This article originally appeared in the April 2011 issue of Smart Business Philadelphia magazine.
Cloud computing can help businesses harness the portability and convenience of Web-based IT services, and if your company hasn’t started investigating this new technology, now is a good time to start.
Cloud computing provides businesses with ease of maintenance, scalability and cost reduction, says Sassan Hejazi, director of the Technology Solutions group at Kreischer Miller, located in Horsham, Pa. Specifically for accounting and financial departments, offsite management of these systems can be particularly valuable from a security and updating standpoint.
Meanwhile, more businesses are looking to the cloud for services instead of purchasing software or overseeing systems in-house that can instead be managed off-site by specialists. Rather than dealing with the limitations of traditional in-house software, companies can simply turn to the cloud and access the programs they need from anywhere.
"Like a utility, when you plug an appliance into an outlet, you get power," says Hejazi. "You don’t know where that power comes from or who manages the production of that power; all you know is that the power is there when you need it. The IT world is evolving into a utility-based commodity that is very sophisticated and being delivered by specialists. We are now increasingly accessing the technology via ‘the cloud.’"
Smart Business spoke with Hejazi about how businesses can use cloud computing in finance/accounting and other disciplines to streamline their IT portfolios.
What is cloud computing, and how can it work for businesses?
Cloud computing refers to using Web-based applications and services provided by offsite providers. A simple example is e-mail such as Gmail or Hotmail. You can access these services from anywhere with an Internet connection, and you never have to worry about upgrading the program or running out of storage.
Today, most software and hardware providers also offer a ‘cloud strategy,’ so businesses can shift systems they currently manage in house to the cloud and save time, money and resources.
Essentially, cloud computing is the next phase of the Internet evolution. Rather than the Internet serving as a tool for communication, it also can house the systems and services you use to conduct business so you can access these applications anywhere.
What advantages does cloud computing bring to financial and accounting departments?
When finance and accounting departments manage their systems internally, they are responsible for upgrading these systems regularly and keeping up with software changes so they can run them efficiently. The resources required to keep these systems operating at peak performance can be draining, and there’s no reason to expend resources this way now that there are off-site, Internet-based options.
A growing number of applications from leading companies offer cloud-based versions of their accounting and financial systems, which allow businesses to leverage capacity without having to invest in internal resources for basic system maintenance. Cloud-based systems give companies economies of scale because the provider serves many different companies. As a result, resources are highly productive, trained and specialized, giving companies better ROI than if they operated their own system in-house. Essentially, cloud computing allows companies to shift from an internal to an external service provider.
Another advantage is that cloud-based systems are scalable. Companies can easily add more users to increase capabilities, or decrease users to scale back. Also, cloud computing allows companies with multiple locations to access information. Employees can work from home offices or on the road and use the system, as long as there is an Internet connection.
Is cloud computing secure?
There is always some level of risk involved because if a company loses its Internet connection, it cannot access its cloud-based systems. However, this is becoming less of an issue with the newer wireless devices. With a cloud-based system, you also have the ability to access information from anywhere should internal issues such as a system crash occur.
Regarding security, the providers of these offsite systems must earn a SAS 70 certification, which involves rigorous security audits. Generally, they have better backups and disaster recovery than most companies that manage systems internally.
Rest assured, cloud computing has evolved significantly in recent years to become a strong option for companies of all sizes. Of course, to minimize risk, management teams should conduct a thorough study of alternatives and create a cloud computing roadmap.
What should a company consider when evaluating which IT services can be shifted ‘to the cloud’?
First, take an inventory of all hardware and software systems — your portfolio of IT assets. Divide that portfolio into distinct groups, for example, by department and by function, and analyze each section.
How old is the technology? How well supported are the systems? How could operations be improved? Tie this into the bigger picture of business objectives: How does existing software/hardware support your goals for the future? This exercise will help you focus on cloud computing as a business value proposition. As you do this analysis, consider the cost of purchasing systems. It’s not just what you pay today for software/hardware. Figure the total cost of ownership, including periodic upgrades and maintenance.
This is where cloud computing offers a real economic advantage. For scalability, ease of maintenance and lower cost of ownership, cloud computing offers competitive systems that give companies increased flexibility and the ability to access information from anywhere.●
Related:
- Important Considerations for Media Companies Planning a Move to the Cloud
- Reducing Risk: How to Manage Risks Associated with Accounting in the Cloud
- Moving to the Cloud? Beware These 6 Risks