Welcome to the cloud. What actually IS the Cloud? If you look it up, you’ll likely find something like this Wikipedia entry:
“Cloud computing is a kind of internet-based computing that provides shared processing resources and data to computers and other devices on demand. It is a model for enabling ubiquitous, on-demand access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services), which can be rapidly provisioned and released with minimal management effort. Cloud computing and storage solutions provide users and enterprises with various capabilities to store and process their data in third-party data centers.”
In the simplest terms, the cloud is a metaphor for the internet. Cloud computing, or the Cloud, means storing and accessing your data and programs over the internet instead of your computer's hard drive. That hard drive forces you to physically be in your office in order for you to be able to access data and complete your work. It’s also the key piece of equipment that allows you to “work from home.”
The cloud is not a destination but rather a concept for efficient processes and workflow—for your work and personal life.
Let me explain. Do you have an email address? Perhaps you have a few. If you email, text, shop online, have a LinkedIn profile, and/or Twitter account, you have been in the cloud in my estimation for several years. Being able to email, shop online, access applications like checking the weather from where ever you are and at any time all use the Cloud? Yes? The Cloud delivers on-demand computing resources—everything from apps to data centers—over the internet on a pay-for-use basis.
Demystification of the Cloud
Moving some of all of your organization’s operations or resources to the Cloud can be a value-add for your internal infrastructure and functional improvement. It should not be considered in the context of a profit center move. While there are many benefits to using the Cloud, the highlights include:
- eliminating the cost of hardware and hardware maintenance;
- device and location independence;
- agile and nimble processes;
- lowered opportunity costs by eliminating business operations data center dependency;
- increase the asset value of your IT staff by allowing them to focus on data flow efficiencies, management, analytics, and insights; and
- lower your risk profile.
As I talk to cloud providers, companies, accounting firms, non-profit charities, and many other global organizations that operate in various vertical markets, what’s truly fascinating is prior to the Cloud, almost all of these organizations said that they would never move their company, customer, or client data to the Cloud. Yet the employees of these companies and firms emailed this type of data without using encryption data sources on a regular basis. The employees were using Cloud-based services and platforms like Gmail, Yahoo, and Dropbox to correspond and send data files to clients but never thought of these platforms as using the Cloud. Once this sinks in for organizations, it is usually the point when they realize the value of the increased security moving to the Cloud offers.
When considering the Cloud, think about the value of data management and security—not just the systems. Security can improve through centralization of data and increased security-focused resources, but concerns can persist over loss of control for sensitive data and the lack of security for primary computer processing software. Security is often as good as or better than other traditional systems, in part because providers are able to devote resources to solving security issues that many customers cannot. On the other hand, the complexity of security is greatly increased when data is distributed over a wider area or over a greater number of devices, as well as software systems shared by unrelated users. These “multi-tenant” systems allow many users access to a single software architecture.
Common Cloud Applications for Firms & Small Business
The accountancy industry has been participating in move to the Cloud for about a decade. Over this time, some patterns have emerged as to how firms take their first step in migrating to the Cloud. Document management is frequently a first step, and possibly because:
- the firm has identified document storage as their biggest pain point or most inefficient area of their workflow;
- from an IT standpoint, it may be the easiest area to migrate without causing disruptive change management;
- there are reliable, secure cloud solutions for document management; or
- a combination of the above.
This said, please note that this is an example. I’m not advocating that this should be the starting point for your firm. Although there is a lot of common ground among accounting firms, every firm is different. Hence, what I AM advocating is every organization should develop their own Cloud Playbook.
Achieving New Efficiencies and Harmonization of Business Operations
The utmost pressure on any accounting firm regardless of size, niche market, and location is to increase margin activity and net profit growth. Migrating to the Cloud lowers the barrier to reach these goals on a continuous basis. Statistics from the last five years show accounting services revenue growth has significantly increased because accounting firms have been able to acquire modern technology that provides them with the opportunity to transform and deepen their practice. With modern technology comes efficient workflows and high margin services. Which accounting firm do you think will win the most revenue generating client? The firm that is in the Cloud and can provide client services quickly and nimbly, from anywhere and at any time? Or the firm that traditional hard drives can only pull data when in their office and able to access their stationary data centers and systems?
Efficiencies for your firms’ accounting, finance, operations, human resources, and client communication process can be found by investing in:
- moving from premise technology (a PC desktop) to the cloud;
- replacing paper formats with digital workflows, such as document storage, online payments, employee, and client-on boarding systems; and
- adopting business intelligence systems, such as a customer relationship management system, risk management platform, and reporting and analytics software.
The Cloud Will Transform and Expand Your Practice
Overall, the Cloud will modernize your practice and broaden the range of services you can provide. The Cloud will streamline internal processes to be location independent—all digital, all the time, anywhere. It will help you create a digital organization that communicates and collaborates virtually to support and counteract generational, cultural, and geographical diversity. The technologies associated with the Cloud will actually lower your risk profile and compliance costs.
The Cloud serves as a base from which you can offer five star client services, including immediate engagement, interactive collaboration, and remote client management. You will also have greater capabilities in respect to data management because you will be able to perform due diligence and analytics on the data that the Cloud facilitates for your firm. By providing all of this information, the Cloud helps you monetize the life time value of your client portfolio.
I’m more than confident in saying the Cloud is here to stay. Therefore, this is the first article in a series on the Cloud Playbook, which will help you understand the basics and determine what might work for you.
Also, check out Jules Carman's video interview with the IFAC Global Knowledge Gateway, Do Accounting Firms Understand the Benefits of the Cloud?