Are Cloud-Based Accounting Solutions the Endgame? No, On-Premise Accounting Software Still Has a Role to Play.    

Are Cloud-Based Accounting Solutions the Endgame? No, On-Premise Accounting Software Still Has a Role to Play.    

Good accounting software is an essential part of any business. For decades, accounting tools such as AutoCount has helped accountants perform accounting tasks better and faster, as well as preventing costly mistakes. But while these tools have long been required to run off a local machine, the development of faster computers and internet connections meant that a new way of computing solution was in the works; Cloud.

Ever since it entered the market in earnest sometime back in 2009, Cloud-based solutions have quickly grown in popularity. The ability to host entire software server-side has its distinct advantages. It’s no longer necessary for users to purchase and install software anymore – all that’s needed is for the host server to allocate some of its resources to the user. This not only improves the economies of scale, but also significantly lowers the front-load cost for the end user.

However, Cloud-based computing solutions are still in its infancy and its future is uncertain. While many of its kinks can be ironed out in time, the highly sensitive nature of the data being handled in accounting means that it won’t be soon before the solution gains universal acceptance – if it ever does. There’s still good reason to stick to on-premise accounting software in Singapore:

General Concerns: Cloud vs On-Premise.

Data Security

Among the biggest concerns with Cloud-based solutions is data security. First of all, users have no control over their own data as it’s all stored on the host server. This is cause for concern as it includes company’s financials, client lists, passwords, bank account numbers, employee details and other sensitive information.

Second, the online availability of the data means that hacking and other forms of unauthorized access is a real threat. Identity theft issues could take months to rectify, and not all of the damage will be reversible. Larger firms are more likely to have to contend with online robbery (i.e. illegal online fund transfers). Cloud solutions providers can try to convince us that their security measures are infallible, but there are always loopholes. So as banks start swapping out cash for electronic checks, so did robbers swap out their shotguns for hacking tools.

Then there are matters of data privacy. The scandal involving the American NSA regularly tapping Google and Yahoo data hubs is proof that nothing is private online.

So while users of on-premise accounting software must spend more on data storage space, there is peace of mind knowing that they are in complete control of it. No amount of convenience or improvement in productivity is worth a hacker wreaking havoc in your company.

Customization –

Cloud applications are managed strictly by the host server and this includes the add-ons and customization options it makes available. While SMEs can usually find all they need, niche market businesses may find this arrangement inflexible. An example would be a manufacturing firm who need to take special processes into account.

On-premise accounting software provides greater control and customization that these businesses need, where trained IT personnel handle the highly technical aspects of the process. The same customization for Cloud-based applications is possible but will incur a hefty additional charge on top of the basic charges.

Cost –

Although initially cheaper and with better cost forecasting and manageability, the cost of running Cloud-based solution will add up over time. Assuming that subscription fees remain the same, over the course of 8 to 10 years it will start to exceed the cost of an on-premise accounting software solution. Subscription fees are also subject to change by the solutions provider, plus there may be other hidden costs including additional data usage fees or expensive add-ons.

Despite this, the difficulty of performing a server migration will probably means that most users will not have a choice but to absorb additional cost. In similar fashion, printer manufacturers used in the past was to sell the printers cheap to ‘trap’ users before charging exorbitant prices for the ink cartridges. It’s best to be wary.

Cloud users will also have to purchase additional licenses if they need to handle multiple business accounts. Additional charges will also be incurred should users exceed their data transfer limits and need to be factored.

With on-premise accounting software (e.g. AutoCount), the number of accounts that can be created using a single license is limited only by the user’s physical disk space. And remember, purchasing a piece of software means it belongs to you indefinitely.

Reliability –

The reliance on the internet introduces another risk – possible downtime. Problems with your ISP could mean loss of access, slow speeds and/or data loss. Cloud servers are also subject to possible service interruption (10 Biggest Cloud Outages of 2015). Applications running off the internet also tend to be slower than software running off a local system, regardless of how fast the internet connection is.

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Justine Foong

Likes lone walks in the park. Doesn't think that waiting an hour in a line for food is worth any recommendation. Believes that a major breakthrough in Engineered Negligible Senescence will come within this lifetime.