Tag: small business

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Growing Up: Software buying decisions throughout the business life cycle

Two-TallThere are two certainties in life – death and taxes. While both are unavoidable, at least the taxes issue can be managed. Managing taxes and business finances in general takes detailed information. Considering how most small businesses get their start with business bookkeeping and accounting, it’s no surprise that information gathering becomes one of the most time-consuming and frustrating tasks around tax time. Fixing the problem from the beginning and implementing a system to manage the detailed information the business needs on an ongoing basis is key to avoiding the rush as well as building a business information framework that might span the life of the business entity.  Yet fixing the problem for this year’s tax information gathering is relatively simple compared to figuring out how to format, retain, and continuously collect and compile new data for analysis throughout the life of the business.

In order to understand how to address the problem, it is important to understand the evolution of business accounting. Not how the concepts or practices have evolved, but how technology has (or has not) been applied to certain problems, and where the gaps are.

Starting Up

The first things a new business owner generally does is get a business license, get a computer, and run down to the discount store to buy a copy of QuickBooks or maybe Microsoft Excel. Now, this business owner isn’t necessarily prepared to properly handle the accounting for the business, but he understands that he has to do something. Keeping a check register, at the minimum, lets him know how much money is in the bank. And that’s what it’s all about for the small business person – cash flow and cash availability. But the focus on the checkbook frequently causes the business to postpone implementing deeper, more beneficial processes.

With a focus on the checkbook, the business manages cash by counting payments out and receipts in. But the nature of the payment or the receipt is the true question that must be answered and accounted for. It is surprising how many businesses still keep ledger cards – those manual 3×5’s in a box – where customer and vendor information is kept. It is a simple method, and provides the business a way to keep individual account records. But the fact that this detail information is not part of an integrated system creates a greater potential for lost or inaccurate data. Further, the greater the volume the more difficult and error-prone managing the information becomes.

It is at this point that the business seeks to find a more comprehensive means to manage the additional business data. This is another buying decision the business owner must make, introducing a new system which can handle the additional activities around accounts receivable, accounts payable, inventory and sales orders, etc. The business was already keeping track of products or services, customers and vendors. But here we are at a step where new systems and processes must be introduced. Although a belated effort, this after-the-fact implementation of customer, vendor and item tracking now establishes the means to manage more business activities as part of an integrated system.

The difficulty comes in loading the historic information and learning new systems. Depending on volume, the quality of the manually kept data, etc., it may be determined that historic transaction details are not to be entered. So, the business moves forward with a better system for managing business activities and data, but loses the value of the early transaction detail.

Volume and Growth

The business has implemented an accounting system which helps to keep track of customers, vendors, items, and cash. More detailed processes are introduced as the business requirement grows – offering perhaps more specific information on costs of certain products, or summaries of customer purchases or item sales activity. This data provides a much more informed basis for business decision-making, but also impacts the systems as the volume of data to be managed grows.

Growth may present itself in many ways – growth in the number of products or services offered, growth in the number of transactions processed regularly, growth in the dollar value of transactions, or growth in the number of employees who need access to the system. All of these areas impact the ability of the system to continue to support the business requirements. Quite frequently, a certain “density of data” is reached and the current system is not able to efficiently manipulate and manage the volume. Here again is another buying decision. Can the existing system be expanded to handle the additional volume? Or must a new system yet again be introduced? The business process requirements may not have changed, but the earlier choice of systems may cause a forced change simply due to business volume or number of users.

The frustrations of changing business systems are compounded the further into the business life cycle the change comes. Much of the historic intelligence of the business is derived from the earlier days of operation; data which reflects the stages and activities of the business over time. When a business reaches a point where data volumes force a systems change, a worst-case scenario occurs: The volume of historic data is too great for the current system, and loading it into a new system takes a huge amount of time and effort. Unfortunately, this task often proves too daunting for the company, so again valuable historic detail information is lost and summary information is loaded into the new system.

