Tag Archives | cloud computing

Cloud Computing: The Good, The Bad, & The Ugly

As I sat in my car, stuck in Houston traffic, I looked around and saw many other people stuck in a similar situation – frustrated, impatient, and banging their heads against the wheel. How easy would it be to never go into work, avoid traffic, and just stay at home or work at a local coffee shop all day? More companies are adapting to working remotely, and collaborating from home is increasingly easier… thanks to the Cloud.

What’s the Point of Cloud Computing?

For an example of why a company would switch to cloud computing, I need look no further than my own backyard.

The Strategic CFO started out as a service company, doing business through face-to-face consulting. We were one of the first in the market as a consulting firm for CFOs. Eventually, that market was flooded with competitors who offered similar, if not more services. Although we have developed additional services over the years, we have recently begun allocating more of our budget on the web and cloud technology, rather than spending money on a big office to support a more traditional model of business.

Long gone are the days where it is necessary for a company to have an office in order to be “in business.”

Technological luddites who aren’t quick enough to accept technology as the market is shifting may see their overhead skyrocket and may even find themselves in financial crisis. Having been in this industry for over 25 years, I’ve found this to be a common issue in many companies.

Cloud Computing Benefits

Cloud computing helps companies cut long-term costs. There are many advantages to being part of the cloud, such as no need for office space, more storage, flexible availability, and ultimately tracking Key Performance Indicators easier.

Telecommuting vs. Office Space

As mentioned, some businesses don’t operate in an office. Instead, many businesses are experimenting with telecommuting (or “working remotely”) and foregoing their expensive office rent. I once had a client who was entirely virtual – I never even met the person. For all I know, that client could have been working in their pajama pants!

Previously, we spent thousands of dollars a month in rent, yet we were rarely in the office because we were interacting with clients in their offices or via the web. That was when we knew we had to get rid of this expense. The decision to switch from the office to telecommuting using the cloud saved us easily around $40,000 a year. That budget was then allocated to other areas in our company that were growing. Reallocating liquid assets has helped us be more flexible and able to shift with the market.

Less Hardware, More Storage

In the early days of computing, data was stored on huge supercomputers that were virtually impossible to move. This made it difficult to share information or work on projects that contained a lot of data.

Now, there are many platforms to store, create, and share data. Apps such as Quickbooks and InfusionSoft perform services that were previously performed on computers and hard drives.  By working in the cloud, a company can easily expand their ability to store information. Some companies even offer unlimited storage with a subscription package – an industry that was started as a direct result of cloud technology.  Even better, these companies will back up your data nightly – a practice often neglected by many businesses.

Anywhere, Anytime Availability

Another benefit of cloud computing is the availability of information from any location, and on any platform of technology. Like we mentioned earlier, the cloud allows for global collaboration and minimal miscommunication. As long as you have an internet connection, team members can access the same information from anywhere.  This can lead to huge leaps in productivity.

This contrasts greatly from traditional companies, where you have to ask multiple different people for data and do a lot of number crunching because the data varies. For entrepreneurial companies, this transparency is a blessing gift-wrapped and presented beautifully. For large corporations, this could be a security disaster. Thankfully, this “anywhere, anytime availability” can be controlled to reduce security risks while still improving productivity.

Eight years ago, Hurricane Ike made landfall in Houston, TX. It’s been estimated that 2.8 to 4.5 million people were without power – including our offices (where our standalone server containing all of our client files lived).  All but a couple of consultants had power at their homes, but couldn’t log into the server because our office had no power.  Had we been in the cloud, my employees could have logged on from their homes and stayed productive despite Mother Nature’s wrath.

Track the KPIs of your business

With cloud technology, it is also easier to track the KPIs of your customers and employees – hence, your overall business. CRM (customer relationship management) systems such as HubSpot, SalesForce, and InfusionSoft track the activity of both your customers and your employees, and analyze the data in real-time.

How does this help track KPIs? Well, for one, software can perform services that traditional companies need to gather multiple pieces of information from the employees quickly, analyze the numbers, and then make the reports.

Secondly, the data is communicated universally across the organization and is more accurate.

Finally, with faster number-crunching, you can more quickly resolve issues and grow your business.

Is your company having issues tracking (or even identifying) your KPIs? Download your free KPI Discovery Cheatsheet today by clicking here.

Disadvantages of Cloud Computing

With any type of technology, there are bound to be issues. Some of these disadvantages can be so problematic that they scare more people away than they bring in. The important thing is to analyze whether the benefits outweigh the risks

Integrating the change with your employees

On-boarding employees is a critical step that you have to undertake unless you want to risk high employee turnover. Likewise, implementing a new system calls for your company being responsible for on-boarding and training employees to to use it.

Integrating change with your employees will generally result in one of two outcomes: everyone embraces change or everyone sees change as evil so they’ve nailed their feet to the ground.

Security

When considering switching to the cloud, the biggest question you hear is “what about security?” Having all important documents and resources in hard copy form seems like the better alternative for some people; but when you think about it, the security issues with hard copies and the cloud are similar.

If the office catches on fire and you don’t have any backups, you find yourself in a bit of a situation. Likewise, cloud computing requires backups and continual updates to structure your system in a way that it becomes more and more difficult for the bad guy (or fire in the physical world) to hack into your system.

Technical Issues

Security isn’t the only issue to consider when switching to a cloud environment.  Sometimes, honest mistakes can occur that can cause setbacks. Occasionally, I and many others in my network mistakenly delete something without making a backup. Thankfully, we have not found ourselves in too much of a pinch as a result of our haste; but that’s not to say that technical issues can’t severely hurt a company.

