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This article was first published in the October 2015 China edition of Accounting and Business magazine.

When business software first appeared, it was sold as a product – a set of disks and a paper-based user manual – that you installed on your computer and proceeded to use to create and store files on that same machine. Modern cloud-based computing, on the other hand, refers to software and documents that are held on the servers of a third party (typically the developer that created the software), which you access via the internet.

Simply put, cloud computing means storing and accessing data and programs over the internet. This allows you to access your data, information, programs and services, at any time, from anywhere – all you need is an internet connection and a device (a computer, a laptop, a tablet or a smartphone) to connect with. Previously you would have saved your files and programs onto your computer’s hard drive, so they were physically held by that particular device; with the cloud, it’s all stored online.

Most of us use the cloud every day. We run our lives on it, buying goods through Amazon, sending emails via Gmail, Hotmail and Yahoo, using social media platforms such as Facebook and Twitter, listening to music on Spotify and sharing files via Dropbox.

In business

The cloud lets you access content from any device. It’s often just a matter of opening up a web browser on your laptop and logging into a site or downloading the app version to your phone or tablet.

Businesses and consumers tend to use cloud applications differently. Some smaller businesses use consumer apps, but many take a software-as-a-service (SaaS) approach: they subscribe to an application designed to solve a business need (Intuit QuickBooks and Microsoft Office’s Web Applications are examples).

Some go down the platform-as-a-service (PaaS) route, creating their own bespoke cloud-based applications for use by everyone within the organisation.

There is also infrastructure as a service (IaaS), where the likes of Rackspace and Google provide an infrastructure that can be rented by other companies. Pinterest, AirBnB and Netflix all run their services from the Amazon Web Services cloud.

The cloud market is enormous. Market analyst IDC predicts that cloud spending will exceed $32bn globally by the end of this year. In the UK, 84% of businesses have already adopted a cloud solution, and four out of five adopters use multiple cloud applications.

Business benefits

The over-arching benefit of the cloud is that it helps employees in all sectors work efficiently and collaboratively wherever they are. Most cloud products use intuitive, simple interfaces that require minimal training to understand.
Let’s look at the benefits in more detail:

  • Working on the move. Employees are no longer confined to their desks. Because you can log into the cloud with a mobile device, you can work on the train or from a café. In fact, all core back-office business functions can be carried out in the cloud. 
  • Better security and backup.
Lost laptops and leaked data can have serious implications for the offending business or individual. But with cloud applications, data and confidential information can be securely protected through complex encryption algorithms – a mathematical lock and key. Should there be an equipment failure, or a flood or fire, your data is safe when it is stored in the cloud.
  • No upfront costs.
Buying hardware and servers and upgrading business processes entail huge upfront investment. A traditional system means planning and paying for maximum possible usage. But with cloud tools, you are subscribing to a pay-as-you-go service. You typically pay a fixed monthly fee; some services even allow you to pay only for what you use. 
  • Fast implementation.
Implementing or upgrading systems and software across an organisation can be a time-consuming task, but with the cloud, you typically just sign up online and start using it. A lot of cloud software works on an ‘ecosystem’ principle: you subscribe to a cloud platform and switch on only the parts of the platform you and your business need, speeding up implementation.
  • Instant scalability. If a business goes through significant fluctuation in activity or workflow, traditional processes can struggle to cope as demand increases, or become unnecessarily expensive and wasteful when it drops. The online and flexible nature of cloud applications means you can scale up and down at will and pay only for what you need.

Cloud for accountants

Cloud-based accounting software transforms the way accountants can work with their clients. There’s no need to sift through client receipts and manually enter them into a desktop-based accounting platform. Receipts can simply be scanned in from any device by you or your client, uploaded to the cloud, synchronised with associated documents across that client’s profile, and updated – all in seconds. Tasks like updating bank numbers and reconciliation can also be automated.

Intuitive cloud software also makes cleaning up and fixing errors obsolete. Inbuilt parameters will not allow you or your clients to progress with a task until details have been completed accurately. Inconsistencies with other associated forms can be flagged, and notifications sent to remind clients that a particular task needs doing, whether on a regular monthly basis or as a one-off.

Cloud accounting can also enhance the accountant-client relationship. Unlike traditional accounting, where the financial data is generated once a month or even once a year, the cloud gives real-time access to all this information and can be constantly kept up to date with clients’ finances and cashflow position. You can log in at any time and have complete, real-time visibility of your client’s processes and make sure they are, for example, labelling transactions correctly.

Blue skies beyond

The cloud can have a transformational impact on a practice. Cloud-based accounting software lets you serve your clients better and even apply its tools to your own business. This can give you faster and deeper insights into ways to improve and grow your practice – everything from offering new services and capabilities to simply being more efficient.

These changes represent a major evolution in managing the books, and practices are set to reap the rewards through greater efficiency, a wider skillset and a deeper role in their clients’ businesses. This in turn will drive up the value of what you offer, resulting in higher profits, higher gross recurring fees and more capital value.

More broadly, cloud is enabling the industry focus to change from a purely compliance-based service to strategic partnering – the accountant can act as a virtual FD for clients. Using the greater insights and other benefits that cloud accounting provides, accountants can offer more premium services and adapt the role that they play with their clients.

There is no mystery to the cloud – it’s just an efficient tech-enabled way of working that lets businesses, including accountants, totally change the way they offer their services. And once understood, it can be a powerful tool for moving businesses forward in any sector.

Rich Preece, UK VP and managing director, Intuit