Operationally Specific Systems

As the business matures – and in order for the business to mature in a healthy manner – specific and detailed information must be captured and analyzed. Systems which take a broad view of the business, offering only general information and process support, frequently do not supply the business with the levels of intelligence truly required. For example, a manufacturing business needs to fully understand and manage the manufacturing processes and materials supply chain to ensure profitability and consistent product quality. A retailer needs to know which products sell in which markets in order to ensure product stock and availability to key customers. And all of this information is time-critical if the business is to make necessary adjustments in time to benefit from them.

This level of detail can only come from a system which incorporates a certain specific orientation towards the operational processes of the business. The fact of selling a product to a customer is an activity which gets recorded, but the additional details of the customer location, pricing levels, purchasing levels, salesman, inventory item, and warehouse location tell the rest of the story. Over time, the business owner can then better understand customer purchasing habits, inventory item turnover, supplier dependencies – a wealth of business intelligence. This data is then used to assist the business owner or management in determining the specific activities or actions necessary to keep the business moving forward and improving performance.

In the end, it is the demonstration of well-defined processes, deep insight into the business operational metrics and financial performance, and the ability to effectively and accurately report on this information that creates a basis for provable business value.

No Best Answer

When looking at the business accounting and finance systems available in the market – particularly considering those which have earned a level of market share – there are visible gaps – big ones. This is clearly reflected in the numbers, where Intuit QuickBooks leads in the small business market, but has no reciprocal in the midrange or enterprise markets. QuickBooks fits into that early space, where the business is just starting out and, maybe, extending into keeping more detailed customer, vendor and item information. MS Excel is also a winner for very small and new businesses, as the spreadsheet is a simple and easy solution to creating an electronic check register. But there comes a point where a business has requirements that extend beyond the ability of the small business software. Sometimes, the mere thought of change is so abhorrent (usually based on a bad initial implementation experience) that the business attempts to use the software far beyond what it was built to handle.

Other application makers offer systems that have a number of small business features, but that also offer more in-depth or complex capabilities to handle the growing business. These systems, too, have a great potential to be outgrown, and can be costly implementations which handle only a portion of the business life cycle.

Larger, module-based systems and frameworks offer a broad range of functionality, integration, and data management capability. They typically address more – and more detailed – business processes, and can scale to very large sizes. But the cost and complexity of these systems is often the barrier, and given that there is no clear seed product (small business version of the big business software), the upgrade path is unclear and problematic. Given the huge gap between the “typical” small business system and the upper-levels in the enterprise applications catalogue – the transition from very small to very large software is not likely to be made in a single step.

Losing intelligence with each step

Each stage of business requirement typically drives to a buying decision. This buying decision is met with angst, as considerations include not only cost, but data conversion vs re-loading, new process or system design and setup, user training, proofing the system (running parallel?) and a host of other issues, not the least of which is the business benefit to be derived.

The emergence of SaaS solutions and multitenant web applications has compounded this issue, as there is a tendency for such solutions to provide only list data and other easily exported data.  Transaction information and details are frequently unavailable for export to another solution, or the data may be exported but not necessarily in a meaningful form.

Small Businesses should be particularly concerned about whether or not the solution will fit the needs of the business for an extended period of time and through a variety of business conditions. The small business should also determine if there is a way to continue use of the solution (or transition from the solution) if the solution or the provider stop meeting the needs of the business. Small business owners are particularly at risk, because the SaaS solutions oriented towards small business users often don’t have the on-premises options that some of their enterprise counterparts offer. And small businesses are the ones who are most likely to need to transition to another solution as the business grows. Further, the small business user often lacks the technical knowledge to manage the conversion effectively, and doesn’t typically employ skilled in-house IT personnel to handle it for them. The result: consulting dollars get spent, just to retain the data the business already has.  http://jcmann.blogspot.com/2009/11/salvaging-business-intelligence.html

If information is power, too many businesses are losing that power when they migrate from one software product to another – they are losing valuable historic information by leaving transaction and other detail data behind when they convert from one system to another.  This should be an area of focus and key discussion point when any change to systems is considered.  After all, the insight and business intelligence gathered over the years was likely instrumental in helping the small business grow up to become a successful big business, and will continue to be important for years to come.

jmbunnyfeetMake Sense?

