So much confusion about what is and what is not a cloud application – in just the past week I have seen two email newsletters suggesting that just because a your data is in a different place to you and can be accessed remotely this makes it a cloud app.  It doesn’t, it just makes it an application you can access remotely! 

And yes, this is an important distinction – let me illustrate this with a couple of examples of what are not cloud applications, then I’ll explain why this is important (to you, the user).

If you take a copy of a desktop application – for example one of the Microsoft Office products or a desktop accounting package – and install it on a server, then provide remote access via remote desktop or terminal services this does not make it a cloud application – no more than if you put it on a server in your office and access it from the building next door (or invite someone else – such as your accountant) to log in from their office.   So when you see someone advertising “hosted MYOB AccountRight” as a “cloud accounting solution” it’s not, it can’t be because AccountRight is a desktop package (a really great one, but a desktop package all the same).  Ditto with Quickbooks online – it is a desktop package, even when you access it via the internet.  

Not sure why this matters?  Ok, let’s see what this all means.  Last week I listed a few of the features of cloud applications:

• There is no upfront cost for the software, just a monthly subscription which helps with cashflow.  
• You do not need to install a server or any other IT infrastructure, again a big saving in cost plus this is a much simpler solution for those small businesses without an in-house IT team.
• You are able to access your data from anywhere, which is a great solution for the small business owner who wants to log in from home, or for businesses that run virtual offices.
• The functionality offered by many of these applications for a small monthly cost rivals what you could get from desktop solutions costing 10s of thousands of dollars.
• The ability to invite other users in to your application can provide you high levels of on-demand support at a very low cost (for example from you bookkeeper or from your account).

To these I would add a couple more when highlighting what the impact is for the end user of a employing a cloud application as opposed to a hosted desktop application.

• You can access your data from any machine – from a PC, or a Mac, from an IPhone or IPad.
• Many online solutions are designed to allow access from other “add on” solutions, using an “API” (or Application Programmer Interface) – whilst this is also possible with desktop solutions, it is in practice harder to achieve economically.
• One special instance of this is direct bank feeds – in the case of most desktop accounting software getting data into your software is done either by manual keying, or at best by a download and import process.  With hosted solutions bank transactions feed in directly

So what does all this mean for the user?  Well let’s narrow this down slightly to talk about cloud accounting solutions, rather than the host of other cloud applications.  For the user having their accounts in the cloud (rather than on a hosted server) means:

• Not having to buy software
• Not having to pay for annual upgrades
• Not having to pay additional licence files because you need more users
• Not having to run Windows software on your Mac (so that you and your accountant can share the same file)
• Not having to pay to large sums to have other applications integrated into your accounting system – examples of the types of systems that can integrate to Xero include payroll, inventory management, workflow management, e-commerce and so on.
• Never having to key another bank transaction (this is my personal favourite)!

For the user of one of these applications some of these differences will be critical to how you use the software.  For example if you work on a Mac but your accountant works on a PC you will not both be able to access the same file at the same time.   By having a direct bank feed (rather than having to download a file once a week, or once a month) and then importing this your data is always up to date.  Suddenly you can start to get some information from your accounting system to help you run your business better – or retain your financial advisor to provide this information for you, knowing it will be timely and accurate!

If you are interested in looking at a cloud based accounting solution MYOB have recently launched LiveAccounts, an entry level product, with a reduced range of functions at a lower price – perfect for the micro business.  Or for businesses that need slightly more from their software we recommend Xero.

Not sure which would be suitable for you?  Call us for a free appraisal.