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Tech analysis: How will the cloud grow in 2014?

22nd Jan 2014
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AIA

Will 2014 be the year of cloud… again? AccountingWEB technology editor Andy Price sifts through the portents and predictions to see how accounting applications are likely to respond to the industry's big trends.

There have been lots of cloud predictions in the past few years about how it would transform businss systems including those associated with finance and reporting. Analysts have always insisted there will be an explosion. In reality, the cloud has been around for a long time, and in finance, at least, adoption has been patchy and slow to get off the ground. Cloud evolution will certainly continue in 2014 and we’re likely to it influencing organisational habits in new ways, particularly around mobile and social solutions - as FinancialForce.com's Jeremy Roche argued just before Christmas.

Predictions have been coming in from all ends of the IT industry. Frank Gens, senior vice president and chief analyst at IDC expects to see the emergence of platform as a service. He predicts the start of a migration from Infrastructure as a Service (IaaS) to data-optimised platforms that could encourage more accounting software providers to offer cloud options for their platforms. NetApp chief technical officer Jay Kidd also expected a hybrid approach in which both desktop solutions and cloud options would be offered.

And, unsurprisingly, security will also drive much cloud development.

While cloud applications have taken more more strongly in functions such as HR and marketing, AccountingWEB's 2013 Software Satisfaction Awards (SSAs) provided further evidence of slow adoption within mid-size businesses. Small businesses are getting on board - with cloud applications used by around half of our respondents, but with the exception of NetSuite, cloud software was less prevalent in the ERP and business intelligence categories.

Rod Newing recently highlighted issues with marketing big tech concepts in his blog Big Data: The third of a terrible trilogy. ‘The Cloud’ and ‘business intelligence’ make up Newing's trio of industry buzzphrases that are frequently misunderstood and misapplied by overenthusiastic marketers - and potentially hold back adoption because they confuse potential users and target businesses.

“The really sad thing is that the buzzwords disguise some very solid and valuable realities that can bring genuine change for the better,” he concluded. Cloud, BI and Big Data are much more about about getting the right info to people to make informed business decisions – which should be second nature for accountants. So what can we learn from this year's survey evidence?

What we learned from the SSAs

Analysis of the SSA survey results showed that barely 1,000 out of 16,000 product assessments were submitted for ERP and business intelligence applications. Excel and reporting tools attached to accounting and ERP systems remained the business intelligence tools of choice for most of our respondents.

Sage 200 has now joined NetSuite, FinancialForce.com and Aqilla in the mid-market cloud accounting race, but the majority of shortlisted vendors in the ERP and business intelligence categories were integrated client/server ERP programs. But that did not stop NetSuite from winning the ERP category.

ERP customer advocacy ratings were also lower than in other categories. The average finance manager is unlikely to feel the same personal bond with their accounting software as a one-man band, but the question has to be considered whether ERP applications are failing to meet expectations - a perception that goes back as far as the 1990 boom for often over-ambitious business re-engineering projects.

Despite this apparent reluctance within the AccountingWEB audience, analytics and business intelligence are not going away according to Gartner.

While cloud accounting is becoming the norm for SMEs, this only came about after an initial period of suspicion and doubt. Software developers and vendors will continue to embrace the web – and are usually driven to do this by customer behaviour. Sage, for example, is adapting towards a softly-softly approach. Moving its Sage 200 ERP product to the cloud last year, Sage opted for a hybrid strategy, retaining on-premise solutions.

“Our future focus is on cloud but we’re not killing off the on-premise apps,” noted chief technology and information officer for Sage UK and Ireland, Stuart Lynn. The hybrid approach is one developers and users can feel comfortable with, and suggests the hybrid prediction is a short-odds call for 2014.

The impact of cloud on BI is particularly interesting. Some of those with experience of established BI mention the excessive configuration and investment needed to get them working properly, which has kept them out of the hands of SMEs. Since the cloud gives more agility and flexibility in enhancing and rolling out a remote system - and can make it easier to deliver real-time updates - it could become a vehicle for driving the wider adoption of business intelligence.

So for accountants, a future in the cloud certainly isn’t quite here yet. But considering what we’ve learned in 2013, 2014 looks like it is shaping up to be a pretty interesting year.

What is your view of business intelligence software and the cloud? Is anything holding you back from applying it within your business?

Replies (9)

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By jon_griffey
22nd Jan 2014 15:45

Still early days

The first issue is cost.  I have looked at it seriously for our own small practice needs.  The quotes are coming out at up to £12K p.a.  Compared to our own server which costs us £2,500 and will last 5 years.  Once the prices start tumbling as I think they will as the market matures then there will be much greater take-up - but will this mean that providers go out of business as their margins are eroded?

Amongst smaller clients I have not seen much enthusiasm.  People would generally rather spend a one-off £150 on Sage Instant than £20 per month ad infinitum.

There is also the issue that we are trusting our valuable data to a company we may not have heard of, run by people we don't know in a place we have never been to.  The data centre may be owned by someone else and we are not even told their identity.  What happens if someone in the chain goes bust?  How safe is the data?  What about PI?

I think the professional bodies need to provide members with some guidance.

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Glenn Martin
By Glenn Martin
22nd Jan 2014 16:57

£12k per annum?

How big is your network John. I have arranged for a client a deal with an IT supplier I have worked with before.  And for a Network of 6 PC's initially it was something like £30 per month for the cloud storage, £120 per month for support + cost of broadband. I agree with your concerns around data security, and if the hosted server owner goes bust and how you get your data back. That will be a worry to clients aswell.

