The Cloud business case

The thread about confusing Cloud terminology has spilled over into whether or not Cloud applications are cheaper than desktop accounting alternatives, with Internet Accountant Richard Messik stating the case for and Chatman arguing against.

As he has claimed in his blog, Richard thinks Cloud apps are more convenient and greener as well as "generally cheaper". Chatman countered by mentioning the £125 cost of his VT Accounts program (with access to a free Cashbook) that he didn't expect to upgrade for 10 years.

In the interests of broadening the debate, even the analysts at Gartner are having a hard time swallowing some of the Cloud industry's Hype. In a report dismantling five myths surrounding on demand technology, Gartner argued that the cost advantage eroded after the first two years as users continued to pay their subscriptions. The study is covered in more detail by our sister site BusinessCloud9.com, whose editor Stuart Lauchlan frequently says the difference between Cloud and on-premise software is like renting or buying your house.

If anyone can come forward with some solid figures to quantify the benefits and cost comparisons, we might be able to put forward a better informed business case for the new approach.
__________________________
John Stokdyk, Technology editor

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daveforbes's picture

technical vs financial

daveforbes | | Permalink

Thanks for the links to the forester report. Very well balanced.

I understand the technical side, asp.net mvc, amazon S3 all that mullarkey. What I don't know and still have no feeling for is whether our users will be wanting online versions of our software in a couple of years time. They don't now, but they might in a couple of years. I would love to see a compelling business case for cloud because we could then get going on it wholeheartedly rather than tinkering.

At the moment I see pros and cons. On the positive side for web-based: not having to install/update, easier collaborative work with clients, pretty user interface, accessing from anywhere, not having to worry about data in the event of natural disaster.

On the negative side, having to have a permanent internet connection and worrying about my data in the event of economic catastrophe at my supplier.

Having access to the online data in an open format (so that it can be backed up to a PC!) would remove the latter concern.

The thing I really still have no handle on is this whole business case thing.

Logic vs emotion

Anonymous | | Permalink

This argument about whether applications in the cloud or on premises are better is a bit like arguing over whether flying is better than driving your own car. 

Air travel has been conclusively proven to be safer than driving.  Yet far more people are fearful of flying than of driving.  The reason?  Mitigating the risks of air travel is out of your control - you're completely dependent on other people doing things correctly. Whereas when you drive you are substantially (though certainly not completely) in control of what happens.

This is the same problem the cloud vendors have.  To me the evidence suggests their security and back-up systems are better than for on-premise software.  Yet plenty of people don't believe them or, even if they do, they don't like the loss of control involved.  They want to "drive" themselves rather than be "piloted" by someone else.  Perception becomes reality.

Logical - no.  Understandable - yes.

There are human emotions involved here and emotions are very powerful - more powerful than endless jargon-filled case studies.  It will be a very difficult battle for the cloud vendors to win.

daveforbes's picture

Airline analogy

daveforbes | | Permalink

Not so worried about the crash. I was more worried about my airline going bust before I fly. If my car manufacturer goes into receivership my car does not stop working.

I am sure a web-based vendor would be very careful with my data, I would just like to be sure I could get at it an an open format at short notice. Currently some web-based solutions are better than others in this respect. What would be ideal, and I know there is some talk of this, would be for data to be interchangable so that if vendor A disappeared I could swap to vendor B.

Demanding open data may seem unfair on web-based, as this facility may not exist in traditional software, but like my car, at least it will keep going for a while.

If there is an explosion in web-based solutions there will be some that don't stay the distance.

Perhaps with Amazon's online storage or the mythical google Gdrive there will be a move to all web based apps storing data in an open format somewhere accessible to the owner of the data and this won't be an issue.

DuaneJAckson's picture

a standardised format solves that... here it is:

DuaneJAckson | | Permalink

With our SaaS accounting solution you can schedule your data to be sent to you weekly or monthly in Sage/CSV format automatically. It's the closest thing we have to an industry standard format.

