In a rapidly evolving business environment, an increasing number of accountancy firms are turning to cloud-based accounting software to help improve their time management, efficiencies and output.
Cloud accounting provides powerful and transformative applications that have the potential to add substantial capacity to company resources. Automation, centralised data, client portals, communication tools, and resources help to considerably reduce the workload by removing many repetitive or basic tasks, increasing processing power, boosting output, and enhancing accuracy.
Challenges of cloud accounting adoption
Firms that lag in technology investment are at a disadvantage, but migration is not without its challenges, including:
- Data security
Due to the sensitivity of their data and the pressure of data protection regulation, accountancy firms may be understandably reluctant to hand over control of their data to third-party service providers. However, cloud-based solutions offer incredibly tight security in today’s computing environment. Security is a core responsibility of cloud-based service providers, and they devote significant resources to the issue. Services include robust encryption, access controls, and vendor due diligence, and should a vulnerability arise, a patch is immediately available. An internal IT team tends to respond to vulnerabilities slower, typically held back by competing priorities.
- Integration with legacy systems
Business continuity is paramount, so migrating massive amounts of data can be incredibly complicated. The integration team has to manage a number of complex issues, such as data incompatibility, technological obsolescence, security risks, and user adoption.
It requires a careful and phased approach, which can take months. It is sometimes necessary to build customised software to help bridge any gaps between legacy systems and new applications. Specialist platforms like Silverfin can provide APIs for seamless integration with existing systems
- Downtime during transition
Downtime during transition is inevitable, and given the cost of being offline, it is a significant disincentive. It is manageable, however.
The first step is to check the quality of the data to be migrated, deleting redundant or duplicate data, reducing data volumes, and enhancing data quality. Ensure the migration method is the most appropriate for the company size and resource availability. There are various options.
- A system blackout migration shuts down the on-premise application, transfers data to the cloud-based database, and then re-starts the application in the cloud. It is a straightforward and secure method, but it can result in significant downtime if the dataset is large.
- A dynamic migration approach minimises downtime while keeping the migration process relatively straightforward. A master version of the database is hosted on the in-house data centre and a replica copy is set up in the cloud. One-way data synchronisation occurs from the on-premises master to the cloud replica. Any changes to data during the migration are made to the master. Eventually, the two databases are switched: the cloud-based version becomes the master, and the in-house version becomes the replica. This method has a much shorter downtime than a system blackout approach.
- Synchronized migration carries the most risk but, if done well, results in minimal downtime. Users create a replica of their on-premise master database in the cloud and establish a bi-directional synchronisation between the two masters, creating a multi-master database configuration. Data can be accessed and edited on either master, updating both in real-time. Users can run instances of their application on both masters and redirect traffic to the cloud master to minimise downtime. Should there be an issue, the on-premise master is available as a backup.
- Reluctance to change
Employee resistance during change is a common issue, especially when the change is complex and drawn out. Leadership and active communication under these circumstances are key, and are especially needed at times of discouraging setbacks during implementation. Clear strategies, open communication and strong leadership can greatly diminish resistance. Invest in training, support resources, and ongoing feedback sessions to improve confidence and help teams navigate the new software.
- Cost
Some firms may view the cost of migration as a disincentive. Upfront costs and integration and implementation resource costs can seem high, but cloud-based software offers significant savings over the long-term. A recent survey shows that nearly three-quarters (74%) of respondents’ experience revenue growth after migration. It’s also possible to manage costs using a phased adoption approach.
Benefits of cloud accounting solutions
While these challenges may cause hesitation, especially for under-resourced or smaller accounting firms, successful integration can deliver new efficiencies and better position the company for growth. It also supports innovation and provides an improved response to market demands while reducing operational costs and enhancing system security.
Benefits of cloud accounting solutions include:
- Real-time data access
Users can access financial data in real time from anywhere with an internet connection, so decision-makers always have up-to-date information.
- Improved collaboration
Multiple users can access and work on the same document at the same time, regardless of their physical location. Powerful communication tools reduce the need for back-and-forth emails and file transfers and keep all conversations in one place for quick reference.
- Automation
Routine and repetitive tasks such as invoicing, payroll, and reconciliation can be automated, reducing the potential for human error, ensuring consistency and accuracy in financial reporting, and giving team members more time to focus on high-value strategic activities.
- Scalability
Cloud-based solutions tend to be highly scalable, a useful feature for businesses of all sizes. As a business grows, cloud based software can easily accommodate increased data volume and additional users without significant infrastructure change or investment.
- Increased efficiencies
Automation and real-time data access help to streamline accounting processes and reduce time spent on manual tasks. This increased efficiency allows businesses to focus on core activities and strategic planning, ultimately driving growth.
- Reduced operational costs
There’s less need for physical storage, paper-based processes, and manual labour. Cloud-based solutions often come with subscription-based pricing, which can be more cost-effective than maintaining on-premises systems.
Real-World Success Stories
KPMG, one of the Big Four accounting firms, adopted cloud-based solutions to enhance their audit and advisory services, improve data analytics and client collaboration.
Integrating cloud-based accounting software with existing systems was particularly challenging, but partnering with a specialist cloud provider resolved this. The service provider ensured that all staff were using new tools and processes, helping to achieve a seamless integration.
Results:
- Improved data analytics: Enhanced data analytics capabilities provided deeper insights to clients.
- Enhanced collaboration: Real-time data access and collaboration tools improved client interactions and service delivery.
BDO, a global network of public accounting firms, transitioned to cloud-based accounting software to improve efficiency and scalability.
The company encountered resistance from staff who were used to traditional methods. To counteract this, they implemented a comprehensive training programme and communicated the new system’s benefits to ease fears and build trust for the process.
Results:
- Time management: Automation of routine tasks reduced the time spent on manual processes.
- Scalability: The cloud-based solution allowed the company to scale their operations easily as they grew.
Grant Thornton adopted cloud accounting solutions to enhance their financial reporting and client service capabilities.
The firm was challenged by ensuring data security and compliance with industry regulations. They addressed this by implementing robust security measures and conducting regular audits.
Results:
- Improved accuracy: Real-time data access and automated processes reduced errors in financial reporting.
- Enhanced client service: Digital collaboration tools and timely financial insights helped to improve client satisfaction.
Overcoming cloud accounting challenges
If you’re considering a move to cloud accounting software but are unsure of how the best approach, consider this:
- Before choosing a cloud accounting solution, assess company resources and objectives.
- Partnering with a trusted vendor like Silverfin for implementation support can ease the migration experience considerably.
- Once a commitment has been made, plan a communication strategy for employees to ensure everyone understands the benefits and goals of the transition.
- Conduct a pilot programme before full-scale implementation begins.
- Post-implementation, continue to review and optimise the system to fully maximise the benefits.
Conclusion
Despite the challenges, the need for cloud accounting adoption is increasingly apparent. Without the computing power of a cloud-based solution, firms will be on the back foot. Transitioning to the cloud can be a daunting task, making the choice of a cloud-based vendor a crucial part of the journey. The right vendor can significantly ease the transition process. Partnering with a specialist like Silverfin, a cloud software company founded by accountants, can help resolve many migration challenges.
Discover the power of enhanced accounting with Silverfin.