J

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Accounting Professional Value is Insight and Advice, Not Just a Hosted Server

Accounting Professional Value is Insight and Advice, Not Just a Hosted Server

Back in the late 90’s, when the application service provider model was first established, a number of providers recognized how beneficial it would be for public accountants to use hosted applications to work more closely with their accounting and bookkeeping clients.  Seeking markets which would rapidly adopt a hosted application model, these providers focused on hosting small business accounting solutions such as Intuit QuickBooks desktop products, and then sought participation by the largest addressable communities of users working with those products – QuickBooks ProAdvisors, bookkeepers and accountants.  The idea was that the community of QuickBooks professionals would benefit by bringing their clients onto the hosting platform, and service providers could sell to one professional and gain a bunch of small business users.  It made sense, too, as it allowed the professional to have a single service and login that allowed them to access all their client QuickBooks company files.  The client could log in to the system, too, delivering remote access and managed service benefits to the client, as well.  But there was a catch, and it didn’t fully reveal itself until recently as cloud-based applications and true SaaS applications began to gain market adoption.

The problem actually started to reveal itself as more businesses elected to adopt hosting services.  There’s a saying amongst the QuickBooks hosting providers that “nobody uses just QuickBooks”.  Saying “nobody” uses just QuickBooks is a bit of a stretch, but the reality is that numerous businesses use other applications and software solutions in addition to their QuickBooks product.  Sometimes these products integrate with QuickBooks and sometimes they don’t, but it is not often that a business utilizes just the one software solution.  At minimum, there are likely email or productivity tools in use, too.  The point is that the QuickBooks hosting providers – those hosts focusing on providing service to QuickBooks accountants and small business clients – realized that the number and variety of applications desired by their customers would grow very quickly, as would the variety of needed implementation models.  The unfortunate solution of the time was to just put it all on the same environment.

The original selling message to the QuickBooks consultant and accountant markets was that they should get all their clients on to the hosting service, and then the accountant could benefit from an “economy of scale”, making the cost of the overall delivery lower.  Further, by grouping the firm and the clients into a single hosting environment, it would make application and data sharing easier.  Both of these messages are true, but putting the firm and its clients into a single environment – with the firm as the “sponsor” and front line promoter of the service – began to have impacts which were not clearly foreseen.

  1. Accounting professionals and consultants changed the nature of their relationship with the client, going from trusted advisors to technology and solution vendors.
  2. Client business technology needs were placed as secondary to “enabling” the working relationship between the accountant and the small business client.
  3. Attempts to fully satisfy client technology requirements overburdened and impacted the environment, reducing overall service quality and satisfaction and diminishing the value of the scale economy (as well as the clients’ perception of their accounting professional).
  4. Firms structured their processes to support a single technology and operating model, and found difficulties in adopting new strategies or solutions.

In concept, having accounting professionals and their clients all working seamlessly together in the same systems sounds great.  For some firms, a cloud server packed with all the firm and client applications and data enables an entirely new business and service model, which is very cool and it actually works (for some firms and their clients).  But the problem – a problem which may not be fully revealed in the short term – is that the various businesses involved, from the accounting practice to each and every client, has different business needs and operates as a unique organization.  While there may be fundamental similarities, “the devil is in the details” as they say, and a single platform or hosting solution is unlikely to really work well for all.  Even more potentially damaging, the perception of the trusted advisor who is now viewed as a vendor of IT services or software erodes the value of the client engagement and the potential for the firm to deliver greater benefit through their core offerings.  A business owner is more likely to change vendors of IT service than they are their trusted accounting or finance professional.   And they’re also more likely to change IT service providers if the provider cannot deliver exactly the application or service desired.  When the accounting professional is perceived to be the IT service provider, the lines are blurred and the client ends up attaching their loyalty to a software product or business solution instead of the accountant advisor OR the IT provider.

