep their files backed up and safe and secure, rather than the old model where each individual PC user had to be responsible for it alone."

Mike Elgan from Computerworld.com warned users against being too trusting.

"Services say give us all your data and use the applications from the internet, and don't worry about anything, we'll take care of the security. It's a value proposition based on you trusting the provider," he said.

"What we've learned recently is that no matter how trustworthy the provider is, it's never as secure or bullet proof as you might think it is," he added.

Cloud danger

Unlike Dropbox and Evernote, some services do not synchronise data to personal computers and are based solely in the cloud.

An internet connection failure, or infrastructure downtime, is enough to cut people off from their files on these systems.

Many students have become heavy users of the free collaborative online tools that are based in the cloud. This has prompted some colleges to go as far as banning cloud computing completely.

Others like the University of San Francisco have to send out constant reminders that trouble on the net is unacceptable as a classroom excuse.

Chris Brooks, an associate professor at the University of San Francisco, said: "I'll tell students 'this [site] may go down, don't do your homework at the last minute. Just like the library might be closed at 2am on Saturday morning when you want to do your homework'".

"It's another way of learning responsibility," he said. "But I do think you have to be explicit with them that this is not always a 24/7 thing, so plan ahead."

Limited options

Not relying on the cloud entirely is one concern, but critics advise students to ponder on the physical location of their work, issues over ownership, and the rising fees for accessing it.

These factors may have to be taken into account by governments too in the future, and legislation could be needed to define new parameters for consumers.

Moving information to a virtual computer puts someone else in control of security, and there is an ever-present risk from hackers.

Mr Elgan from Computerworld.com said there was a lack of options.

"Keeping data locally or to manage all of its backup and maintenance yourself is also fraught with hazards. The hackers are going to go wherever the data is including on your own system," he said.

"The problems of managing an increasingly complex body of data is very daunting and that's one of the appealing things about cloud computing," he added.

Source: BBC news (http://news.bbc.co.uk/2/hi/programmes/click_online/8625625.stm)