Thomas G. Stephens, Jr., CPA.CITP

The term “cloud computing” is used by many to describe a number of very different situations. To some, cloud computing means having traditional computing applications “hosted” on remote servers and then accessing these applications through remote access software. To others, cloud computing means developing applications such as Google Docs, Salesforce.com, and Intacct accounting software that are specifically designed for provisioning only over the Internet. And to others still, cloud computing means providing a Web-based platform that developers shape according to their needs. These are but a few of the flavors of cloud computing and what they and the other forms of cloud computing have in common is one very important trait – they will change how you do business!

Consider some of the numbers. According to the Gartner Research:

· Cloud computing is the number one priority for Chief Information Officers;

· Today, only 3% of businesses have the majority of their information technology in the cloud; that number will grow to 43% in as little as four years; and,

· Worldwide cloud services revenue grew 16.6% in 2010 to $68.3 billion, with 58% of the market attributed to the United States. This growth was against the backdrop of information technology budgets increasing a paltry 1% in 2010. Further, worldwide revenues are expected to grow to $148 billion by 2014.

Clearly, the cloud is arriving, but what is driving the growth? There are numerous potential advantages to utilizing cloud-based applications, data, and services, including some of the more relevant listed below.

· Reduced dependency on hardware. With cloud computing, applications and data are delivered through the Internet, typically in a Web browser. All computing and data storage is done on the cloud-based server, potentially resulting in significantly less powerful hardware being required at the end user location.

· Rapid deployment. Since no software is installed locally, users can be up and running on a cloud-based application oftentimes in a matter of minutes.

· Scalability. Most cloud-based applications are offered on a monthly subscription model. As the workforce expands, simply increase the number of users on the subscription; as it contracts, reduce the number of users on the subscription.

· Data security. Many organizations will experience improved data security by storing data in the cloud. Any reputable service provider is going to take extreme measures to ensure that an organization’s data remains secure and private. Further, because the service provider’s primary line of business is computing, it is altogether probable that the information technology team employed there has a greater awareness of security issues and the resources to address these issues than the information technology team at many small to mid-sized businesses.

· Disaster recovery. Because the servers on which the data is stored are often located hundreds, if not thousands, of miles away from a company’s office, and because data is typically duplicated across multiple “hardened” data centers, in the event of a disaster striking an organization’s office, neither the cloud-based applications nor the related data is impacted. Thus, in the event of a hurricane, fire, flood, or other calamity, the organization will still have ready access to their cloud-based applications and data.

· Anywhere access. Team members only need an Internet connection and a computing device – possibly including their smartphone – and a web browser to gain access to their cloud-based applications and data. This means that users can connect from almost anywhere and are no longer limited by the reach of their corporate network.

The potential advantages to cloud computing cited above should not be construed to imply that stormy clouds do not sometimes appear. Yes, there are potential risks associated with moving to the cloud. Chief among these are potential breaches of confidential data. For many businesses, moving to the cloud will actually enhance data security. However, as more data congregates in the cloud, it is logical to assume that hackers will target the cloud even more than they do today. Another potential issue associated with cloud computing is integration – how well can a cloud-based application export data for analysis to Excel, for instance. And for any company considering a cloud strategy, understanding the exit strategy from the cloud is a must. For example, if an organization moves its accounting application to the cloud and later decides to return to a traditional environment, can and will the cloud provider supply the organization with a copy of the data? These and other issues must be considered as part of any company’s due diligence when considering a cloud strategy.

Numerous, proven cloud opportunities exist today for business professionals – including accountants – in all size businesses and in all industries.

· Microsoft, Google, and Zoho all offer some form of cloud-based spreadsheet, word processing, presentation, email, and calendar functions.

· Intacct, NetSuite, QuickBooks, SAP, FreshBooks, Bill.com, and Concur are among many service providers offering some form of accounting functionality in the cloud.

· Salesforce.com, Microsoft Dynamics CRM, Sage SalesLogix CRM, and SpringCM are but a few of the companies offering cloud-based customer relationship management solutions.

· Virtually all major tax software companies – including CCH, Drake, Intuit, and Thomson Reuters – either offer cloud-based solutions directly or are available in hosted environments.

· Niche markets such as Budgeting & Planning, Project Management, and Business Intelligence are served by cloud providers, including Adaptive Planning, QuickArrow, and Jaspersoft.

· Service providers such as Real Time Data Services, Real Time Bookkeeping, Right Networks, and InsynQ are expanding their hosting offerings.

For many, cloud computing is a scary concept – no longer having our data and applications in our physical possession is a daunting proposition to many. Yet, as we fully understand the benefits and risks associated with cloud computing, the prospect of transitioning to that environment does not seem quite as intimidating as it once did. After all, fifteen years ago who would have thought that most accountants and other business professionals would have transitioned into online banking?

Mr. Stephens is a Certified Public Accountant and a shareholder in K2 Enterprises where he develops and presents continuing professional education courses to accountants and other professionals across North America. You can reach him via email at This email address is being protected from spambots. You need JavaScript enabled to view it..