Category: online accounting

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Cloud Computing and Online Accounting for All? Some Markets Are Still Waiting for Broadband

Cloud Computing and Online Accounting for All? Some Markets Are Still Waiting on Broadband

As the information technology industry espouses the benefits of the “paradigm shift” in computing and the move to cloud computing platforms and models, there are folks out there in the world who just aren’t seeing it happen like that.  Not everybody’s working online. For many, the Internet and online working models simply haven’t intruded into their lives and businesses as it has for others.  While this may be partially rooted in conservative mentalities and beliefs which are resistant to change, the more likely reality is that options for high-quality and affordable broadband service is simply not available to them.  Without choices for affordable and useful connectivity to the Internet, online just doesn’t have the attraction it does for those who are “connected”.

When businesses look at cloud solutions and the Internet dependency that comes along with them, having more than one connection to the outside world becomes the imperative rather than a luxury.  Unfortunately, some markets are still waiting for broadband (or have very limited options for service), rendering the cloud nearly unreachable.

It may come as a surprise to some, particularly to those in East and West coastal regions, that high speed broadband just isn’t as available in other zones.  In fact, the *National Broadband Map clearly reveals limited availability and choice in numerous regions of the US.  Broadband Internet access is a necessity to support the IT industry’s shift from localized IT to “cloud” IT.  But the shift is only evident to those who are involved in it or who have that option.  For those who the industry is beginning to refer to as the technology “have-nots”, this lack of available and affordable access will ultimately create more than simply an inability to participate in broadband-reliant IT solutions.  The fast pace of innovation and evolution in IT almost guarantees that the technology have-nots will fall even further behind, possibly to the point of not being able to catch up.

 “A Growing Gap Between IT Haves, Have-Nots. There will be a growing gap between the IT haves and have-nots in 2013. The latter will fall behind the former on a wide range of business technology fronts such as mobile, cloud, social, virtualization, and analytics…” 7 SMB Technology Predictions for 2013 | InformationWeek.com

As business (and personal) technology models continue to evolve, and as new solutions and services begin to displace the old, those who remain disconnected will begin to directly experience much more impact.

Consider something as simple as using QuickBooks desktop software for small business bookkeeping.  As Intuit continues to remove elements from the installed software product, turning them into web services instead, customers with limited or no broadband access will find themselves without the features and functionality they need in the software.  And the only possibly comparable alternatives to QuickBooks desktop accounting products are Internet-based alternatives, making them not really alternative options at all.

It is also likely that lack of sufficient broadband is one of the factors motivating many solution providers to seek clients in other markets – outside of the United States, and in regions where broadband availability is more prevalent and service speed and quality is higher.  Yes, it’s true.  The United States is not the leader in broadband availability, or even in quality.

“For many people, their broadband connections are their lifelines. So what is the state of broadband in the U.S.? Well, when it comes to speed and price and adoption, we’re certainly not a leader — “middling” is a better way to describe our position.

Currently 119 million people that live in the U.S. don’t have broadband connections (for many reasons, including not wanting it or not being able to afford it) while 19 million don’t even have the option to get it. Our rate of broadband adoption (62 percent) lags behind countries such as South Korea, the U.K.,and Germany, according this year’s Federal Communication Commission report. (We’re closer to the penetration rates to Japan, Finland, and Canada.) These numbers are not likely to change soon, given that broadband growth is slowing and providers are moving away from wireline infrastructure. “ GIGAOM:The state of broadband in the U.S. [infographic]

Accountants and other professional service providers serving clients in regions lacking sufficient choices for access must recognize that their approaches to doing business will not necessarily match their peers in more fully connected areas.  Certainly, accounting and legal professionals are dealing with this reality as practice coaches and industry leaders push for IT- and cloud-enabled models for improving practice performance and creating differentiation, even as their proven applications and business solutions morph into or are replaced with SaaS applications and online service.

The take away from this is that there are still large numbers of businesses and individuals doing things with legacy tools, managing spreadsheets on standalone PCs, or writing with pens and using paper – even in areas where broadband access is plentiful.  Regardless of how forward moving the rest of the world may be there remains a need to provide service and support these IT have-nots.  Perhaps this becomes a means for differentiation, finding ways to work with businesses who are connected and those who are not, and leveraging the firm’s access and capability to deliver what the client cannot obtain directly.

Make Sense?

J

*The National Broadband Map is a tool to search, analyze and map broadband availability across the United States

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Accounting Professionals, Software as Service, and DIY

Joanie Mann Bunny Feet

The question begs to be asked “how did we get here?” (with “here” being the current state of information technology and the accounting industry). There is confusion in the market; there is still significant debate as to the underlying value of Internet technologies and online application services, and the “managed enterprise approach” has yet to return the benefit and cost-efficiency that is expected.

