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Wednesday, 13 June 2012 01:00

What Cloud Computing Means to Accounting and Finance Professional

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Computers and digital data have made much of what Accounting and Finance departments do inarguably easier. Or would you rather go back to ledgers and hand-cranked desktop calculators?

But accounting and records management aren’t only about crunching numbers and quarterly summaries. Real-time analysis requires collaboration and effective communication. Companies work with CPAs and other outside advisors, and are constantly exchanging invoices, purchase orders, and other "paperwork" with suppliers, customers, and business partners. Streamlining a finance department benefits from efficient workflow, which means that data access and sharing are key.

To get these benefits, many companies are moving from on-premises software to "the cloud:" software and data housed (securely) in data centers, accessible (securely) via the Internet.

"We've gotten used to putting our credit card information into Amazon, and our finances into services like Quickbooks Online. Now you're seeing CPAs and Accounting/Finance departments have more comfort putting their business and financial data out on the cloud," says Joel York, CMO at Xignite, a financial services cloud company, and author of the ChaoticFlow blog.

"Tax and accounting firms are flocking to the cloud," says Rick Telberg, president of the Bay Street Group, which provides strategic advisory and market intelligence services for the tax, accounting, and finance communities.

For accounting firms, says Telberg, "The cloud is the fastest-accelerating technology they are adopting. More firms are looking at cloud solutions than at buying new laptops, or adding monitors. Most can see the tremendous advantages in client service and in staff productivity – and the software vendors are pushing companies to move to the cloud." According to Telberg, the main players in cloud-enabled accounting services are CCH (a Wolters Kluwer company), Intuit, Intacct, NetSuite, and Thomson Reuters.

Note that "the cloud" isn't necessarily the same as Software-as-a-Service (SaaS). "'SaaS' has tended to focus on the vendor and its software," says Daniel Druker, Senior VP of Marketing at the aforementioned Intacct. "Being a 'Cloud' service suggests – or even states – that it interoperates with other applications and services, including beyond the vendor's own offerings, letting customers assemble solutions to meet multiple needs."

The Benefits Of Cloud Access

The main benefits that attract adoption by CPAs and other finance types, says Telberg, include:

  1. Continuous software updates, which means everybody is using the same version
  2. Automatic secure cloud backup, so companies don't need to worry about users doing their own backup in a regular, secure fashion. Cloud backup also addresses regulatory requirements for having off-site backups, Telberg notes.
  3. Simplified access. Having the applications and data "in the cloud" provides "anywhere, anytime" access. Users can get to the financial data from smartphones and tablets, not just from desktop systems.
  4. CPAs and clients can work together, because both access the same data (although possibly through different applications or features).

Finance and CPAs often send or share data. Having the application and data in the cloud, where everyone can look at it together during a teleconference, removes historic delays to relay data or tech scrambles to share the same view. This minimizes the effort of exchanging large files using by e-mail, file-transfer, or couriering physical media.

Additionally, the cloud lets companies self-provision their data. "Finance and Accounting can have instant access to the latest data, rather than having to e-mail Accounting or their CPA for data requests," says Telberg. "And accountants don't have to be interrupting other tasks to respond quickly to these requests. Now, users can dig into the data directly, for themselves, so the finance professionals can focus on analyzing the data, rather than on collecting and being 'human photocopy machines.'"

Putting Financial Data To Work

Having financial data more accessible lets companies get more value from it – especially when it integrates with other programs.
"Finance and Accounting can create custom dashboards using real-time data," says Telberg. "These dashboards allow users to log in and see how the business is doing: where the wins and losses are, make sure there's cash on hand to cover the payroll or payments, see whether inventory is backed up and by how much, and spot changes like 'Sales in Ohio are down' so somebody can ask why."
Cloud-based apps and data can also bring large, positive changes in workflow.

