Accounting Firms IT – CATCH 22 (On-Premise vs Cloud Accounting)

By Rick Dhatt on 16-04-2015


Remain On-premise Vs Cloud Accounting Jump

In recent years, accounting firms have a lot at stake, when it comes to achieving higher ROI with IT operations. As traditional IT operations turn the corner and become increasingly cloud-based, accounting firms, like many other small and large business firms, are caught in the technology dilemma of today:

Should their IT operations remain on premise?


 Is a cloud-based solution more pragmatic?

Thus far, regardless of being small or large accounting firms, On-premise networks are the preferred IT infrastructure.

However the traditional on-premise network based functional features are all set to change, as the decade-old trend of cloud computing is slowly transforming office and workstation services via secure Application Service Providers (ASP) or as commonly called Cloud Services Providers.

Cloud-based business service providers provide either pure SAAS service or services that include managed IT based on private cloud infrastructure secured on enterprise-class datacenters that are compliant with local and national Canadian privacy regulations.


On-premise the first choice thus far

On-premise networks are secure and efficient, as accounting firms have been able to build networks running automated software, for localized multi-user access-points. Dedicated IT staff manage the complex end-to-end IT operations to keep the business running by providing services such as software/system/server/hardware purchases/maintenance, patches updates, SLAs, routine maintenance cycles, disaster recovery processes and more.

However, there are inherent limitations with on-premise managed IT operations:

Routine functioning of on-premise networks is subjective and as good as the expertise of IT staff.

Alternative solutions which can overcome these limitations are Cloud Services.

Cloud-based services solutions pragmatic

In United States, wide-ranging pubic cloud services by Amazon Web Services, Google Platform Live, Rackspace, MS Azure etc. are the technology platforms on which small and medium size businesses build their cloud IT operations but it’s not the preferred solution for accounting firms just like in Canada who opt more for private cloud based solutions.

Cloud-based Services Drive Primary changes for Accounting firms

Accounting firms transforming to cloud-based accounting services find their interaction with clients has intrinsically multiplied in terms of value. The virtual platform maximizes reporting, improves insights and allows better integration with operational systems, thereby optimizing client’s profits.

Primary drivers:

1. Basic changes in technology strategy via cloud-based services allow accounting firms to provide in-depth, category-based review of a client’s business.

2. Value-addition services can include CFO services/outsourced accounting services in real-time. This improves one-to-one as well as one-to-many user/client interaction on the secured accounting firm portal improving client servicing scope.

3. Ensures instant access to reports or information via smartphones and gadgets in real-time.

4. For accounting firms, the delivery of high-quality add-on services allows room for ‘brand-building’ and newer avenues/opportunities.

AAA Survey Forecast: Cloud accounting gradual

In May 2014, in a survey of over 100 firms by Association for Accounting Administration significant changes in the number of on-premise networks was observed.

Only 71% maintained on-premise networks in 2014 as against the similar 2012 survey where 78% owned on-premise networks. Importantly, majority of the 5.2% drop in on-premise network owners had opted for vendor or third-party cloud providers.

However, despite the availability of wide-ranging choice of cloud services, accountant firms are caught-up in a dilemma

Dilemma persists: On-premise or Cloud-based

Though the advantages and benefits of virtual computing and IT-support are well-listed, questions remain on the wisdom of reworking existing IT infrastructure entirely to the cloud.

Reasons for businesses to remain on-premise include:

1. Legacy infrastructure

2. Sensitive information that has to remain on the premises

Experts Speak

What do you do when you already have an on-premise infrastructure? Should you yet move to the cloud? Answers to these questions are at two levels.

Firstly, accounting firms will have to determine if organization is at a phase to leverage better benefits from the cloud entirely, partially or to remain on-premise. Secondly, firms will also have to evaluate if clients are acceptable on moving their private data to the cloud.

Cloud operations are usually of two kinds:

  1. Typically, firms have the option of browser-based, app-like cloud operations
  2. Moving the entire on-premise infrastructure, servers included, to the cloud

However, both options offer unique benefits but ‘end- achievable’ will be subject to the native processes of the firms as well.

Again, a key feature which compromise cloud-based working is the complexity of the platform. Multiple aspects of cloud computing sometime undermine the flexibility of operations in contrast to the agility achievable with on-premise installations. Additionally, data centers need to be located in Canada itself as data privacy laws are a primary concern for clients.

Enhanced On-premise Solutions are now the trend

Cloud service providers have come to recognize the slow-curve in moving entirely to the cloud. Therefore, their new solutions include on-premise options which work on the same set of management tools as those supporting their public, private or hybrid solutions.

For example, Microsoft just launched its on-premise solution Cloud Platform Services running on Dell device, on the same Azure on-box services. Recognizing that the market continues to demand on-premise support for in-house operations for some of its sensitive processes, other vendors too are developing their versions of on-premise products.

Increase in SaaS Portal Use

According to a recent survey by Tax Research was the most popular SaaS application used by 88% of the respondents. Significantly, 15% increase in the use of SaaS was observed in the latest survey over 2012 study.

Highest Cloud deployment observed were: hosted spam/anti-virus management services of

  • Postini
  • AppRiver
  • McAfee/MxLogic
  • MimeCast

Nearly 59% respondents had opted for outsourced services of one of the above, with 11% more to opt for remailer services by the end of 2014.

Only Payroll services appeared to remain on-premise with only 61% interested in using vendor services of:

  • Intuit Online
  • Paychex
  • ADP

Survey reiterated popularity of most used Cloud solutions and Applications:

  • XCM Solutions workflow
  • Thomson Reuters GoFileRoom
  • CCH Axcess Portal
  • QuickBooks


Success-scenarios of transition to Cloud are effective because:

  • Infrastructure required is close to ‘nil’
  • Virtual office-systems, encourage lean staff hiring with emphasis on remote work force
  • TOC of Cloud overrides On-premise


Industry Speak

Alan Salmon, the doyen of accounting technology and CEO of K2 Enterprises Canada, in his recent annual software review of popular accounting software in Canada, sprang some surprises:

  • QuickBooks and Simply Accounting for entry-level Canadian accounting firms had enhanced their database solutions
  • Mid-level to Large-level accounting firms preferred module-based software such as:
    •  Adagio by Softrak,
    • Sage Accpac, Sage Business Vision 50 Accounting, Simply Accounting
    •  Blue Link Elite
    •  Microsoft Dynamics:  GP, NAV, SL
    • SAP Business One
    • SysPro
    • Intuit QuickBooks

It is however necessary for clients and accounting firms to evaluate the benefits and the risks between continuing on-premise services or cloud-based services. The factors that need to be evaluated are:

  • Price
  • Function Features
  • Legacy applications support
  • Secure Features
  • Integration
  • Maintenance
  • Data center location
  • Backup



Cloud accounting is the best-fit technology solution for businesses. The significance of cloud computing remains the uniqueness with which it breaks down the traditional framework of working from offices and allows the novelty of remote-working. For clients too, cloud-based services are beneficial. It enhances user experience as they are no longer bound by time-zones and geographic locations and can access virtual accounting offices at their convenience.

With mobile computing already on the horizon; on-premise servers and computing will soon lose its significance. It is necessary that your organization takes nano steps towards cloud-based accounting platforms as it brings value-addition to client services: financial reporting, insights and operational system integration ensuring clients running more profitable businesses.





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