Collaboration and client portals are all the rage and the Dropbox online storage service is proving to be a popular choice. Among the service's 50m users are increasing numbers of UK accountancy firms, judging from contributions to a recent Any Answers debate on the pros and cons of Dropbox.
The thread was sparked by a question from jaybee661. Having started practising from home, jaybee wanted a way to make the same files accessible from the firm’s new office: “Is something like Dropbox the answer so I can ‘see’ the files (and, more importantly, make changes to them) wherever I am?”
Nearly 70 comments were posted in response. This article sifts through the evidence presented to throw more light on one of the internet’s most successful recent phenomena.
Top Dropbox tips
Experiment The combination of instant back-up and joint access makes Dropbox very flexible - you can even use it to host a fully working website.
Consult clients If they prefer idiot-proof Dropbox approach to file sharing, get their written agreement
Use it to collect client data Safer and more secure than email
Encrypt data if you are concerned about privacy, and familiarise yourself with DPA, ICO and safe harbour requirements
Make Dropbox your “MyDocuments” location to back up all your files automatically. Lifehacker explains how
Consider alternatives If consumer-oriented Dropbox service does not cater for your needs (see box below)
Dropbox - what it is
As one of more than a dozen AccountingWEB members who came forward to discuss their experiences with Dropbox, Hansa descrbed it as a “very useful cloud service for synchronising non-confidential data”. The advantages include ease of use for uploading and retrieving files to the web, compatibility with most mobile devices and built-in synchronisation between PCs, Macs and smartphones that you connect to the service. Once you load up a file, the latest version is available on all your devices.
The big concern Hansa and others raised was around security. After a few recent headlines, some users who delved into the data protection arrangements were less enthusiastic about using it for storing or sharing client files.
“It's great for granny's photos, not for business”, commented Hansa.
But Paul Scholes and other Dropbox enthusiasts don’t see the need for ultimate security and are happy to live with the acknowledged risks: “Once you use it you'll chuck away all your memory sticks and realise how much more confusing life was before it.”
How accountants are using Dropbox
Dropbox is an online storage facility to which you can back up files from your desktop and mobile computers. It also share files so you can also use it to distribute or collect data from others.
The service is free for the first 2GB of storage, and you can earn extra space by encouraging others to sign up. Professional services can be purchased starting from $10 a month ($99 a year).
“One of the best uses is where clients have to send over lots of files in bits and pieces, say if we do their books, so they just dump them into a shared folder over the month and then email me when they are done,” said Scholes.
The app is also infiltrating accounting systems; online accounting provider KashFlow has adapted its software to let users to upload and attach accounting records such as quotes, invoices, customer/supplier data and journal entries to Dropbox and encourages its accountant clients to use the mechanism as a document portal for tax returns and accounts within Orbit.
Pros and cons
The comments in favour of Dropbox were consistent: “simple to set up, works well”, as AccountingWEB member ChrisMartin put it. Hansa agreed Dropbox is easier to use than many rival systems. Having used it as an email replacement to share files between offices in different countries, Dropbox also proved itself in situations where there were poor internet connections. But once a client pointed out some of the security issues, Dropbox has been relegated to non-confidential uses.
ChrisMartin also highlighted that Dropbox was not as effective for collaborative work as rivals such as Google Docs or Microsoft Office 365 (see below). If changes are made to an online spreadsheet file, the first person to finish wins and the competing changes are saved to a separate file.
The security issue
The discussion was dominated, however, by whether or not Dropbox offers the requisite level of data protection for accountants operating in the UK and registered with the Information Commissioner as data controllers.
Hansa put the case against Dropbox: “Be aware it is not secure and the servers are US based (thus minimal privacy). Their staff can access your files and thus give them to others... It’s great for granny's photos, not for business and very probably breaks data protection rules.”
The final point was rebutted by several contributors. Dropbox is hosted on Amazon’s US-based S3 web servers, which are covered by a safe harbour agreement effectively granting equal status to European Union-based servers under the Data Protection Act. Hansa’s concern went further, and related to provisions within the US Patriot Act that gave government forces the power to demand access to files held on US-based servers; the Switzerland-based Wuala service was suggested as an alternative, along with a few other rivals.
The original thread delved into the issue in great detail. If you do not have the time or inclination to research these issues now, be aware that they are important; some relevant links are collected below if you want to find out more later.
Also worth a look
Except where indicated, these services include a free personal/introductory service, with extra space and features available for additional fees.
• Microsoft Office 365 - 10GB storage included in £4 monthly fee, with email synching too
• Springcm.com - includes methods for collecting documents and workflow tools, starts from $18/user/month, but free to Salesforce.com users.
But the prevailing view on AccountingWEB was more pragmatic.
“I’ve been using Dropbox for my own personal files and client files for years,” commented member 0103953. “Any really sensitive Excel/Word documents are password protected. The US government would not be remotely interested in any of my clients… For the type of clients I have, the standard Dropbox encryption and security procedures appear sufficient for me.”
Dropbox itself has no in-built password facility, so protecting files before upload may be advisable for confidential data. Jonstanton advised that the DPA puts a responsibility on controllers of personal data to ensure it is protected in transit. “Whilst you may perceive the risk to be low - your clients may not be so comfortable with using Dropbox to hold their personal details,” he commented.
“If you want to use Dropbox I would try combining it with TruCrypt, so the files are encrypted before they are uploaded.”
Another point raised by martinlittle is that once you share a file on Dropbox, the person you have shared it with can then share with others, so you no longer have control over who accesses those files.
The weight of numbers and popularity with clients came down in favour of Dropbox, JC urged members who use it to check their PI cover before entrusting files to a public Cloud service, and to do a risk assessment of potential problems should anything go wrong with a site chosen as an online backup medium. “If all your backups were located in the Cloud, can you retrieve your material if they are closed?” he asked.
- More Dropbox coverage
- Dropbox hints & tips (Thanks to JC)
- AccountingWEB online storage archive
- Google Drive versus Dropbox and the rest: cloud storage compared (Guardian article, with thanks to David Terrar)
- Keys to the cloud castle - Economist blog
- Information Commissioner’s data protection principles (PDF)
- International safe harbour principles (Thanks to David Forbes)
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AccountingWEB’s interim Editor in Chief has been with the site since 1999 and returned to the editorial hot seat in March 2020 to support the team through the pandemic. When not tending to the needs of AccountingWEB members and geeking out on their technology habits, he devotes much of his time to an oddball collection of stringed instruments...