A guy called Martin Kleppmann was working on a standard format called oAccounts. But he hasn't had the time to push it forward. When it was initially floated as an idea, the main 4 (IMHO) UK SaaS accounting vendors were supportive of the concept. See here for more info

I've been speaking to someone else who has a commercial interest in making this work. (there was no commercial aspect to it for Martin, hence it ending up onthe back burner) Not just for accounting but CRM and all the other emerging SaaS spaces. He's talking to Martin tomorrow with a view to picking up oAccounts from where he left it.

So now all we need to do is incentivise the vendors to adopt it.

My proposal would be for there to be some sort of "easy in, easy out" badge vendors could display on their sites to show they support both importing and exporting in this format.

Then the user community needs to be educated as to what this badge means. Once conusmers start asking about it more vendors will support it. You never know, we might even get Sage on-board : )

DT - it's something we should discuss at an Intellect meeting and perhaps spread to the other SaaS groups as it does seem to be an issue affecting uptake.

Kashflow Backup

chatman | | Permalink

I have some clients on Kashflow. I quite like it, but I do not understand the automatic backup. There are no column headings, and the nominal ledger transactions do not add up to zero. Perhaps if there were column headings, I would see how to make them balance, but at the moment, the backups are useless to me. I accept that other users might understand how to use them.

Having said that, I love the idea of automated and one-off downloads of on-line data for backup purposes.

DuaneJAckson's picture

Blame Sage, not KashFlow

DuaneJAckson | | Permalink

There's no headings because they're in the exact format Sage requires for import. If it had headings it wouldn't import into Sage.

I am not blaming anyone...

chatman | | Permalink

...or criticising anyone.  All I am saying is that it doesn't work for me, as I do not use Sage. Apart from that I like Kashflow.

Having said that...

chatman | | Permalink

...if I did use Sage (which I understand most people do) it would be a great feature for me.

david_terrar's picture

Addressing the backup and data concerns....

david_terrar | | Permalink

Hi daveforbes,

Great to see your commentary here softening on the issue.  Understand the data backup issue.  Several of the products mentioned in this thread allow you to copy all of your data at any time.  Duane's can do it scheduled, which is a cool feature.  He uses Sage format.  Others use a series of logical spreadsheets with headings to make it easy for you to import generically in to other systems, and then others do it by giving you a copy of their database.  This and the "what happens when the provider goes bust" question are two issues that the industry has to get better at addressing - the 3 vendor groups that are now cooperating will put some effort in to that.

Hi anonymous,

Absolutely spot on with the airline vs. car analogy - that captures the problem perfectly.

Hi Duane,

Let's put that backup "standard" discussion on the agenda for the next Intellect SaaS Grouo meeting.  I'll also feed it in to the discussions that are going on between Intellect, EuroCloud and the BASDA Cloud SIG.  

David Terrar

D2C and Twinfield  

daveforbes's picture

XBRL

daveforbes | | Permalink

@duane - looked at your link re. oAccounts.

I think this would be great (and also make export to stat. accounts and tax packages much simpler too !). I noticed that on the comments on that link a number of comments re. XBRL not being suitable for this as it is primarily a reporting language. Yes and no. Maybe have a look at XBRL-GL see. http://www.xbrl.org/GLTaxonomy/

@ david - re "softenting of commentary" - more todo with time of day than anything else !

david_terrar's picture

XBRL

david_terrar | | Permalink

@daveforbes.

I'm with you on XBRL as a potential standard for this - we're just working on two separate inititiatives applying that standard for data import/export beyond just government reporting.  Worth exploring as part of this idea.

David Terrar

D2C and WordFrame

daveforbes's picture

XBRL GL

daveforbes | | Permalink

The reporting side of XBRL is often referred to as XBRL-FR - this is the bit that we do for reporting to CH and HMRC - www.tax.co.uk/hmrcxbrl.htm 

XBRL-GL is the bit aimed at getting data to and from accounting systems, but I should warn you - the learning curve starts vertical and gets steeper ! 

david_terrar's picture

XBRL for Dummies

david_terrar | | Permalink

@dave

Dennis Howlett edited the very good "XBRL for Dummies", which was my starting point.

