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How to find just the right 'flavor' when selecting cloud accounting software

For something that now depends so heavily on modern refrigeration technology, ice cream has a lengthy history going back to ancient times. The earliest known frozen desserts were crafted in China more than 2000 years ago, long before the electric-powered freezer could even be imagined. Different recipes and techniques for making ice cream were honed over the following centuries, but, until relatively recently, anyone who wanted easy, on-demand access to it really needed his or her own icehouse.

However, this type of ornate structure required a lot of real estate, plenty of insulation (e.g., sawdust or straw) and proximity to a reliable freshwater source such as a lake or stream. As such, ice cream was out of the reach of mainstream consumers until the late nineteenth century, when commercial refrigerators started to hit the scene. When home freezers finally became commonplace in the twentieth century, ice cream's popularity was cemented.

The meteoric rise of cloud computing in business IT in general and in budgeting and forecasting software in particular has played out a lot like this spike in ice cream's prevalence throughout the 1800s and 1900s:

  • Whereas ice cream making once necessitated a well-maintained local ice house, everyday IT workflows - such as running reports or wrangling with a customer relationship management application - once required similarly extensive on-premises infrastructure. Servers, storage appliances, IP networks, you name it: All of this equipment had to be bought and maintained in-house, at great cost to the company.
  • Small businesses eventually got the option to utilize hosted solutions, which allow them to access unique instances of software over the Internet through a mechanism such as Citrix. Think of this setup as the ice cream parlor of IT, in that you can get what you want but only through someone else's technology (i.e., big freezers in the case of the ice cream shop, and infrastructure in that of the hosted software provider).
  • Cloud, although around in some form for decades (early versions included the "thin client" computing of pre-Internet multi-user systems), only came into its own in the last decade plus. Like the home refrigerators that made ice cream available almost anywhere, cloud software removed many age-old hurdles to access, effectively giving businesses the applications they needed at any time via the Internet.

How do you find the right flavor of software delivery for your SMB?

Ice cream now comes in thousands of flavors, but a few classic ones like chocolate, vanilla and strawberry still have a hold on consumer taste. With SMB software, another trio of options accounts for most of the market: on-premises, hosted and cloud/software-as-a-service, which we described above.

Cloud is an increasingly popular software delivery model.
Cloud is an increasingly popular software delivery model.

Selecting the "right" delivery model from these three depends on your company's particular requirements. For example, on-prem may be the first pick if you deal regularly with privileged data like health records, while SaaS may be the best solution for cutting overhead, getting real-time access to data and ensuring scalability as your business grows.

Beyond these models, you also have to consider whether your SMB would be better served by a mix of best-in-class solutions or a software suite. Here, your particular functional requirements for financial software will play a central role in determining your choice. These specifications cover a lot of ground, from inventory and order management to reporting and accounts receivable/payable. Across all of these fields, you will want tools that can handle complex financial scenarios, with the ability to process multi-currency, multi-book and multi-entity accounting.

There are two main ways to ensure that you get such functionality:

Best-in-class
This approach entails integrating a variety of independent applications, each of which is deemed the "best" for its given department. If you have deep functional requirements, then the autonomy and flexibility of this best-in-class route is an ideal fit. You will have to figure out your integrations and workflows and also buy your software piecemeal, however.

Suite
As its name implies, a software suite includes multiple applications bought as a bundle. This arrangement has the advantage of being relatively simple - there are fewer choices to make, and everything is already well-integrated. The chief drawbacks include the need to replace existing tools and less flexibility in terms of meeting functional requirements.

The difference between these two categories is sort of like what separates a do-it-yourself sundae bar from a box of Neapolitan ice cream. One gives you choice and autonomy, and the other gives you pre-integration and variety.

Evaluating cloud financial software: What to look for

Any diligent purchase process for accounting software will include an extended evaluation phase, in which you compare product demos, vendor reputations and expected returns on investment. Say you have decided that cloud/SaaS is the right fit your SMB. Evaluating the potential options in this space can be daunting, since there is so much more to keep an eye on than there is when sizing up on-prem or hosted solutions, including:

  • Infrastructure quality and security
  • Operational track record (of the provider)
  • Implementation processes
  • Level of support
  • Cost-effectiveness compared with what you could do on your own

The last point is crucial. Cloud software should be supported by top-tier data centers with redundancy as well as encrypted systems, all of which would be covered by a regular SaaS subscription. This flexible OPEX of cloud can provide enormous savings over the rigid CAPEX you would have to deploy simply to match the dependability of an ideal cloud solution.

"Cloud software automates activities such as revenue recognition."

It's the iceberg, rather than ice cream, that provides the best metaphor for understanding how cloud budgeting and forecasting software can save you money. With cloud, the "tip" of the iceberg is the subscription fee, which represents the bulk of your costs; the hidden part consists of implementation and training-related expenses. With on-prem, the tip is your software licenses, which pale in comparison with the ongoing maintenance you'll have to conduct.

Cloud software boosts your bottom line in other ways, too. It automates activities such as revenue recognition, helping to reduce common errors from manual processes. As a result, you also get to close your books more quickly than before. The long-term ROI of using SaaS like Intacct for your accounting will make you wonder how you ever got by with spreadsheets or legacy desktop software in the past.

Tagged With: Cloud Financial

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