The accounting industry is experiencing continued change, and understanding the progression of events and technology developments can provide significant insight into where the industry is today and where it will likely be tomorrow. Most professional accounting firms recognize the need to implement technology and solutions that will help the firm and its clients compete in today’s market. Understanding the options available and imperatives that drive the need is key to making the right choices

Technology to manage general business and financial processes has evolved tremendously in the past 20 years, and history clearly reveals that those who have successfully adopted such technologies have done so in stages. Bridge technologies and services (which I fondly refer to as “tweeners”, like cloud hosting of legacy applications) provide a means for safe and low-risk adoption of online working models and managed IT services.

Application hosting solutions have achieved a high level of acceptance in the market, and these are the services that have assisted in garnering online users for the purely Web-based (SaaS and cloud) applications. Providers delivering their “legacy” applications using terminal servers, Quest, Citrix and similar technologies offer the full capability of the Windows application along with the rich Windows interface, as well as the benefits of ASP service and Internet accessibility similar to the Web- app (e.g., the “software as a service” model). This familiarity in functionality and presentation has made adoption of hosted deliveries of these applications a harmless and often seamless transition from localized IT models.

Once a business has adjusted to working online and outsourcing the management of the general IT service, taking the step towards a “true” SaaS solution is much less of a step.

However, trends in the software industry indicate that the concept of “software as a service” has been taken several steps beyond simply providing online access to applications, and are offering outsourced support and finished product deliverables rather than just the software application. For example – an accounting professional may obtain a “finished client tax return” rather than simply purchasing the tax preparation software.

For many emerging Web-based applications, this is the positioning and model which is selected to bolster adoption of the solution.  There has been a great deal of success in offering business users access to a solution, and then providing the actual business service behind it as users find it easier and more efficient than doing the work themselves. This activity has focused on the direct customer and consuming market, where business applications are not sold separately, but as a function of getting the business process facilitated. CRM and helpdesk services are frequently offered this way, as are HR administration and payroll services. The technology has matured to a point where the outsourcer can facilitate the internal business process on behalf of a business fairly transparently, including business bookkeeping and accounting.

All of this serves to devalue the knowledge required to perform the business and accounting processes. There is a belief that has been marketed very well to the small business sector – “if you can write a check, then you can do your own books”. This concept has not proven as realistic as many would choose to believe. But it earned – and continues to earn –  market share. With the trend in software becoming the transparent outsourcing of the processes, is the consuming market likely to recognize the expertise required to manage the outcome?  Retail providers of accounting, tax preparation, and other services (H&R Block, as an example) have quite successfully marketed against the need for businesses to engage with a skilled credentialed professional.  Accounting professionals who do not view this as a threat to their value are simply not paying attention.

Today’s accounting professional must address the realities of Internet technologies, outsourcing, and retail or consumer-direct competition, and the potential impact it will have on the businesses (the client business as well as the professional practice). Recognizing that accountants (by trade) are not typically technologists, it is important to understand that involvement with the financial processes causes a necessary level of involvement with the technology, as well. Professionals who understand and embrace the appropriate use of technology and outsource models are the professionals who will continue to demonstrate their value and expertise to their client businesses and to the market.

With the industry generally moving towards an online, enabling model, those who do not embrace such technologies will rapidly find themselves attempting to compete. As the trend continues to devalue the backoffice processes by essentially hiding them from the consumer (the client business), the position of the accounting services provider is also devalued.

By embracing the technology/enabling model now, the professional service organization positions itself to function as seamlessly with the market as the online service. A clear example of such activity is the emergence of free e-filing of tax returns and the prevalence of low-cost do-it-yourself business bookkeeping and accounting solutions online. Reports indicate that there continues to be a marked decrease in the number of returns prepared by professional organizations as compared to the significant increase in volumes of online do-it-yourself return processing. This has clearly devalued the tax preparation service in the eyes of the consuming market, bringing it down to a level where price is the sole differentiation.

The solution is to fully “enable” the professional services organization, and provide the foundation for seamless delivery of services to the consumer. Once an online working model is adopted within the professional service organization, it gains the opportunity to change and reconstruct internal systems without concern for direct client impacts.

Just as the online application can render the computing platform irrelevant, so can the professional service delivery render the supporting applications irrelevant. This offers the professional service provider the flexibility and freedom to use or develop systems that create differentiation through the underlying process rather than forcing frequent change upon the client.