David Terrar

D2C and WordFrame

daveforbes's picture

separate thread ?

daveforbes | | Permalink

Maybe the last few posts should move to a separate thread on "getting at my data" oAccounts / XBRL - GL / xml / csv.

John Stokdyk's picture

Whoah! This thread has exploded!

John Stokdyk | | Permalink

Sorry - I spent two days on the road there and the discussion has shot out in several directions from the original starting point.

I'm definitely taking on board the suggestions from the two Davids. In Richard M's absence, I'll kick off a few new threads and gather together info on:

  • Total cost of ownership comparisons
  • Useability
  • Data backup, import/export & standards
  • Cloud case studies & reference library

I noticed through the thread that the points being raised about APIs and development strategies were being argued mainly by suppliers - would it be helpful for you to have your own thread, or even a separate forum? Another line of discussion that should have its own place, I think!

PS - helpful suggestions about organising the content, too, David. That is one of the very good ideas I've picked up from this thread and will put it on my agenda once I've dealt with the material from our Business Cloud Summit meeting.
____________________________
John Stokdyk, Technology editor

david_terrar's picture

Extra threads

david_terrar | | Permalink

Hi John,

Extra threads for those topics - that would be great.  Pulling together some of these explanations and links in to a resource, also great.  Not sure if the SaaS providers need s separate thread, but I'll comment there.

One question, triggered by Stuart Jones - why are these groups "members only"?  Surely it would be much more useful if they were open to any AccountingWEB user, like the Any Answers section.  It's one more step that might put some off, and it makes them more hassle to access from a BlackBerry or iPhone. 

David Terrar

D2C and WordFrame

A User Thread might be better?

gsgordon | | Permalink

I don't really see the point of having a "Cloud suppliers' club" thread to handle discussions that might get too technical. It would be better seen as covering all the issues that are not dealt with in the focussed technical threads -

  • Total cost of ownership comparisons
  • Useability
  • Data backup, import/export & standards
  • Cloud case studies & reference library

Any topic that becomes hot in the "club" would perhaps then merit a new focussed thread.

It might be worth having a "User club", where the user community doesn't have to worry too much about the terminology. Suppliers and experts might then respond in similar terms and, where appropriate, point to relevant information in the other threads.

RedTapeDoc's picture

How secure is it

RedTapeDoc | | Permalink

-- A complete solution to your employment document needs, employment policy, employee handbook, employment contract and HR letters and forms

Fluffy white storage is not one that fills many with thoughts of security ....

 

 

cverrier's picture

More secure than your current system...

cverrier | | Permalink

@RedTapeDoc

'Cloud' storage, to be clear, means that your data is stored on high quality servers, in an enormous, purpose-built, windowless, data-centre with top-notch fire supression and multiple layers of physical security (in many cases, very few of the data-centre's own staff are allowed access to the server racks themselves). The buildings are unmarked, and their exact locations are not advertised. The data is backed up regularly throughout the day. 

The data-connection into the centre is protected with enterprise-class firewalls, and is actively (and continuously) monitored for problems and attacks.

How many of us can say the same for our office IT systems?

 

 

garyturner's picture

Unsecurity

garyturner | | Permalink

Double click most charts in a PowerPoint deck and you might be surprised to find that the source data is embedded within the presentation.

If the person who created that presentation didn't realise this critical fact, and was sitting on a full extract of their customer or sales database in order build a graph showing sales of a new product, for example, and then made that presentation freely available as a download to thousands of people...

I'll say no more.

PS - It wasn't me.

cverrier's picture

So....

cverrier | | Permalink

So, Gary, it's the users, not the technology that are the biggest issue - which I'd fully agree with.

I once had an argument with someone who wanted me to PROVE that a particular system was compliant with Data Protection Act.   I had to explain that (leaving aside the issue that the DPA doesn't set technical standards for software) the most amazingly secure system could be made insecure in an instant if some dopey user wrote their password on a post-it note and stuck it on their monitor...  

I note that Microsoft are proposing facial recognition be built in to Windows 8, which might be interesting!

 

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