Last updated on August 22nd, 2022
You have carefully planned your company’s goals and budget for the coming years and decided to move to the cloud. Now you also must decide whether you want to host the accounting application in private, public, or hybrid cloud. Each model comes with its own benefits as well as challenges.
To select the right cloud accounting solution, it is important to understand the impact it can have on your accounting operations.
According to LogicMonitor’s Cloud Vision 2020 survey, 41% of enterprise workloads will be running on public cloud platforms by 2020. An additional 20% are predicted to be private-cloud-based followed by another 22% running on hybrid cloud platforms by 2020.
Image Source: Forbes
Let us first evaluate different types of cloud:
a) Public: This model is the most recognizable model under which the cloud services are offered by third-party providers over the Internet. The cloud providers host your application and data on their cloud environment, which is usually built in remote data centers.
You can opt for the specifications you require and pay as per your usage. Billing is mostly done on a monthly or annual basis.
b) Private: As the name suggests, a private cloud environment is built by an individual organization for its dedicated use. Only the authorized users can access the private cloud.
The private cloud can be accessed through the internal network or a private connection on the Internet. The responsibility of maintaining and configuring the private cloud is also in the hands of the organization.
c) Hybrid: Hybrid cloud is an integrated service which combines private and public cloud by allowing applications or data to be shared between them. Gartner suggests that companies should design private cloud services while keeping the hybrid model in mind, ensuring future integration.
To understand which cloud platform is the best for your accounting firm, consider few questions below:
1. How important is security for your business?
Security is the most important factor for any accounting firm. Letting the accounting data of even a single client get compromised can prove to be costly for your accounting firm and can damage your reputation in the market. Having the right cloud model can make a significant difference for your company.
It is a general notion that private cloud is more secure than a public cloud. While this may be true to a certain extent, it also depends on your choice of the cloud service provider.
A private cloud is the one with only a single tenant, i.e. your business applications and data. As there is no interference from any other alien process, there is minimal to no chances of your data being compromised.
The renowned cloud service providers, on the other hand, make sure that your data is secure by implementing security safeguards like multi-factor authentication, data encryption, Intrusion Detection and Prevention System, and more.
In addition, they also offer Business Continuity and Disaster Recovery Plan to ensure that the data is safe even in the event of a disaster.
You can choose between the type of cloud platform depending on the criticality of data you handle. Moreover, you can choose a hybrid cloud to get the computing power from a public cloud provider but store all your confidential data on the private cloud.
2. How much do you spend on your IT?
When was the last time you checked your IT-related costs? An article by CIO explains the operational costs which should be considered while going through the company’s IT costs.
When deploying a private cloud for your business process, you will have to bear all the costs related to building the cloud environment, including the hardware setup, and the supporting equipment. Also, the task of maintaining and upgrading the applications and hardware is your responsibility.
However, if you choose the public cloud, all your accounting data and applications will be hosted on the cloud servers of the service provider.
Hence, the cost of purchasing high-end on-premise hardware is minimized. Additionally, if the provider offers managed hosting services, all the IT tasks such as application installation and setup, data migration, as well as, hardware configuration are handled by the provider.
Hence, you can eliminate the costs of an in-house IT team. This makes it a low-cost option. The major cloud service providers in the market have used the concept of the public cloud to offer small accounting firms a competitive advantage with affordable access to leading services or software which otherwise would be unattainable.
The cost of adopting a hybrid cloud falls between the private and public cloud. The accounting firms can use the private cloud for more critical functions while using the public cloud for the non-critical services.
3. How many offices do you have?
The number of offices or location points from where the business process is being handled affects the choice of your cloud platform. If you are planning to expand your firm into multiple locations, it would be important to have backups in a secure location.
However, if you want to downsize and reduce IT expenses, a private cloud or hybrid cloud would be the best fit.
For example, in a warm disaster recovery scenario, a firm can keep its recovery environment in the public cloud and production environment in a private cloud.
In this case, the firm’s data is replicated across the public cloud while other resources remain non-operational unless required.
4. What kind of performance do you need for your business?
The performance of an accounting process depends on the type of hardware being used to carry out the operations. Whether private, public, or hybrid cloud, you can choose the one that offers the best output for your accounting software and data.
In the case of a private cloud, as the entire setup is on-premise, there is no latency in the operations. Moreover, if you make sure to have the best-in-class hardware setup, the private cloud can give you optimum output.
In the case of public cloud, however, ensure that the data center location where your accounting data and application is hosted is close to your location. This will lead to low latency and high output.
Why should you care?
Making a shift to the cloud – and deciding which model is the best fit for your accounting firm – is as much a business decision as it is a technical one. And the probability is, you will be taking the decision sooner or later.
Cloud has enabled small business owners to take control of their data and take the reins. Instead of purchasing products or hardware which will likely be unused, they would get an option to select the processes that would work for them.
There are numerous cloud providers, deployment options and software publishers in the market, but a good understanding of different models of cloud would help you get the right answers and make the right choice for your firm.
Chat With A Solutions Consultant