Make Sense?

Joanie Mann Bunny Feet

J

Have questions about hosting business applications (like QuickBooks)?Are you looking for help developing your IT-enabling model?  Need assistance convincing clients to use the cloud, or onboarding clients to cloud services?

We can help.

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Many Companies Are Negligent About SAP Security, Researchers Say – CIO.com

Is your hosting service provider helping to keep your critical business applications secure?  It is not enough to simply harden machine images and develop policy-driven access; application hosting providers need to understand the vulnerabilities introduced by each and every application in the environment.  Otherwise, the system could be exposed to threats directed specifically at the application environment and opportunities it presents.

Many hosting providers will offer customers service for any business application they have, and often provide those services with no significant experience or expertise in dealing with configuration or security issues specific to those applications or environments.  Consider the following report from IDC which indicates that numerous SAP deployments remain vulnerable to attack or intrusion, even though SAP has improved security of the products. The problem rests not exclusively with the SAP applications, but also with the approach to implementation of systems and security around those applications.  Understanding the various vulnerabilities introduced with SAP products is the first step to securing them.  Certainly a skilled IT solution provider is likely to offer a high level of service and capability, but there may be issues presented by various products (like SAP) which introduce additional or unique considerations, and it is important for the service provider to be aware of and address them.

Joanie Mann Bunny FeetMake Sense?

J

IDG News Service — SAP has significantly improved the security of its products over the past few years but many of its customers are negligent with their deployments, which exposes them to potential attacks that could cripple their businesses, according to security researchers.

The biggest issue is that companies expose insecure SAP services to the Internet — not only HTTP services, but also critical administrative interfaces, Alexander Polyakov, chief technology officer at ERPScan, a developer of security monitoring products for SAP systems, said Tuesday.

Between 5 percent and 10 percent of companies that use SAP products expose critical services to the Internet that shouldn’t be publicly accessible, Polyakov said. This happens because they want to enable remote management or because of improper configurations, he said.

Most of the services have vulnerabilities that can be easily attacked, Polyakov said.

Publicly available exploits exist for many SAP vulnerabilities, including some that are part of Metasploit, a popular security testing tool.

The percentage of companies with exposed SAP services differs from country to country. The situation is better in North America and Europe and worse in the Asia-Pacific region, Africa and Latin America, Polyakov said. However, even 5 percent translates to a very large number of companies, he said.

via Many Companies Are Negligent About SAP Security, Researchers Say – CIO.com.

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Client Solutions, not just Professional Services

Client Solutions, not just Professional Services

Accounting Professionals serving a small business client base are struggling to find ways to demonstrate the value of the services they provide, yet many firms remain focused exclusively on their own processes and improving profitability therein rather than looking “outside the box” to see how they might involve the client in the discovery.  The obvious element which these firms are not addressing is the client user, and how a direct participation by the client becomes the foundation for internal process improvement.  After all, a lot of what accounting professionals are battling against is perceived value.  If the client were to be a more direct participant, the value of the work and the tools which support getting it done could provide a more tangible or visible aspect and increase the overall value perception of the client.

It is easy to say “get the client more involved”, but actually doing it can be the real challenge.  Professionals are recognizing this reality as they attempt to engage client users in online portals for document exchange and by providing application functionality which is supportive of the accountants’ processes.  While some professional firms are experiencing success with this approach, many other firms are not.  There are likely a variety of reasons why some firms have more success than others in getting clients to work with their online tools, but I believe there are two key elements which impact success:  accountant-centric focus, and provider lock-in.  Whether these elements work to the firms’ advantage or not depends solely upon the specifics of the service model and client market being served.

Accountant-centric focus

Most accounting professionals recognize that paperless approaches to working with client information and documents makes a lot more sense than working with the actual paper.  Particularly with the innovations in image capture, OCR and zero-entry solutions, it is logical to try to get as much of the required information transformed into useful digital data as possible.  Data entry time is reduced, accuracy is improved, and the resultant information is better and more useful and may be processed more efficiently… for the accounting professional.  For the client, on the other hand, it’s just another way to get information to the accountant (who is always wanting more information).  The value of the deliverable – the reconciled bank account, financial report, tax return or whatever – isn’t increased.   The solution often offered to the client is a solution intended to solve not the client problems, but the accountant’s.  For the client, it is difficult to see this as a “solution” to any evident problem they face.

