Considerations on Cloud Computing for CPAs

Article excerpt

One service that is changing the landscape of business and information technology in significant and far-reaching ways is cloud computing. Cloud computing is an efficient, on-demand service that uses the Internet and central servers to store and access information remotely. It has been around for many years, but has gained visibility recently through applications called integrators. Cloud computing ties each component together to allow users to go from ordering cloud space to using the space in less than one hour. CCH, the developer of the ProSystem Suite of accounting software, is making headway in the world of cloud computing; it continues to work toward using the cloud to house CCH products. Other accounting-related programs, such as QuickBooks, Peachtree, and BNA, can conceivably be hosted in the cloud as well. This article will discuss the benefits and drawbacks of cloud computing and how it can be useful to CPA firms and their clients.

Problems with Servers

Traditional software applications such as Microsoft's Dynamics GP can be complicated and expensive. They run on bulky servers and reside in data centers that are responsible for the powering, cooling, networking, and storage of these applications. Traditionally, IT professionals or consultants are tasked with physically installing, configuring, testing, and running company servers while also providing backup and restore support for any production failures.

The average lifespan of a server is only three to four years, depending upon size and usage. In addition, some accounting firms may not require large amounts of server space for the months of the year outside of the busy season. This could mean they are wasting resources on a system designed to meet the needs of the peak season.

From a business continuity perspective, housing servers and their backup in a single location places organizations at a great deal of risk of losing important data The risk of losing significant information such as client records, quarterly sales figures, and tax ID numbers is worth considering if something happens to the server location.

Advantages of Cloud Computing

Businesses can reduce the use of space, equipment, and IT labor while improving application backup with cloud computing. It is scalable and flexible. Instead of building, owning, and staffing a data center, cloud computing lets outside experts take care of the management, maintenance, support, updates, and upgrades.

When users utilize an application that runs "in the cloud," they log in to a customized interface and can then begin working. Businesses using cloud servers can bring ideas to market faster and respond quicker to customer needs. Some accounting firms already run all types of custom-built cloud computing applications for customer relationship management, human resources, and specialized accounting needs. Through cloud computing, these applications can be up and running in minutes, which traditional business servers cannot do.

Cloud programs provide a cost-saving opportunity because businesses do not pay for staff, products, or facilities to run them on their own. Their sharing of the physical hardware with other users distributes the cost. Payment for cloud-based applications is bundled into a monthly subscription, so companies only pay for what they actually use. The model is similar to paying a monthly electricity bill, which is based on voltage used.

Within the accounting profession, there has been debate about the effects of cloud computing on capital versus operating expenditures. The current literature does not suggest a financial benefit in moving the costs from one area to another. Nevertheless, there is a business benefit in having a cash outlay over time become a fraction of an upfront investment over the same period of time.

Security is an important factor for CPA firms to consider. Security safeguards for cloud-computing users continue to improve due to advancements in network, microprocessor, and virtualization technologies. …