Like it or not, cloud computing is probably here to stay.  It’s a powerful tool to not only save the costs associated with storing and accessing data, but can result in huge productivity gains due to greater access to information.  The improvement you can see in these key indicators might itself be enough justification to make the switch. 

Want help determining what key indicators you should be watching?  Download our KPI Discovery Cheatsheet here.

Cloud Computing Benefits

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Cloud Computing Benefits

 

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Continuous Accounting: The New Age of Accounting

See Also:
Reducing Your Cash Conversion Cycle
Key Performance Indicators (KPI’s)
Accounting Principles 1, 2, and 3
Accounting Principles 5, 6, and 7

Continuous Accounting: The New Age of Accounting

Continuous Accounting is the new age of accounting. It provides a more efficient way to review financial performance in a real-time automated process, and a trustworthy, repeatable accounting cycle to forecast future results. It also gives the financial department a larger role in strategy and planning.

The Old Model: Record-to-Report (R2R) Accounting

The traditional model consists of a linear record-to-report process for accounting. In order to complete a record keeping process, a company must report certain tasks and responsibilities pertaining to the company’s financials. Expect these to be completed by the end of the period – which can last anywhere from two weeks to two months. Store and manage the data in a large computer processor. Disadvantages of this process include:

  1. The data accumulated over a large period of time have a greater chance for error with unreconciled transactions
  2. Inaccuracy and misrepresentation
  3. Takes up too much time and loses effectiveness of team

The New ModelFinancial Strategies with Cloud-Based Technology

Managers and financial leaders cannot afford to wait a month to two months for reports to be processed. This is what bookkeepers tend to do. Continuous accounting changes the prolonging process from period-end to a day-to-day basis. The cloud platform is capable of recognizing and verifying information constantly and repeatedly, thus enabling it to be “continuous.”  This evenly distributes work rather than accumulating large amounts of tasks over time. Continuous accounting is an organized alternative to the old model of record-to-report accounting.


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Shifting Business to the Continuous Accounting Platform

In the past, bookkeepers would record with accumulated reports, which would process a month at a time at least. With the matching principle, the company matches the expenses that are incurred during the same period the revenue is recognized (or the time the service was performed). Instead of recording in batches, modify the accounting system record as they occurred. Now, the next progression is to continuously reconcile accounts and analyze detail. In order to do this, have companies automate their systems. Otherwise, bank statements and other records would have to be linked and reconciled daily.

The New Age of Accounting

Advantages of Continuous Accounting

1. Continuous Accounting processes financial information faster than before.

Certain companies depend on a faster cash conversion cycle, in which case this technology would be useful. Instead of reviewing financial information every month or so, continuous accounting will complete the processes day-by-day. The processing of financial information will be quicker, and key performance indicators will become more apparent and easier to fix. This allows financial leaders to eliminate risk and take action proactively and defensively.

2. Automated systems improve the productivity of the accounting departments.

Increased automation should result in the benefit of improved productivity. This reduces costs because taking the manual systems, rather than automatically through continuous accounting, and applying them everyday would be cost-prohibitive.

Disadvantages of Continuous Accounting

1. Adapting the finance departments to a new way of accounting.

Implementing change is always a challenge, especially when a department, trained for 10, 20, 3o years on how to properly perform accounting, does it. Larger companies would benefit from continuous accounting more than smaller companies, where new, younger, more adaptable people work. However, the disadvantage of switching from traditional accounting to this new automated technology is that the larger companies have employees that have worked as an accountant for 25+ years and aren’t as adaptable.

2. Financial statements may not be as accurate. 

Instead of waiting a couple of weeks before submitting invoices or reports, continuous accounting processes the information right away. This leaves little time to adjust and organize data. By using continuous accounting, the financial leader succumbs to having financial statements 90% accurate rather than the expected 100%.

How Continuous Accounting Affects the Future of Finance

Technology itself is changing finance departments globally. Continuous Accounting is just the start of new automation processes that pertain to large sources of data. Technology such as Continuous Accounting establishes a precedent for timely, cost-effective, and/or high-quality improvements for business.

New Age of Accounting, continuous accounting

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New Age of Accounting, continuous accounting

 

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FTC Examines Cloud Computing

The FTC examines cloud computing. While the potential value of using cloud computing in your organization should be considered, it is also important to consider the potential risks – legal and regulatory – you may face if your organization offers cloud computing services.

FTC Examines Cloud Computing

The FTC is currently examining the matter, per a request from the FCC.

FTC Examines Cloud Computing

FTC Examines Cloud Computing

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Cloud Computing: Advantages and Disadvantages

We currently run on a Windows NT server using Remote Terminal Services. It has worked like a charm and is instrumental in our daily operations. Unfortunately, it is coming to the end of it’s useful life. Our outsourced IT department has informed us that we should replace the system during the year. They are recommending that we go to their cloud computing system. We’re not sure.

Cloud Computing: Advantages and Disadvantages

Cloud computing seems all the rage right now. We have had our own local cloud computing system for the past six years. Now they are asking us to consider going to a “regional” cloud system. Google would like us to consider their “national” cloud system. I’m not sure I want our financial information floating around. Furthermore, what do we do if they go out of business or mess up our information. (Think ATT sidekick!).

The cloud computing advantages as I see them are: access from anywhere, secure backup, redundant systems in the event of national disasters, and limited upfront investment. The disadvantages of cloud computer are: control, security, and control. (Did I mention control?)

We have a client that is using a national cloud computing accounting system. The annual fee came up for renewal and the company demanded immediate payment. They would not finance the system like they had in the past. Our client was stuck. Also, the bill came due December 15. Not a good cutoff date.

As information has become more valuable and instrumental in our ability to service our clients I am not comfortable in outsourcing our servers. What are your thoughts? I would like to hear from anyone who has had any experience with cloud computing.

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cloud computing

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