Provider lock-in

Business software customers are often commenting about how the solutions they use don’t allow easy transition to alternative products, or add-ons are only available from developer-prescribed sources.  Vendor lock-in is a consideration and may be a barrier to doing business, because business owners want to know that they have the ability to change as business requirements change… whether it means changing software and systems, or whether it means changing professional service providers.  As more professional service providers attempt to engage their clients in technology-based approaches to doing business, clients are recognizing that these approaches may come with “strings attached”, limiting their future choices.  While it is important for the professional services firm to protect its work product, it is also important to consider the client’s position.  Part of every business relationship is trust, and that trust should not be one-sided.  Just as the professional trusts that the client will work with them in a legitimate manner, so does the client trust that their professional will not hold their information hostage if they elect to make a change or engage with other providers in the future.  Additionally, does the system provided by the accounting firm allow the client to collaborate with their own team members or other service providers, or does it address only the interactions between the accounting pro and the client?  This also represents a barrier to participation, as any given client business likely interacts with a variety of providers – many of whom are also asking that owner to implement solutions which improve their ability to do a form of e-business together.

As accounting service providers look to technology to facilitate closer and more efficient working arrangements with clients, they would do well to also consider how that technology is positioned to benefit the client as well as the professional practice.  Delivering a solution which provides clients with the capability to control information access, which allows collaboration with their various service providers, and which facilitates a lean process approach for all involved could be the right answer to the problem.  Perhaps this becomes the most important factor – client enablement – and focusing on solutions which address the clients’ information management and processing requirements as well as those of the firm.

Make Sense?

J

Read more about Data Warriors: Accountants in the Cloud

Read more about using the cloud to extend “connectedness” beyond traditional boundaries

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The Cloud Makes Time Travel Possible: Hosted applications can deliver immediate business benefits

The Cloud Makes Time Travel Possible: Hosted applications can deliver immediate business benefits

In an article published on CIO.com, author Kevin Fogarty describes how moving to a cloud IT approach proved to be a highly beneficial and strategic decision for an on-site diesel fuel distributor.  The focus of the article was on how existing software and processes were enabled by centralizing them in a cloud hosting environment, and not by replacing them with new subscription-based applications.

For many businesses, this is the secret that nobody’s talking about: you can have the benefits of “the cloud” without having to radically change everything you have and everything you do.  Retention of knowledge assets is critical to business continuity, and moving existing systems and process to platforms where they can be leveraged to greater business advantage is a way to do that.  With centralization of systems and services, information can be processed far more efficiently than before, eliminating delays and improving cash flows dramatically.  Time is money, and the cloud helps businesses spend less of both.

“A lot of the invoices have to go out every day by certain times, so third-party accounting companies can do their thing for the fleet owners.” The setup sounds like a classic for any overhyped business-process-automation system, but Daniel Abrams and other Diesel Direct managers weren’t interested in managing their business using sophisticated business systems that require more motivation, money and technical staff than Abrams was willing to use or pay for.”

The initial benefit is being able to use the products already in place, just from a more secure and redundant location, but when you begin to consider the positive ramifications of reducing the time between delivery and invoicing, billing and payment receipt, or customer demand and product supply, you rapidly realize that the cloud means much more to the business than just another way to run software.

“Those changes save Diesel Direct both money and time. Rather than running reports and invoices all night Tuesdays, for example, the additional capacity lets the company run those resource-intensive processes during the day rather than overnight. That gets critical work done faster and more accurately than a process left to complete itself unattended.”

In short, the cloud makes time travel possible, because the result is available almost immediately upon completion of the task.  It’s kind of like getting your expense check as you walk off the plane in your home town, because you reported all your expenses in real time as they were incurred (snap a picture of the receipt at the bar, and like that).

Yet most business owners and IT managers for small and mid-sized businesses are being told that the cloud is best applied when innovation is required, and should be reserved for NEW things, and not thought of as a way to improve the status quo with existing or legacy architecture.

“It’s not unusual for mid-sized companies to come to depend on cloud services, according to James Staten, vice president and principal analyst for Forrester’s Infrastructure and Operations practice.

It is unusual for them to be more concerned with infrastructure than with applications, he says.”

With affordable and secure application hosting services being widely available for small and medium businesses, owners and managers no longer have to look to new solutions just to enable mobility, remote access, and a fundamentally stronger and better-managed system.  Legacy applications can be hosted and delivered, extending their useful life as well as the value of the development and intellectual property, and giving customers capabilities not readily available with local implementations.

“Diesel Direct can’t accomplish anything if its minimal IT infrastructure is offline for any length of time.

Abrams, worried about storms taking out his business as well as the power, didn’t know what technical solution he wanted until Callow “described for him what an enterprise infrastructure looked like,” Callow says.

