Both sides now.
The advantages are:
• It makes it convenient as you can work from anywhere.
• Minimise cost of IT support consultants and extra hardware such as servers.
• Solutions like Xero are investing heavily in automation of accounting tasks.
• The data is stored on server farms with multiple backups and higher spec firewall for security.
• Software upgrades are done automatically at backend without the user having to do anything.
The disadvantages are:
• To access your data, you are entirely dependent on your internet connection so if it goes down or runs slow you can’t work (I’ve seen people waste half at their office is in Waterloo). With a LAN connection, you remain in control, with faster to response times for more complex transactions and reporting.
• As the data is sitting on a third-party system you won’t know where your data is stored (some servers are not even in the UK). As a director one of your responsibilities is to know where your data is located, which is not possible with this technology. Most vendors will not allow you even to keep your own backup. (I have seen one company have their company file locked as they had an argument over charges).
• If you out source your data business owners lose the discipline of standard security practices. If a staff member leaves, an employer will remember to take their mobile, laptop and the car but won’t remember to change their password. There have been instances of ex-employees who go on to work for a competitor, log in to their old works system, and undercut their previous employer for the same job.
• The cloud will be compromised at some stage. I don’t care what people say, if the Russians can walk through JP Morgan’s systems for the fun of it, then a cloud based system will be breached. The implications under the upcoming GDPR regulations will be interesting. A firm of accountants had their system breached and the perpetrators where able to lodge all their clients tax returns, change the bank details to collect all the refund money. I believe that accounting firm is no longer trading.
To be continued with “Issues involved with Cloud Accounting Software”
About the Author:
Malcolm Ford has 25 years business experience on two continents and now implements different accounting software and other solution to companies across the UK. He is a specialist in Excel programming and in creating dashboards for live financial reporting.