The Hidden Cost of Cloud Accounting

The Hidden Cost of Cloud Accounting
By all accounts, the use of cloud software and applications is the direction of the future. In the not too distant future, all businesses and many service providers will be working either solely or substantially through the cloud. Fantastic, great, bravo many are saying, and while no doubt there are some significant benefits, there are also some unforeseen disadvantages.

Certainly some of the benefits include a reduced need for servers and the like being located in every office and business. This will lead to a reduction in computer hardware spending which some firms and businesses are already experiencing.

However, one obvious issue is what happens if the source of the cloud software or your files are unavailable?; there’s an access issue. I recall a practitioner recounting a situation where one of their clients hadn’t paid their monthly premium so the software provider simply locked the client out from accessing their own files. An interesting outcome. So perhaps some investigation into who actually owns the data and access rights may be useful when implementing such software or programs.

For the professions, there are also requirements, issues and concerns around data storage, hosting and location. Where is our information and data actually stored? Is it in Australia or somewhere else? How does this match our professional requirements? These are significant questions to ask.

Another issue that is gaining pace in the media is feedback about how internet service providers will need to increase capacity and speed. In anticipation of the NBN rollout across the country which will hopefully increase speed, many parties are currently experiencing real issues with volume and speed and the impact this is having on their current internet plans. For businesses and firms looking to increase the utilisation of the cloud, further investigation in this area will be warranted.

An associated issue with the above point is the likely increase in cost for internet access. If we are going to increase cloud utilisation, we are going to need greater speed and volume.

Recently we were valuing a firm whose cost for accessing the internet had increased by over 300% in a 12 month period. So while there were some gains in terms of hardware costs, another cost that often isn’t considered when going through the planning process for such a change, is the likely significant rise in internet access charges. Make sure to include such needs in future budgeting efforts.