My & Say Accounting CPA firm consists of 25 CPAs in five different U.S. states. The managing partner Mr. Say, is looking for the most efficient method of connecting offices with the best security. He
Heads in the Cloud:
Part 1 CPAs discuss advantages, challenges of new computing paradigm, by Jeff Drew C loud computing creates unprecedented opportunities for CPA firms to do more chargeable work faster and with better client communications. But transitioning to the cloud and having con- fidential information accessible over the Internet raises implementa- tion and security concerns that CPA firms must address.
To help CPAs better understand the bene- fits and challenges ofthe cloud, the Jo/A in- vited five CPAs to share their cloud expe- riences in a round-table discussion.
Participating in the conversation were:
• Steve Chaney, CPA, founder of Chaney & Associates, a small firm based in Roseville, Calif., that leverages a cloud-based delivery platform to pro- vide outsourced controllership services to more than 300 nonprofit religious organizations.
• Jennifer Katrulya, CPA, founder and CEO of Danbury, Conn.-based Business Management Resource Croup LLC, a firm that uses cloud-based systems to provide outsourced accounting and ad- visory services to clients across the U.S.
and internationally She also trains other CPA firms in how to make the most of the cloud.
• Carol Kulencavich, CPA, tax principal at Bagante, Cameron, Watters & Strong LLP, a midsize California firm that uses a Web-based workflow tool to manage tax and other services. Her firm also uses a Web-based application that or- ganizes, bookmarks and exports data directly to the tax software.
• Joseph E Manzellijr., CPA/CITP, di- rector of operations for the Fuoco Croup LLP, a New York-based midsize firm that uses a Web-based workflow tool to manage tax and other services.
• Michael Smith, CPA/CITP, managing director of RSM McCladrey's consulting practice and a member ofthe AICPAs IT Executive Committee.
Moderating the call was Jeff Drew, sen- ior editor covering technology for the Jo/A.
Following are edited excerpts of the conversation focused on the advantages, challenges and return on investment of cloud computing. Part 2 of the conver- sation will appear in the March issue and explore different cloud business models and advice for firms considering a move to the cloud. For an expanded version of the Part 1 transcript, go to journalof accountancy.com/tech.
CLOUD-COMPUTING ADVANTAGES Drew; How has leveraging cloud-based accounting applications changed your capabilities and relationships with clients?
20 Journal of Accountanq' Februar>'2012 www.jou rna lofaccounta ncy.com Smith:
We've been able to remove geo- graphical barriers associated with (the) lo- cation of resources and location of our clients. Thanks to the developments m cloud-based technologies, even though our client is located in California, in this ex- ample, and I'm in our office in Boston, we're now able to assign specialists from our North Carolina office, which is over 2,000 miles away (from the client).
Katrulya: We're based in Danbury, Conn., so the client base that we wanted to reach was not going to be (only) in our local mar- ket. We (had) to get information routed to us.
They either dropped it off at our office or were FedExing packages to us.
There just wasn't that sense that we could operate (in) real time with (clients). We initially had to log in to their computers remotely to be able to get information that we needed. Ul- timately, we did require that they log in to our server and access information, but then we incurred thousands of dollars of pro- gramming costs and IT services and hard- ware.
With cloud technology, that has all changed. We give our clients a process they can easily follow that allows them to re- motely, and in a number of ways, get in- formation to us so that it's accessible by us really quickly—minutes, hours, no longer days or longer. We can route things to them digitally for approval. So for each new client now, we actually give them an iPad just for the purpose of making sure we can show them how easy it is to collaborate with us.
(The cloud also has) allowed us, as far as staffing, to pick up staff wherever we find the best talent.
Kulencavich: Our firm is fairly new to the cloud-based applications and, for us, it's re- ally how it fits more internally We use an (outside provider) for our IT work. Having them be able to focus more on our strategic www.journalofaccountancy.com Febmary2012 Journal of Accountancy 21 TECHNOLOGY plan, rather than doing the mundane serv- ices of loading software or fixing various software problems, has helped a lot.
Manzelli: It just makes it easier to work with each other. With having multiple of- fices (New York City, Long Island, Florida), it allows us to be able to push work from one office to the other because there are times when one office is going to be a lot busier than the other, and we're able to move work around because it is digital.
Chancy: We've been able to cut our ad- ministrative burden because, predomi- nantly, we're just a bookkeeping firm. We offer controUerships for hire. What (the cloud) has allowed us to do from a deliv- ery perspective to our clients is we spend more time actually being able to create the dashboards they want and the reports, and then they can go online and, in real time, have updated reports. So we've been able to increase our effective rates while not in- creasing our billable rates.
MOVING TO THE CLOUD:
THE CHAÍ.T.ENC";F'^ Drew: What are some of the key chal- lenges for firms to make the transition to a cloud-based service delivery platform?