With SaaS and native web-based applications being broadly adopted by small businesses, the opportunity for firms to engage with clients in different ways and with different solutions started to break the one-size-fits-all hosting approach.  Professionals found that empowering their clients by supporting properly fitted solutions which work for the client business delivered the opportunity to become more operationally and strategically involved with the client business.  Deeper operational and strategic involvement with the client became the means to drive increased value in the engagement and services offered and delivered.  The client business was able to benefit from the involvement of their trusted advisor, regardless of what platforms or systems might be in place.

Accountants and bookkeepers are recognizing that the previous model of aligning the practice with a particular software product or delivery system may not be the best approach to building and retaining the customer base.  With new business accounting and bookkeeping solutions emerging regularly – and gaining broad market adoption – and as more and more varied cloud based services and solutions are applied to various business problems – professionals will further recognize that their value is not tied to a cloud server, a single small business accounting solution, or to any particular technology.  The value of the accounting professional is not in the software they support or the server it runs on.  The value of the accounting professional is in the insight gathered and advice provided – services offered which help support better business management, growth and profitability.

Make Sense?

J

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Managing Client Relationships in a Down Economy | Accounting and Business Technologies

Managing Client Relationships in a Down Economy

There is no question that the current economy is putting the squeeze on many professional practices. While most accountants aren’t in danger of going bankrupt, there is heightened anxiety throughout the industry as professionals grapple with flat or falling revenues and rising costs. You, too, are probably feeling the effects of the economic downturn, as your clients also look for ways to cut costs.

During tough economic times, a familiar pattern occurs in small business. As production drops, profits drop even faster. Even a slight drop in income sets off alarm bells in the minds of many owners. To stave off a serious decline in revenues, the small business owner will often feel compelled to offer services to customers that might previously have been referred out to “specialists”, or to substantially discount products or services in order to obtain business. Additionally, the business owner will certainly seek to cut business overhead.

This last point has a direct impact on the livelihood of the professional accountant, bookkeeper or business consultant. When businesses tighten their belts, they may not necessarily do it in a logical manner. They may procrastinate by stalling on purchases or putting projects on hold indefinitely. They may buy smaller quantities of supplies, even if this means ordering much more frequently. And they may cut back on their reliance on accounting or consulting professionals.

read more at Accounting and Business Technologies | Joanie Mann: Managing Client Relationships in a Down Economy.

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Banks and Small Business: Finding the “Just Right” Fit Isn’t Easy

Banks and Small Business: Finding the “Just Right” Fit Isn’t Easy

Banks need business customers because business accounts provide more profitability than consumer accounts.  By volume, there are more small businesses in the US than mid-size or enterprise businesses, which you would think would be a good thing for the banks – more business customers, right?  It seems not so much.

For many banks, the problem is that they don’t appear to really know how to service – or even identify – these small business customers.  The majority of small businesses in the US don’t have employees, so direct deposit and payroll solutions aren’t something they are looking for.  Many of these small businesses operate from the business owner’s home rather than an office, and don’t generate the revenues (=deposits) that bigger businesses do.

To a bank, most small businesses look like consumers.  These small businesses are treated like consumers – are offered consumer-level services and are not educated on what business banking services might be able to do for them.  In reality, the banks really don’t have much to say to these small business owners, because the services offered by the banks are simply not a great fit.  There are studies which suggest that the small business market is fairly evenly divided, with approximately 50% using consumer banking services rather than those designed for business use.  Given the inability of the banks to even identify those consumer banking customers who are actually small businesses, I would suggest that the percentage is even higher.

There are three primary elements tied to banking which should be better-positioned to assist small business owners in leveraging their banking relationships to the benefit of the business and not just the bank.   If the financial institutions can find a way to meet these three essential needs for smaller businesses, they would likely find that more small businesses would embrace business banking services, resulting in greater profitability for the bank.

e-Payments

Use of electronic payments services represents a growing trend in small businesses and needs to be better-addressed by the financial institutions rather than purely retail providers.  Small businesses are increasingly using the Internet and online technologies to service their various business needs, and payments processing is among the top sellers.  Providing SOLO/SOHO and other small businesses with the ability to process payments at any time and from anywhere has become a big driver for this type of solution.  The popularity of Pay Pal, Intuit GoPayment and Square payment solutions is a testament to the need for such services in the small business market, yet the broadest use continues to be within retail providers rather than directly via the financial institutions.

