Tag: risk

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Cloud IT: Hiding Complexity and Risk

jmbunnyfeet

Cloud IT: Hiding Complexity and Risk

Cloud computing and Internet technologies have delivered previously unimagined capability for even the smallest of businesses – capability to compete, build brand recognition, and reach markets in remote geographies.  The mantra for businesses used to be “location, location, location”, but it’s become connectivity – perhaps even more than location – which now delivers business opportunity.  As technology has evolved, allowing businesses and consumers to connect regardless of time or place, the complexity of the systems and networks have also increased dramatically.  Where a business could once easily identify their various vendors or business service providers, the identification of those involved in the service ‘delivery chain’ are no longer so easily recognized.   Among the benefits of cloud computing technologies is the ability to reach beyond traditional boundaries.  The risk for many businesses is in not fully understanding how, and with whom, those boundaries are being crossed.

For many an enterprise, the convenience and efficiency introduced with cloud computing models overshadows the increased risk potential.  Service level agreements and vendor contracts are assumed to be sufficient to protect the business and its information assets, yet recent events (such as the recent reveals of PRISM and the actions of the National Security Agency) should cause businesses to look a little deeper at their entire provider network.  It’s not that the average business should be concerned about government snooping of their emails, but they should be aware of who has access to their systems and data, and which entities are responsible for which parts of the system.  It’s only prudent to know the details, and it is the best first step to mitigate business risk.

Enterprise Clouds are complex, sophisticated entities which invariably rely on a daisy-chain of third parties and contractors to help build, run and maintain their Cloud provider’s systems. The organizational and technical complexities are additive, resulting in increased systemic risk. Systemic risk is the least visible and hardest to eliminate, and those risks become real when the providers’ systemic risks become [yours].

The question is, how well does your Cloud provider manage the ecosystem of contractors and third parties that are farther down the food chain? This is even more relevant in the globalized workforce, where, paradoxically, Cloud and related technologies have greatly facilitated the outsourcing and offshoring of work to low-cost countries. http://www3.cfo.com/article/2013/6/data-security_prism-national-security-agency-edward-snowden-cloud-implications-vendor-management

Before executing a service agreement with an outsourced provider, make certain that the details of facility, connectivity, network, equipment, and other elements of the delivery and system are spelled out.  Business subscribers should know where the various points of failure exist, and which company is responsible for dealing with each.  If a carrier fails and connectivity to the data center is lost, the hosting service provider may be powerless to impact the situation, even though access to service is part of the SLA and requirement.  If a hosted software product has a vulnerability or fails to perform, the developer of the product is likely responsible, rather than a hosting service provider.  The point is that there are often multiple players in the delivery chain, and customers should be aware of this reality prior to engaging with the service.

Ultimately, the business with mission critical data in the possession of a 3rd party service provider should have a healthy helping of doubt as to whether the provider has full control over their environment.  Business owners, managers and CFOs should recognize the increased necessity of evaluating risk within their provider systems and in provider/vendor relationships, to keep trade secrets secret and prevent intellectual property from becoming the property of others.

Joanie Mann Bunny Feet

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J

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Trends Impacting Every Business | Forbes.com

Trends Impacting Every Business | Forbes.com

You think good accounting isn’t a big factor in getting business credit?  Consider this tidbit from Intuit’s CEO Brad Smith, from a recent article on Forbes.com:

Two-thirds of Intuit’s QuickBooks customers were declined a loan due to poor FICO scores and other credit measurements. In the Loan Finder trial, a business could opt-in to allow banks to use QuickBooks data to evaluate if a prospect was a credit risk. As a result of this additional data, the banks provided several hundred new loans with an average of $10 million dollars.

Accounting professionals… isn’t this something you could be helping your clients with?