Manzelli: One is change management. Any time you re making any kind of change, it's very difficult. What rolls right into that is buy-in. You need to get buy-in from the top.
Probably the biggest thing is docu- menting your processes. If you start look- ing at what your process is and your work- flow, you're going to see where there are a lot of redundancies. That's where, when you go to a cloud-based (system), you'll see that there are a lot of different ways where you can save time. When you're saving time, you're saving money Smith:
What we're finding is that we need to educate our clients and our partners. As an example, some of the costs associated with an on-premise solution might be that you need to purchase a server and you need to maintain that server going forward.
Whereas, when you're moving to the cloud, you're eliminating those costs.
The other thing is just the idea that we're moving a lot of things to a paperless environment, and we're eliminating phys- ical storage space. That could be a signifi- cant cost (savings) that's often overlooked.
Pricing is one of the challenges. The other is security. I think that there is this feeling and concern that moving things to the cloud takes things out of one's control, and (there) is a higher likelihood of a se- curity breach. What we're finding is that, in a lot of cases, our clients' data is more secure on the cloud than it is on the prem- ises because of some of the measures taken by some of the cloud-based vendors we work with. Some of these vendors have Tier 1 data centers that are staffed 24 hours a day They've got guaranteed up times of over 99%. There (are) disaster recovery plans.
There's data redundancy on the East Coast and West Coast. And some of our smaller clients could never afford to have some of these safeguards in place.
Katrulya: We've spent all the time looking at the redundancy of our own access to the Internet, of battery backup, of things like that to keep us connected in the event of a power outage or in the event that cable goes down. I have three different ways to get to the Internet.
These solutions in the cloud are evolv- ing so quickly The actual applications themselves can change overnight. So, we have monthly staff training in our office prescheduled just so that we can go through cross-training on all the updates that do come out in the software.
Kulencavich: It's important to remember that every firm is unique. For us, it's real- ly about testing the different applications and changes that you want to make and not just assume it's going to work because it worked for another firm.
Chaney: I didn't establish a champion at first. I tried to do that myself, and I just did- n't have the time as the owner and CPA driving everything to do that. So it's good to have a person on-site that champions the full transition.
Cl.^^ . . ^ . • <: .' . '[{EROÍ Drew: Have you seen a return on invest- ment with your cloud-computing efforts?
Katrulya: The fact that we're now able to essentially realize three to four times the revenue and profltability that we were able to realize before allows us to work three or four times less hard for that same money (and) increase our client base but also in- vest so much more heavily in our staff and in being a firm they want to work for.
I think that's a tremendous change from always worrying about that billable hour.
Our admin costs are down 75% because we don't have as many administrative tasks.
For our CRM (customer relationship man- agement) system, our clients can actually • Cloud computing removes geographical barriers and allows CPA firms to service clients from virtually anywhere, even thousands of miles away.
• The cloud allows CPA firms to interact with clients in real time in ways not possible before.
• Because the cloud vendor Is responsible for hardware and EXECUTIVE SUMMARY software, CPA firms may not have fo purchase expensive equipment such as servers or pay directly for computer or application upgrades.
Firms also can save money be- cause they no longer need space to house servers and other IT equipment.
• The efficiencies of the cloud allow firms to raise their effective rates without having to hike their billing rates.
• Because of the virtual office environment created by the cloud, one firm is planning on moving out of its briok-and-mortar office when the lease expires, sav- ing thousands of dollars per month.
• Firms should have multiple ways to connect to the Internet Firms that lose the connection to essential cloud applications can't function.
Jeff Drew is a JofA senior editor.
To comment on this article or to suggest an idea for another article, contact him at [email protected] or 919-402-4056.
22 Journal of Accountancy February 2012 www.journalofaccountancy.com TECHNOLOGY add their service requests and their ques- tions by logging in themselves. So our email is down by hundreds of emails a week. Our phone calls, those five-minute phone calls, are dramatically do^wn because (clients) can log in right from their iPads and enter their questions.
As of June, we won't keep our brick- and-mortar office when our lease wraps up.
Everybody's telecommuting, so that's sev- eral thousand dollars a month that we'll keep in our hands to invest in new things.
Smith; It's hard to measure, but the whole work/life balance for our staff is greatly im- jjroved. The ability to take your kids to school on the first day and (to) be able to work from home, little things like that go a long way.
Chaney: Ever since we went to Intacct and Bill.com, we've not been able to keep up with the growth. The time invested now to actually deliver has been more than cut in half based upon what we used to do. • AICPA RESOURCES lofA articles • "Technology 2012 Preview; Part 1," Nov.
2011, page 46, and "Technology 2012 Pre- view: Part 2," Dec.
2011, page 30 • "Cloud Computing: What Accountants Need to Know," Oct. 2010, page 50 Use journalofaccountancy.com to find past articles. In the search box, click "Open Ad- vanced Search" and then search by title.
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