Entitlements

Security and access controls to account and transaction information (frequently referred to as “entitlements” attached to business accounts) are hugely valuable for small businesses.  Most small business owners engage bookkeeping or accounting professionals at some point, and the process of accounting for the business activities is improved dramatically when those professionals are able to access the information directly from the financial institution.  Unfortunately, it is only with the more expensive business class accounts that most banks provide the means for account holders to grant access to account and/or transaction information for accountants and bookkeepers, financial advisors, etc.  Allowing small businesses to benefit from this type of security and control of their accounts is tremendous, yet the overall costs of the associated business banking solutions are often simply too great for the small business to bear.  The result is either a lack of privacy, security and control, where the business owner must grant unfettered access to account information to a 3rd party bookkeeper or accountant, or the business owner simply continues to pay for manual bookkeeping transaction entry.

Cash Management

Most small businesses operate on cash, and expense and cash management is essential to maintaining operations.  Consumer banking solutions may offer limited capabilities for expense and cash reporting, but the services offered through many business banking portals would be far more beneficial for the business, reflecting trends and providing more insight relating to business financial activities and business behavior.  Unfortunately, many of these services designed for business customers are oriented towards the larger organization, and are far too complicated or expensive to provide real value to the owner of a small business.

Small businesses fuel the economy, yet remain a largely untapped market in terms of business banking and other services.  Small businesses run “under the radar” of many service providers because they have not reached the point where the obviously available business services (e.g, the more profitable banking solutions) seem attractive to them.  Banks need to recognize that serving the small business customer well – providing the services which help small businesses grow into bigger businesses – is ultimately the key to acquiring new customers for whom the big banking solutions fit.

jmbunnyfeetMake Sense?

J

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Better QuickBooks Access, Management and Security – QuickBooks Licensing and Hosting Models

Whether hosted in-house or offsite, licensing models for hosting QuickBooks can be very confusing.

driving1-ANIMATIONThe demand for solutions to address user mobility, better collaboration and improved information security is increasing as connectivity improves and cloud services and threats evolve. Server-based computing models and application hosting are increasingly popular as businesses seek to embrace teleworking and telecommuting models for their entrenched applications and systems, creating a foundation for improved productivity and work/life balancing (or integration).  On the technical side, the benefits of centralizing applications and data include improved efficiency in managing, maintaining and securing systems. For many small businesses, this means centralizing the installation and maintenance of core business applications like Intuit QuickBooks Pro, Premier or Enterprise.

Whether it be offsite with a commercial hosting provider or on a co-located server somewhere, or an onsite installation on the in-house server, hosting Intuit QuickBooks licenses can be straightforward or complicated depending on what you are trying to do with them. Because QuickBooks was designed as a standalone single-user application, there are a number of challenges when it comes to preparing it for server-based use.  The primary issue is often simply understanding the QuickBooks licensing model, which is not particularly INTUITive (sorry).

Licensing hosted QuickBooks applications comes with two different sets of implementation issues: the technical implementation (the installation and setup) and the logical allocation of licenses to users (the licensing rules).

When it comes to the technical implementation, many an experienced engineer has beaten their head against the wall trying to get QuickBooks to work properly in a workspace or session-based system (e.g., terminal server), all because they expect the product to implement like a “normal” client/server application. While QuickBooks may use the Sybase database manager guts to handle multi-user access to QuickBooks data files (I think it is still Sybase), the architecture required to properly service a networked QuickBooks installation does not necessarily mimic what would be used with, for example, a .NET desktop client application with an MS SQL back-end.   First, the QuickBooks data files cannot be remote to the application, meaning that both the client and the database manager (which is actually working as an adjunct to the client) must exist on the local network; it will not work over a WAN connection, which is why so many folks get frustrated when they put their server “in the cloud” and attempt to connect from a local client using a VPN.  It just won’t work that way with QuickBooks; it all has to be on the local network – client, server, data… all of it.