“They didn’t need one, didn’t want one, but they did want the security, the reliability of a redundant IT infrastructure,” he says. “The most effective way to get that at the lowest possible cost is the cloud.”

Among the greatest benefits of outsourcing application delivery to a cloud hosting provider are the increased monitoring and security, application of best practices, and high levels of system fault tolerance and recovery capabilities offered.  While business subscribers focus on features and functionality of the application, the real focus for hosting providers is the platform – and the management and security of it.  This behind the scenes work offers tremendous business benefit to subscribing customers, but is often not the focus when discussing overall benefits of a cloud computing approach in the context of Software-as-a-Service, which is where many smbs focus their investigations.  As an alternative, businesses who may seek to adopt hosted solutions for their existing applications and software frequently do so for reasons of security and redundancy, not recognizing that their business processes may likely experience significant improvement, as well.

“Enterprises might have the luxury of making strategic decisions about cloud or other technology,” Golden says. “In mid-sized companies things are very tactical. No cloud evangelist is going around the refueling industry saying ‘there are ways to solve this problem.’ “Companies make tactical decisions to solve their own problems and, five or 10 years later, we’ll all wake up and realize we’ve changed the way we do everything,” Golden says.”

Make Sense?

J

The company in the article could be just like yours.  You don’t have to adopt new software and systems to benefit from the cloud.  How could your business change, if you could remove the problems of time and distance?

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In Bookkeeping, Accounting, and Information Technology: The Value of Outsourcing

The Value of Outsourcing

The small-business market, unlike the mid- and enterprise markets, utilize the general services of public accountants in much greater volume and typically for more fundamental business services – such as business bookkeeping and daily process support. Larger organizations typically employ accounting and bookkeeping departments and/or in-house personnel, and rely on outside accounting professionals for higher-level work. Small businesses, on the other hand, want to hand off much more of the core bookkeeping and checkbook management functions to their public accountant. This creates a volume of fairly mechanical work which can be burdensome and not terribly profitable for many CPA firms. But this level of work is of significant value to the small business owner, and thus the value of outsourcing to the accounting professional should be clear.

CPA firms started to step away from bookkeeping activities (this is in the 1980’s or so), reserving their time for compliance, audits, and other engagements referred to as the “higher level work”.  As business accounting became more complex (largely due to advances in information management technologies as well as accounting and tax regulations, which generated a LOT more detailed information to “account” for), many professional firms saw a need to focus on their core offerings, and not on the lower level bookkeeping and record keeping activities.  As a result, the emerging cottage industry of bookkeeping service providers grew in power and numbers, and came to represent a critical intermediary between the CPA and the small business owner.  Truly, bookkeepers and software consultants are often the folks who help to automate the processes, capture the information, and organize the data so that it is useful to the accountant.

The issue that revealed itself was that small businesses started to pay more attention to the technology and business solution advice and direction of their bookkeepers and consultants than the advice of the CPA.  In a lot of cases, the CPA kept an arm’s length from the business, concerning themselves with their tasks, and not paying significant attention to how the data is collected or controlled.  As long as they got the data, that was OK.  As the reality started to set in, that bookkeeping and information management consulting also delivered the “higher level” accounting work, CPAs once again sought a means to gain more direct participation in the client business… but through a somewhat less direct manner than previous.  Now, partnering was revealing itself as the means to more fully engage the business, and the bookkeeper or consultant, in the overall accounting value chain, resulting with the delivery of work as well as value back to the accounting professional.

The enabler of this value chain, where the accounting professional, the bookkeeper, and the business owner can all work in concert without limitations in systems or based on location, is the cloud.  Providing standardization in terms of data platforms and integration, offering mobility and device independence, and combining resource management and access into a comprehensive approach to solving business problems is enabled through cloud technologies and connected solutions and services.

For many, this concept of fully technology-enabled business seems frightening, like a loss of control or individual accountability.  But it’s important to recognize that, as things become more complex, the opportunity for specialists is always created.  In the ever changing world of technology, it’s a dangerous approach to believe that you can be all things to all people, just as in accounting or tax.  You can’t be a specialist in every area, so you specialize in your niche, do it better than anyone else, and outsource/partner to get the rest done.  This is a philosophy of the cloud, and it’s working.

The true value of outsourcing, whether it is a small business outsourcing their bookkeeping and accounting to a public accountant, an accounting professional outsourcing bookkeeping work to a bookkeeping provider/partner, or those businesses outsourcing information technology management to cloud solution providers, the end-result can include improved focus on the core business, greater agility in embracing and adjusting to new strategies, improved quality of information through attention to process and control, and a much higher level of value delivered to all participants in the value chain.

Make Sense?

J