Magazine article The CPA Journal

Cloud Computing, Accounting, Auditing, and Beyond

Magazine article The CPA Journal

Cloud Computing, Accounting, Auditing, and Beyond

Article excerpt

Anew wave of technologies for information sharing and work collaboration dubbed Web 2.0including blogs, wikis, news feeds, and social networks - is gaining recognition from accounting professionals. Another Web 2.0 technology, cloud computing, is becoming increasingly popular for business enterprise use. While there is not yet a universally accepted definition for cloud computing, as a general term it refers to providing large-scale computing resources over the Internet. This article provides a brief introduction to cloud computing and its impact on the accounting profession.

What Is Cloud Computing?

The computing resources provided in cloud computing fall into three broad categories of service: data storage, infrastructure/platform, and application software. Data storage is about storing and managing the volume of business data and valuable personal data for companies. In the infrastructure/platform category, cloud computing providers offer the use of computer hardware with system software, which involves operating systems, security, and network systems. Providers also take care of hardware installation, system configuration, and maintenance to make the IT infrastructure ready for a company to use. For application software, cloud computing allows companies to run a variety of software applications using cloud services without managing their own applications. These software applications include business applications that process business operations, such as sales, purchases, production, human resources, and productivity applications (e.g., office suites and communication and media applications). Yet it is almost impossible to provide services that fit into just one of these categories. For example, many application software services depend upon hardware and system platforms. It is also impossible to provide data storage services without having infrastructure and database applications involved.

In the past few years, many IT companies have emerged to provide services in these three categories. Because they are provided over the Internet and typical users do not know where the actual computing is carried out, they refer to getting the services "from the cloud." In comparing cloud computing with traditional IT, the industry is now more focused on providing readyto-use services rather than selling hardware and software to users who then have to figure out how to use them. From the viewpoint of users, they no longer have to buy hardware and software and then install and maintain them. Whenever they need computing power or IT services, they get them from the cloud - meaning purchasing and using the services available over the Internet.

There may be an analogue of today's cloud computing in the emergence of the national electrical grid a century ago - a time when companies stopped generating their own power and plugged into the grid for all their electricity needs. Today, cloud computing providers encourage companies to plug into the cloud to satisfy their computing needs rather than leaving companies to manage these functions by themselves. As a result, small companies may no longer need their IT departments, as everything they need can be obtained from the cloud, while large companies are expected to continue to maintain their IT responsibility in the areas such as Internet connections, firewall protection, local area networks, and workstations. The pricing method in cloud computing is similar to that of utility services where users pay for the usage with a fixed portion, a variable portion, or both. For these reasons, cloud computing is sometimes referred to as "utility computing."

Examples of Cloud Computing Services

Companies have a variety of cloud computing providers to choose from, depending on their needs; some of the most popular are listed below. In the data storage category, Nirvanix ( offers fully managed data storage service through a delivery network to enterprise customers. …

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