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By JC
22nd Jan 2014 17:15

Various …

@jon_griffey – you make good points, however, a great many have been covered multiple times on Aweb over the years. Not sure what your £12k consists of so unable to benchmark the figure, although it does seem quite high. Also don’t know the setup you envisage – is it pure Cloud, remote hosting etc. the combinations are huge and so can the price be.

One of hurdles may be the issue of concurrent licences which bump up the price – realistically providers should allow a number of licences in the monthly price (say 5) and then simply lock additional users out if exceeded. These licences would be dynamic / recycled – i.e. as soon as someone logged out it would release the licence for another. Again don’t know the size of your business or number of licences required

@Andy Price

Just wait until some enterprising company applies for the new domain extension of .cloud or .accounts etc. and then has everyone over a barrel

Of course the real question is, how many of today’s pundits making predictions actually were around or could foresee ASP, SaaS, Cloud at the outset (late 1990, early 2000) – and how many missed the boat and have subsequently jumped on the bandwagon as knowledgeable. As W.Buffet said ‘things always look clearer in the rear view mirror’

We then have the issue of Cloud naming, which rather than being an extension of the original browser/web-based concept seems to have moved away from multi-tenanted architecture and towards anything the marketers’ want to call Cloud – but then the idea seems to be, who cares provided it sells, so there is a huge ‘vague-speak’ market out there?

As for platforms – we already have Force and another approach is Servoy - http://www.servoy.com/

Nevertheless, data-optimised platforms sound remarkably like the current trend of ‘big-data’ which has been in existence for the past year/18 mths or so and therefore can hardly be described a crystal ball gazing

‘.. Jay Kidd also expected a hybrid approach in which both desktop solutions and cloud options would be offered ..’ – again not new. Seem to recall discussions on ‘disconnected data’ on Aweb about 3-5 (maybe longer) years ago. At the time there was a company on Aweb that said the provided ‘disconnected data’ accounting systems

Am rather wary of comment on Sage because of the inevitable firestorm it raises, however they do comprise 10% of the posting so here goes. ‘.. Sage opted for a hybrid strategy, retaining on-premise solutions ..’ – would challenge the comment and question what is meant by an hybrid approach. Surely in this context the concept of ‘hybrid’ means true ‘disconnected data’ whereby apps can run locally or via internet (doen't matter), with or without a connection; with delivery via browser based platform allowing for seamless intranet or internet connectivity (no either/or concept). The resulting data being synchronised the next time a connection is established

On the BI front - proper encapsulated access to underlying databases (i.e. M$ SQL Server, MySql etc.) to allow users to construct their own data extraction and manipulate the resulting data. These may already exist, but so far have not seen one that operates as one would expect, with a wrapped login to the underlying database, allowing the user to have direct access the information they want/need

Nothing so far could be termed ‘disruptive’ and most of the ideas are simply an extension of existing technology rather than ground-breaking

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By GBalarin
23rd Jan 2014 11:05

Cloud computing is already in use - much more than you might thi

An interesting point to add to this discussion - actually, more people are already using the cloud than they might think. For example, having a gmail or hotmail account - or even just accessing your work email via the internet, means your data is already on the cloud. These blogs - although from America - might be helpful. A video explaining how prevalent the cloud is: https://www.concur.com/blog/en-us/what-cloud-computing-means-your-small-...

And a thorough, in-depth analysis of the benefits of using the cloud: a post originally published on the Replicon blog https://www.concur.com/blog/en-us/you-cant-manage-what-you-cant-measure-...

 

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By [email protected]
23rd Jan 2014 12:24

Consumer V Business Cloud use

If you are using any of these consumer based cloud services, its well worth checking the small print. Apparently there are big discrepancies about 'rights' to the data that is stored. The entire IT industry is moving us down that route anyway. Laptops without internal storage, tablets, phones etc. Even Microsoft are ignoring the millions of business users with desktop PC's, mice and no touchscreen. Great, I have given up the ease of use of Windows 7 in favour of synchronising stuff to my phone (the perfect platform for updating a spread sheet). It's like everything, it will really suit some business models, but not everyone. There is a growing market of tech savvy owner managers who are happy to jump on Cloud Accounting platforms and it makes complete sense for them to do so. For the slightly bigger or (dare I say it) older organisations, accountancy resource is still vital and the systems still need to be fed the data. Having access to the internet helps! Big cities are fine, but for rural clients and firms, sometimes the old methods are still essential. That will change though... 

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By Andy Price
24th Jan 2014 17:27

.CLOUD registry

It's interesting you mention the .CLOUD registry, JC. I've written about that before: http://www.publictechnology.net/news/google-recognises-public-opinion-do...

It was lucky someone noticed at the time as Google and Amazon were both applying for it, though looks like they responded to the concerns... I haven't been keeping up with it recently though.

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By BobEdwardsLandmark
29th Jan 2014 10:11

Risk averse or benefit aware

I've over thirty years footfall as a professional adviser. I can remember, vividly, the time it used to take to achieve a snapshot of a client's trading position using manual systems.

I think cloud applications transform client service, and yes, there are data security risks - but minimized surely?

I am particularly drawn to services like Xero, where clients and professional advisers can access the same data platform. Stand-alone solutions just don't hit the spot for me anymore.

 

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By slarti
08th Feb 2014 17:44

Where are the SSA results?

It is all very well have an analysis of some of the results for AccountingWEB's 2013 Software Satisfaction Awards (SSAs) but it would be nice to see a list of what won in each category.

Searching here for "Software Satisfaction Awards" does not find them

 

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Replying to Accountant A:
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By Andy Price
10th Feb 2014 10:02

SSA Results

Hi slarti - all the winners of SSA13 can be found here: https://www.accountingweb.co.uk/article/ssa13-meet-winners/549515 and includes links to articles with further analysis for each category

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