Read more about helping make small businesses bankable 

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J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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Dashboard Reporting Tools: Gauging Accounting Relevance

Dashboard Reporting Tools: Gauging Accounting Relevance

Dashboard reporting tools can be of great assistance when accounting professionals want to help their clients understand how the business is performing.  In most cases, these tools do a good job of showing owners the details of the profit and loss or cash flow reports, presenting the information in a way that non-accountants can understand.  Many accounting professionals have turned to these reporting solutions to increase the value of the accounting work performed.  After all, if the client can’t really understand the P&L and the Balance Sheet, then the reports won’t do them much good.

While simplified graphical reporting solutions are beneficial to the business, providing more insight into historical business performance, they don’t do much for the client on a daily basis if the accounting data isn’t up to date.  Accounting professionals should recognize that these dynamic reporting solutions, tools which can provide business owners with real-time information on business activities and performance, can go a long way towards increasing the relevance of the accountant’s involvement in the client business.

Accounting professionals today are fighting battles on several fronts, and remaining relevant to the client is one of them.   This isn’t too surprising, given that many accounting professionals see their clients only at year-end when the tax return needs to be prepared.  In some cases, the business owner doesn’t even remember the name of their accountant – they just know they went there last year at tax time.  This arm’s length relationship between the accounting professional and the business clients leaves a lot of opportunity on the table for both parties.

When accounting professionals aren’t closely involved with their clients, they risk losing the client to a more attentive, consultative professional.  Many firms believe that the low profitability of bookkeeping and processing daily work for clients means that they should focus only on “higher level” opportunities, yet business owners will tend to seek advice from those who work with them on a regular basis, and who understand the issues that challenge growth and profitability.

Accounting professionals who recognize the value of providing regular bookkeeping services to their clients also recognize the value of working closer with the client, providing useful and actionable information rather than historic data long after-the-fact.  These professionals are more likely to reap the rewards of “higher level” engagement opportunities from the client, because they help to identify the need and are able to support it with real data and insight earned through regular involvement with the business.

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about Data Warriors: accounting in the cloud
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Surprise! Consumer apps get IT approval in small businesses: GIGAOM.com

Surprise! Consumer apps get IT approval in small businesses: GIGAOM.com

In a recent article on GigaOm, author Barb Darrow discusses the findings of a survey of small businesses in the US, UK, Canada, Australia and New Zealand, where it was found that the use of “consumer” information technology is being more widely accepted for use in small businesses, and that many of these selections are happening without the knowledge or participation of the IT department.

“Employees are driving business apps selection in many small and medium businesses, according to new research. A good percentage of productivity, social and collaborative apps now sanctioned by IT in SMBs were brought in by workers without IT knowledge.“

Reporting that small businesses are adopting “consumer” IT, and that it is OK with IT departments, isn’t a surprising finding.  Small businesses have begun leveraging mobility and cloud solutions to their benefit, being able to take advantage of powerful technologies that previously only enterprise IT departments could enjoy.

 “.. the line between personal and workplace technologies has become all but invisible. That poses real challenges to IT departments that have to deal with all sorts of technology coming in over the transom. But it also opens up opportunities for vendors that design easy-to-use consumer apps to enter the business realm as well.”

The cloud introduces new agility and capability for all businesses, not just small business. For IT departments in larger businesses, this is a big IT management issue. For smaller businesses, the IT manager is often the business owner or an occasionally contracted on-site technician.  When faced with IT needs in the business, many small business owners will at some level rely upon the solutions they also use in their personal lives – in many cases, there simply isn’t a budget for both.  The line between business and personal has always been “blurry” for the small business owner.

Make Sense?

