“Cloud technology” has become a common term in IT jargon, but what exactly is it and how can it be used effectively by businesses.
The idea of “cloud computing” is to use the internet to access software rather than physically installing it on a computer. It is sometimes also called “software as a service” (SAAS).
Many people use cloud computing without realising it. For example anyone with a Hotmail or Gmail account is already “in the cloud” as the software and data is stored remotely and is accessible from any computer, not just the user’s.
Cloud based software or applications offer a number of potential benefits for SME’s. For example, the cloud alleviates the need for businesses to store and manage data and maintain computer hardware. With cloud based applications, an SME could in theory operate from a single computer with a standard modem providing an internet connection, without being connected to a server or having specific software installed on the computer.
The cloud also offers access to data storage, email systems, customer relationship management applications, accounting and finance solutions, and productivity tolls. Models allowing a user to pay a monthly fee for access to a cloud-based application are becoming more prevalent.
Recently there have been major developments in accounting and bookkeeping applications, with software providers such as Xero, MYOB and Reckon (Quickbooks) developing products which allow SME’s to access to their accounting packages online. This means SME’s can manage their bookkeeping, accounting and financial needs without the IT infrastructure that would have been necessary in the past.
One advantage of this approach in accounting is that communication and decision making becomes far more efficient and at a reduced cost. Gone are the days of reconciliation and data entry before decisions are made. Now the Banks can feed electronic banking information directly into software and transactions are identified, matched and reconciled in real time.
This enables business owners and managers to better focus on their business’s performance and financial metrics rather than the process of entry and collection of data.
However the potential benefits of cloud applications need to be balanced and assessed against the risks they present. The most obvious issues include:
- Where is the data stored and who can access it?
- Does the software provider have data recovery and backup procedures?
- In which country is the provider’s servers located and under whose law is the data protected?
- What security measures have been put in place by the software provider, including firewalls, virus protection, or hacking protection?
These measures must be considered before any decision is made to move sensitive business and financial information into the cloud.
SME’s should carefully consider their use of cloud based applications to take into account the risks and the benefits as part of their overall IT and business strategies.