It is notable that many businesses use Dropbox and other file sync solutions because they want to be able to get to their data from multiple locations, but the data they’re getting must be “local” to the apps that use it.  It doesn’t allow for simultaneous multi-user access, but it can be an effective way to share a file.  The caveat is that the file (at least in the case of a QuickBooks file, or Outlook PST file, etc.) should not actually be used from the sync folder.  Sync folder should contain copies of data files that users wish to sync or share with other devices.  But I digress…

With a server-based implementation of QuickBooks, technicians will install the QuickBooks desktop software on the server, and will determine whether or not that same machine will also handle the company data files.  The QuickBooks DB manager is part of the installation of QuickBooks, and the file system and drive where the QB files are to be managed must be recognized as a local drive on the server running the QBDB manager.  The overhead used by the database manager isn’t huge, but it can impact the performance of users on the server.  For this reason, some techs will decide to implement a separate file server to manage the QB data files, taking that load off the app server.

  • The QuickBooks software uses the database manager to “host” access to company files.  This simply means that a single server with the data on it is providing managed access to remote-desktop-sessionsQuickBooks application users.
  • When QuickBooks application software and data is installed and centrally managed on a server (instead of QuickBooks being installed on individual PCs), that means QuickBooks application is being “hosted” on that server.
  • When a 3rd party provider supplies the server, the QuickBooks installation, data storage, and your way of connecting to it all,  that provider is a “host” providing hosting services for your QuickBooks.

In a dedicated hosting environment, the data is often stored on the same server as the applications, whereas in a shared hosting environment, the data is often stored on central file servers which serve multiple customers. This is why, in some shared hosting situations, one bad data file can take down the database manager services for all the customers using that same file server.

Users open the QuickBooks application on the server instead of having the application installed on individual PCs.  The single server-based installation of the software is able to be used concurrently by all users logging in to that computer. With the database manager running, the file is essentially “hosted” on that machine, and the file may then be opened in multi-user mode.  OK so far.  The problem generally comes about when a second user on the same computer/server wants to open the same QB data file as the first user.

Because the QB database manager is looking at the license of the client application accessing the data file, it will recognize when two different users/sessions with the same license key attempt to open the company data file.  If that license key is a single-user key, then the database manager knows it should allow only 1 concurrent user in the file.  QuickBooks doesn’t get installed for each user on a computer or server; it is installed one time on the machine and each user on that machine runs from that single shared installation. Any particular version of the QuickBooks application may be installed only once on a single computer, but it is possible to install multiple editions, year versions, and “flavors” of QuickBooks on a single machine (cannot be more than one installation of each unique product). There will be more than a few annoyances when running a variety of QBs on the same computer, but it is technically possible.

In order to allow multiple users to simultaneously access the same data file from a central installation of QuickBooks, the license key installed on the computer must be a multi-user key.  QuickBooks Pro, for example, can be keyed to 3 concurrent users, meaning that the license will allow up to 3 users with that same license key to simultaneously access the same company file.  Technically (but not lawfully) this installation of QuickBooks on the machine could allow a virtually unlimited number of users to launch the QuickBooks application simultaneously, limited only by machine resources.  This is where the logical allocation of licensing comes in.. the rule of licensing QuickBooks.

The logical allocation of unique licenses for each QuickBooks user is a little easier to understand than the technical implementation.  The rule is simply that each user of QuickBooks is required to have a valid registered/activated license. That valid license is a license purchased and activated for that business.

total-businessMaking QuickBooks desktop editions more useful by adding secure remote access and centralized management makes a lot of sense.  For companies who rely on the functionality and features of the desktop products (QuickBooks Pro, Premier and Enterprise), a hosted approach is the only way to really address mobility and multi-location requirements.  Remember that hosting doesn’t necessarily mean offsite, although that could make sense for the business, too.

Centrally-managing QuickBooks applications and data creates greater efficiency and improves overall IT management capability for the business.  At the same time, a centralized model introduces a better strategy for mobilizing the workforce and connecting remote users and offices. The struggles of understanding and implementing proper QuickBooks licensing begin to seem very small when compared to the benefits of deploying a centralized system that’s easier to access, manage and secure.

Make sense?