J

Read more: Disruptive Trends = Emerging Opportunity: Adapting to a changing technology and business environment

What will my business be worth, when I need it to be worth a lot?

bodeguy

Business Enlightenment

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  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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Knowing More: CFO and Accountant Value in Understanding Business Operations

Knowing More: CFO and Accountant Value in Understanding Business Operations

Accounting professionals are being pressured to deliver more value and intelligence to their business clients every day.  The pressure comes from a variety of areas, not the least of which is the fact that a lot of do-it-yourself tools are now available which lead business owners and managers to believe that they know what’s going on in the business.  Lots of charts, graphs, and dashboard presentations make the numbers more readable, but they don’t say whether or not the numbers are even right.  Even more important, they don’t deliver insight based on experience and understanding.  This is where the accounting professional’s value really comes from – providing insight based on good data and quality data analysis backed by experience and understanding of the business.

You can’t be a good CFO or a strategic business partner to your CEO until you thoroughly understand operations and how they drive performance,
CFO.com (http://s.tt/1rtoZ)

Knowing what makes a business valuable is important, but what many business owners don’t fully understand is how to best increase that value.  Generalized reports which summarize financial information, distilling it into a standard set of metrics, often don’t tell the business owner what they really need to know – how to go about increasing the overall value of their business, whether it is through improved profitability or through growth.

The business owner understands the operations, but not necessarily how operational activities actually impact value and profitability.  Helping owners know more about their enterprises requires that the accounting professional also know more, where gaining a deep understanding of operations and learning what business functions are addressed and how becomes the key to bridging the gap between operational knowledge and business valuation. This is where the accounting professional or CFO can really make a difference, and can help to apply their knowledge in building business value directly towards those areas which fundamentally impact it.

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about Data Warriors: accounting in the cloud
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Cash flow troubles can get you in more than just debt: CFOs can be liable for Payroll Tax liability, potentially criminal

Cash flow troubles can get you in more than just debt:

CFOs can be liable for Payroll Tax liability, potentially criminal

With the economy being sluggish and, in some regions, stalled and even worse, a lot of businesses both large and small are feeling the crunch.  Cash isn’t coming easily for anyone, and the cost of running the business and employing workers just keeps going up even if revenues don’t.  Managing cash flow is important when there is cash to manage, but keeping it all going when there isn’t much coming in takes real skill and planning.   Knowing where to cut or limit expenses is essential, but knowing what NOT to forgo when paying the bills can be just as critical if not more so.  You don’t pay the light bill, maybe the lights to out.  You don’t pay payroll taxes, maybe you go to jail.

A recent article on CFO.com discusses the findings where, in cases where payroll taxes were unpaid by the business, specific individuals were held directly and personally responsible for the liability.  And the liability is not contained solely within the walls of the C-level; it may extend to any and all individuals considered to be responsible.   Those who control the purse strings, making the daily decisions on what to and what not to pay, are the folks being identified as responsible for the failure to pay whether they were able to come up with the funds or not.

Responsible individuals, according to the penalty, may include corporate officers, directors, shareholders, bookkeepers and even third parties, such as CPAs, or corporate counsel. In exceptional cases, responsible individuals can have criminal tax liability for failure to pay payroll taxes.
CFO.com (http://s.tt/1p9wf)

To be fair, insufficient funds may seem like a logical reason for not paying payroll taxes. But the Ninth Circuit Court of Appeals in another case, United States v. Easterday, 564 F.3d 1004 (9th Cir. 2009), determined that Easterday could be convicted of a crime even though he may have been able to prove that his company didn’t have enough funds to pay the payroll taxes.
CFO.com (http://s.tt/1p9wf)

Accounting professionals working with businesses and acting as the Trusted Advisor can help their clients avoid facing this type of decision and risk by helping them to monitor and actively manage their businesses more closely – at an operational as well as financial level. Rather than relying upon a current bank account balance or after-the-fact financial reporting to provide the information for making decisions each day, business owners need continuous, real time, actionable data to help them keep the business going forward, and to help keep them out of trouble.

With better information, trend analysis and a little forecasting, accounting services and consultative advice from a trusted accounting professional does not simply help the business stay in business, it could help prevent the business owner, CFO or controller from having to wear an unfashionable orange jumpsuit and shackles.

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud