In the simplest terms, cloud computing means storing and accessing data and programs over the Internet instead of your computer’s hard drive. The most common example in business today is internet banking – most businesses access their bank accounts through browser based software, with the data hosted in the cloud.
A cloud based accounting package is simply one that resides on a remote server and delivers the 'software as a service' or SAAS. Being cloud based means that access to the software is device independent and more importantly all data lives in the same environment.
Digital disruption is the change that is caused by the impact of new digital technologies on the way we currently do business. This impact changes the value proposition for many goods and services.
Most of the digital disruption on the way a business runs it’s administration or accounting function is as a result of data integration rather than cloud computing. The definition of Data integration from IBM is 'the combination of technical and business processes used to combine data from disparate sources into meaningful and valuable information. A complete data integration solution encompasses discovery, cleansing, monitoring, transforming and delivery of data from a variety of sources'.
This data integration aligns with the bank feed and other functionality of most cloud accounting software. It is this data integration that can deliver big efficiency benefits to businesses.
Cloud accounting impact
So what is the practical impact of cloud accounting on small and medium enterprises (SMEs)? Research released by MYOB in November 2013 shows that the automatic bank feeds function save the average SME 10 hours per month. The average value attributed to this time is saving $713. It’s obvious that time poor business owners place a significant value on saved time.
What is also very interesting is how these businesses use the saved time:
- from a business perspective 40% of clients who saved time with feeds spent it on improving systems and processes, 28% spent it on reviewing business performance and 20% spent it on strategic planning and marketing
- from a personal perspective, 38% spent the extra hours with immediate family, 29% on ‘me time’ and 26% with extended family and friends
The apparent willingness of small business owners to utilise saved up time working on their business provides an opportunity for us to work out what they need and how we can provide it to them.
The MYOB research also revealed that these business owners now spend 42% less time on bookkeeping thanks to bank feeds. 77% of respondents said bank feeds resulted in less work at end of the month and 71% said there was less data entry. Time saving was the biggest benefit (89%), with other benefits including easier bank reconciliation (75%), clients feeling more up to date with their accounts (70%), staying on top of financial paperwork (70%) and managing accounts more efficiently (70%).
Advantages for business
What the cloud does best is simplify your accounting enormously – saving you and staff time, so you both can concentrate on the business and your customers.
- access all your vital information from any computer, laptop, smartphone or iPad
- never enter a figure twice - with bank feeds, you’ll hardly have to enter figures at all
- tradespeople can invoice immediately on site from their smartphone or tablet
- plug-ins allow custom features e.g traveling staff claim expenses simply by taking a photo of their receipt
- accurate up the minute information is always in front of your accountant
- never need to back up to a thumb drive or disk that can get lost or stolen - in fact, you’ll never have to back up again, because your data is secure, always off site, yet always available
It is our responsibility as accountants to keep our clients informed on new developments in technology that can improve the way they do business. The cloud is a major shift presenting efficiencies and possibilities that change the way business and accounting can be done. We’re excited for small and medium businesses, because they have the most to gain. Time saved on repetitive tasks, greater security, convenience and flexibility and they are free from any single computer or location. When the accounting virtually does itself, our advisors with up-to-the-minute information can provide greater insight and guidance. And that enables you to do amazing things for your clients and customers.