J

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The Cloud for Your Firm: 3 Initial Considerations for Cloud Enabling Accounting and Bookkeeping Firms Working With Small Businesses

The Cloud for Your Firm

3 Initial Considerations for Cloud Enabling Accounting and Bookkeeping Firms Working With Small Businesses

dscn0903.jpgThe potential benefits of a real-time, lean collaborative working model are too great to argue with.  Accounting professionals, bookkeepers and their small business clients are all hearing about the value of working together in the cloud, and how cloud technologies and solutions can reduce cost and improve efficiency.  There is a great deal of truth in these statements, just as there was a truth in the value of implementing computers, networks and other technologies in business.  What is not clear is exactly what businesses need “in the cloud”, and how they should approach this shift from local IT to outsourced managed service.  Initially, there are 3 issues which warrant consideration, if not deep discussion, prior to making any significant move to relocate internal IT and shift business applications to the cloud: internal use systems, client interaction, and operational support for both.

With all the discussion about cloud computing and remote access, it would seem that all the applications and solutions businesses need are now available online and paid for in low monthly subscription fees.  Anyone working with small businesses, however, comes to understand that the vast majority of these businesses are still using more traditional modes of information management and computing.   For the most part, these businesses are using PCs and local networks, possibly with a little hosted email thrown in.  Almost certainly they have a website and maybe even a fairly sophisticated e-commerce system that allows them to sell products online.  But when it comes to general office functions, and particularly back-office functions like bookkeeping and accounting, the software and the data generally reside on the office PC and server.

Accounting and bookkeeping professionals who work with small businesses are often in the same position as their business clients when it comes to information technology.  Since so much of the work involved requires the same programs and data formats as those used by the client, service providers find that they spend as much in management of software licensing and systems to support working with client data as they do on systems intended for internal use only – sometimes more.  Many of these service providers are also small businesses, and it becomes challenging to find a way to handle internal IT needs while at the same time trying to address those of the client. Where e-commerce solutions are readily available to handle operational aspects of product based businesses, the best tool set for a professional accounting firm or bookkeeping business working with small business clients may not be so easily defined.

The solution for many providers has been revealed through cloud computing and hosted application models.  With Cloud Servers, Remote Desktops, and Virtual Desktop Infrastructure now widely available as affordable alternatives to capital-intensive implementations of locally installed products, businesses are finding new abilities to manage applications and data, provide mobility and enhance collaboration.  The additional benefit is in how accounting service providers may engage with their clients in more efficient and effective ways, without the burdens of replicating data or trying to share access to a single machine or application resource.

There are a number of elements to consider before taking the file server to the parking lot and running it over with a truck.  Moving to the cloud is not a one-step process, and it is important to do a little research and collect some important information before making the final decision on how to proceed.

Internal Use Systems

Among the first of the questions to ask when considering a change in IT management approaches is “which software do we need”?  Implementing an outsourced IT arrangement, which is really what “cloud” is about”, does not necessarily mean throwing away all the existing software and starting with new.  The software in use within the firm may be exactly what it needs right now and adding full IT management, fault tolerance, and remote or mobile access could be the main scope of the requirement.  Moving from locally installed solutions to hosted solutions provides quite a number of benefits while removing many of the direct costs and frustrations of IT management and administration. The greatest benefit of this type of approach is the ability to preserve the “body of knowledge” existing in the business, knowledge invested in the people and processes already developed.

On the other hand, there may be new tools or services only available as “cloud” service, and it makes sense to explore how they may benefit the business more than the in-use applications.  The important element is to remember that the solution must address real business problems, and whether it runs in the cloud or not isn’t the first or most important thing to ask.  For example, a discussion about whether QuickBooks Online might be a better choice than QuickBooks Pro, Premier or Enterprise should be focused on the functionality provided by the applications and not which servers they are running on.  With application hosting for QuickBooks now being an available option, there is a managed IT and remote access capability for both solutions, rendering the fact that QBO is a SaaS solution almost irrelevant in terms of being a differentiator.