"The promise of the cloud is that there will be no re-keying; all the data will already keyed in," says Telberg. "What that does for workflow is tremendous. For example, a typical tax accounting firm can shave 15 to 25 minutes from a typical Form 1040 preparation, representing savings of 20% to 40% on a low end 1040. Multiply that by 500 forms per season!"

Other Benefits Of Integration And Collaboration

The cloud enables and simplifies collaboration and integration, both inter-departmental and inter-company, according to Xignite's Joel York.

"For example, integrating with payment processing sites like PayPal, Authorize.net, or a payment processor," says York. "Almost everyone who uses financial software does this to do billing, collection, payments. You can do this with on-premise solution, but SaaS/cloud applications are built for this; the well-crafted SaaS/cloud service includes APIs. Every SaaS provider has a Partners, Applications, and Tools list. In fact, companies like BOOMI do nothing but connect APIs."

Collaboration tools such as e-mail or chat enable the Accounting folks to build a hub of communications with business partners. A CPA with multiple clients can use e-mail, instant-messaging, or Facebook to collaborate with individual clients from the financial app. “You wouldn't see those features out-of-the-box in an SAP or Oracle system, because there wasn't this assumption of being connected," says York.

This integration extends to related applications such as purchasing, shipping, tracking and returns, York notes. "Take NetSuite's SaaS offerings, for example. At some point when a company gets big enough, integration of AR/AP, CRM and other systems becomes crucial, since important processes like inventory management are cross-departmental."

Cloud-based portals make it easier for companies to work more effectively with their customers and suppliers. The Taulia Invoicement Suite, for example, lets companies who use the SAP ERP system provide suppliers with access to invoices, purchase orders, and payment history. "Accounts Payable departments typically spend 30% of their time doing data entry, and 15% of their time answering supplier questions," says Bertram Meyer, CEO of Taulia. "This approach eliminates data entry and reduces AP 'answer time' – and means that suppliers can get their answers faster."

Also, says Meyer, "An integrated cloud solution makes it easier for companies to do e-payments, which used to be a very laborious task for AP and other teams. The cloud platform can check the bank database to confirm the routing number and trigger payments."
"And these days, with JIT material flows, all these business documents have a life on their own," notes Meyer. "The-based cloud portal makes it easier to integrate supply chains. For example, it makes it easier and more efficient for a supplier to communicate 'I'm out of A, but can substitute B, or meet this schedule.'"

The combination of integrated data and easy secure access for suppliers can also let  Accounting and Finance present suppliers with "invoice discounting" options on approved invoices, using tools like Taulia's Dynamic Discounting feature. According to Meyer, "It not only works with invoices with discount payment terms, but it can help realize discount savings on the rest of a company’s invoice spend as well, which for most companies is the majority of their invoice spend, typically 80+%.”

CPAs, Accounting Still Keeping Busy

Simplifying and reducing workflow doesn't necessarily mean that a business’ CPA bills will go down. Instead, says Telberg, you may be paying the financial and accounting professionals to do the analysis and thinking with the information they now have. “So you'll get more intelligence for your money – and when you do need data answers faster, you can have them."

However, Telberg cautions, "We still have a long way to go, because we are working with multiple applications and multiple versions, such as data spread across Excel spreadsheets, Access databases, and ERP applications. We don't yet have 'all the data in one place.'”
One strategic question the Accounting department should ask about cloud applications is how the cloud service will improve productivity. “Vendors should be prepared to come in and do an audit, and work that through with you,” says Telberg.

On a tactical level, Telberg advises: "Read the fine print on the Service Level Agreement. Who owns the data? Who has access to it? What happens if the data center goes down? And how do you stage migrating to a cloud platform? How do you coordinate your staging with this rapidly developing technology? Don't over-commit to a vendor who promises but can't deliver, and don't over-promise to your organization. It's more complicated than you think; the data is currently spread out."

The biggest concern most companies have is the potential security risks, and the downside of security breaches, notes Xignite's York. "For smaller businesses, the risk may be less than on-premises solutions; cloud providers may have better security controls.”



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