AccountsIQ recently published a series of articles in the AccountingWEB Supplier news section delving into different aspects of cloud accounting.
In an attempt to convince businesses dragging their heels over migrating to the cloud, AccountsIQ argued that web-based services offer a more robust business infrastructure for less long-term cost.
On face value, the monthly cloud software subscription could put businesses off when compared to seemingly smaller costs for updating existing desktop solutions. But that does not account for the overheads and inconvenience involved in maintenance work on different PCs, and the requirement for regular hardware and software “refreshes”. These issues disappear with cloud computing.
AccountsIQ argues that cloud accounting has more benefits than just the cost savings. Security is often cited as a concern for businesses considering cloud-based systems, but a guide on this topic points out that in-house private networks are also to the internet, so they are just as susceptible to hacking. Because they specialise in storing and processing data for thousands of customers, online data centres tend to have higher security standards than non-specialist organisations.
In its breakdown of the costs, AccountsIQ explains how in-house costs dwarfs the cloud computing’s monthly cost. The detailed workings exclude workstations and printers which are essential for both cloud solutions and in-house solutions. But AccountsIQ has published a spreadsheet that is worth consulting if you are considering the financial implications of cloud systems.
The article also tackles some of the prevailing misconceptions that influence cost comparisons:
- But in house solution is free! The argument against switching to the cloud from many companies is that they have paid off the in-house solution, so why wouldn’t they use the free solution rather than incurring a monthly cost with the cloud solution. AccountsIQ concedes that this valid argument but also encourages you to listen closely to your in-house solution, and if you have had it for over five years, you will soon hear it creaking
- Labour costs AccountsIQ lists labour as the most significant cost in the infrastructure management. With the in-house strategy a labour infrastructure is needed in order to ensure that the records are backed up, staff training, and the overheads including holiday pay, and other HR rigmarole which goes along with hiring a member of staff
- Maintenance Once you factor in the maintenance of the in-house desktop solution the amount of money you pay out start escalating, Consider the in-house solution payments:
- Recovery / server facility insurance
- Virus protection
- Storage costs
- Repair costs
- Office space for servers
- Microsoft office cost
- Enhanced application support
- Energy cost for server
- Off-site storage cost
Compare that with the operational costs of the cloud:
- Extra broadband bandwidth
- Application support cost
- Microsoft Office
AccountsIQ lists a modest maintenance expense for the cloud solution. The maintenance services which ramp up the in-house costings are all covered within the monthly cloud subscription charge.
The AccountsIQ projected monthly cost for the in-house solution clocked in at £3,890, yet the cloud solution option proved a much more frugal option costing, in its estimations, just £290.
For a fuller explanation, see Analysing the cost savings of cloud computing.