Client Interaction

An important aspect of adopting new technologies or working models is the consideration of how the firm and the client businesses will work together, and whether or not there is (or could be) a standardized approach that might work for most clients.  Certainly, it makes sense to standardize as much as possible.  Treating every issue or engagement as a singular event – a one-off – is the least efficient way to do business.  The key to profitability is in the firm’s ability to produce high quality work consistently and in a timely fashion.  This requires that the business be well-structured in terms of the standard processes and methods which will be used to work with client information.  When the firm and the client can work seamlessly together as and when required, and when each is responsible for their own systems and data, it is a best-case scenario. The questions relating to client interactions focus on how the firm works with clients and which tools or solutions are required to improve that situation.

It is likely that the firm will need to be able to address working relationships with various client and engagement types – where clients do some of the work, where the bookkeeper does the work, or where the participants work collaboratively together in the same systems.  While it may seem that the best way to create a dependency on your services with the client is to keep them out of the systems, empowering the client is really the key to a close and long-standing engagement.  This means that the client needs to have their own solutions and approach to cloud-enabled IT, and the accounting or bookkeeping service provider should be able to access and work within that environment.

It is rare that a small business can effectively operate without computers and software to manage information and support operations, so it makes sense that the business should have its own accounting and financial systems, too.  For the accounting service provider, it is essential that a level of understanding be gained around the use of today’s available remote and mobile access technologies, as it is with these solutions and tools that participation in client systems will be enabled.  When the client accounting solution sits on their office PC, there are limited options for working together in any real collaborative form.  Connecting to their PC via remote control is a widely recognized means of gaining access to client systems, but if the bookkeeper is on the system when there is a problem of some sort, all eyes go directly to that remote user as the likely cause of the problem.

The considerations relating to remote access to client systems focus not just on enabling a collaborative working environment, but also on mitigating risk and improving client perception.  The risk issue comes in when the accounting service provider is exposed to systems and information not relevant to their task, and the perception issue becomes material when the accounting professional becomes the software or IT service provider.  It makes sense for the accounting professional to make recommendations or suggestions about software and IT service which might benefit the business, but not to necessarily be the reseller or direct provider of the product or service.  The moment the accounting professional attempts to sell the client a software product or IT service, the relationship is changed and the client is more likely to view their accounting pro as another vendor rather than a trusted advisor.  It’s also not necessarily a great move to start a new client engagement by telling the client they have to switch accounting products to allow the accountant to work closer.  Rather, professionals need to help their clients position those products for more efficient use, which may include enabling remote or mobile access granted via deployment in the cloud.

Operational Support

When businesses outsource their IT management and administration, there is often an initial belief that all responsibilities in these areas will be handled by the IT service provider.  What is often overlooked is the reality that the firm still needs to have people attending to IT related tasks, just doing different levels of work with the technology. It is important to recognize that someone in the firm will end up dealing with various IT and process support issues, and it still makes sense to have personnel dedicated to these tasks (*Note: here’s where I suggest that the cloud changes the focus of internal IT personnel, but it doesn’t eliminate the need for them).  The service provider and solution evaluation and selection process, as well as the actual deployment and administration of services, will take valuable time away from actually performing client accounting or bookkeeping work, and there should be people attending to these issues while the business continues operating.

Where an internal IT department or contract technicians may once have supported internal systems, an operational role within the business is still required to manage outsourced IT activities, including and particularly those where clients are involved with the firm systems.  Delivering new benefits with a minimum of business disruption is the goal, and can be achieved through proper planning and coordination with team members and clients alike.

Closing Thoughts

“The Cloud” is just another way to run software and implement computing resources.  It still takes servers and software, it uses processors and storage and networking, just like more “traditional” computing models.  The difference is in how these resources are purchased and provisioned, and the impact is a change in how businesses of all types can benefit from technologies which enable collaboration, lean process, and mobility.  The Cloud for Your Firm addresses your internal business requirements, lends itself to client collaboration, and has internal operational support to ensure the firm is fully leveraging the available benefits to improve business performance and profitability.

Make sense?

J

Read more about Accountants and Bookkeepers Working With QuickBooks Clients: App Hosting Approaches That Work

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