By Roman H. Kepczyk, CPA.CITP, CGMA, LSS BB, AAAPM
CPA firms have been getting into the cloud for the right reasons: quicker updates on the latest application versions, focused technical support, enterprise class facilities including disaster recovery, and of course lower cost due to the economies of scale. Cloud applications are also appealing to firms as they take the hassle out of comprehending and dealing with IT issues and personnel, which many partners admit they really don’t understand how to manage or evaluate, instead allowing them to focus on their core accounting competencies. With all these advantages it is easy to overlook the primary disadvantage of the cloud which is that the firm is now completely dependent on the provider. What happens if they don’t deliver on their promise, or worse, go out of business? This happened with San Diego cloud storage provider Nirvanix this past fall where clients were initially given two weeks to get their data out, causing great distress amongst organizations that had to go into “triage” mode to invoice a cloud exit strategy.
The reality is that after moving into the cloud for any period of time, firms are seldom in a position to take back the IT responsibility as they have usually not maintained the network infrastructure, application updates, and retained all the staff that previously supported those applications. Firms need to understand what happens if the cloud provider doesn’t work out and what needs to be done to keep the firm operating. Below are questions firms should ask and understand, preferably before getting into the cloud.
Termination Penalties: Are there penalties for getting out of contract early, which could be due to the accounting firm being sold, merged, or the cloud vendor not meeting the agreed upon service level agreements? If termination is due to the cloud vendor’s failure, what documentation must the firm have and how much notice (lead time) must the firm provide the vendor if they’re making a management change?
Data Transfer: What is the process to get the firm’s data out of the cloud? Firms need to ask how the data will be returned to the firm and what the fees are for doing so. While there is usually no cost if the data is streamed back to the firm over the Internet, this could take days or weeks and the firm would not be able to work and may still need time to convert the data. If physical media such as DVDs, tapes, or external backup drives are required, who is responsible for providing them and are there additional costs for the cloud provider to handle the transfer and whether equipment will be needed by the firm to restore the files?
File Format: Firms need to understand what file format and naming convention the data will be returned to ensure it is usable. If the cloud application has a different file format than the on-premise version, is there an automated conversion routine or will the firm have to make changes manually on each file? Are all files named with specific client/year identifiers and organized by client directories? A horrific problem can occur if files are exported without adequate client/year identifiers and there are only generic filenames transferred (i.e. 2013 1040 Return, 2011 Compilation) which the firm will have to open individually to determine where they belong.
Application Versions: While moving industry-generic data such as Microsoft Exchange or other Office files from one cloud vendor to another or back into the firm are fairly universal if there are good naming conventions, cloud-based tax and accounting products can change each processing year and may create data that is not on the same format as the applications that the firm can purchase for internal use. Firms should be aware of other cloud providers that can host the firm’s specific applications and data, and what the cost of the on-premise application licensing would be (and whether it is the same as the cloud version). Again, the firm should ask what the process to convert data entails, whether it can be done en masse or individually, and the cost/time frame around doing so.
Asking these questions and understanding the options before partnering with a cloud vendor will help firms not only make a more informed decision, but also prepare them for alternate solutions if things don’t work out.
Roman H. Kepczyk is Director of Consulting for Xcentric, LLC and works exclusively with accounting firms to implement today’s leading best practices and technologies. Roman provides monthly articles similar to this one which are posted on the PCPS IT Corner with Roman. Be sure to check it out!
By John C. Graham, CPA, PFS
At our firm, we want to be on the leading edge of technology innovations - but not necessarily on the bleeding edge. We work to stay current by reading a variety of CPA publications, such as the Tax Adviser, that address technology issues and solutions for firms and attending up-to-the-minute technology events, such as the annual AICPA’s Practitioners Symposium and TECH+ Conference and networking events such as our bi-annual PCPS Small Firm Networking Group meetings. These resources and opportunities to meet and speak with other CPA firm owners enable me to learn about and discuss the latest technology solutions and those we should consider implementing in our firm. These events and peer-to-peer conversations recently gave us the motivation we needed to go paperless and implement client portal and cloud solutions. We can’t believe the flexibility and efficiency gains we’ve realized since making these changes.
Paperless, Client Portal and the Cloud
With clients all over the world due to our international practice and the increased need for employees to work remotely, we have invested in key technology solutions to help provide real work/life balance for our staff and accessibility and improved service for our clients. Our paperless approach eliminates the costs of paper, toner, copiers and storage and our website provides resources to clients as well as access to a client portal for them to upload or download documents securely.
However, the biggest change in our firm occurred when we moved to the cloud in the fall of 2013. Moving to the cloud and ensuring all of our employees have the ability to work remotely has greatly improved employee quality of life by allowing them to work from home after having dinner with their family, getting their kids to bed or attending school or sporting events during tax season. Remote access to any program or client information in the cloud reduces the need to work late at the office. Most of our staff now leave the office at 5:30 or 6:00 p.m. year round, enabling them to fulfill family or other commitments and then log back in to work to meet any outstanding client commitments.
The cloud also allows employees to live and work remotely, which saves on expenses. We have two out-of-state workers who, before moving to the cloud, needed a computer at home and one that they would log into at the office to access the server. We have eliminated the cost of two computers in these instances, plus the cost of a server, too, since making the move to the cloud.
Switching to the cloud has also been a very positive step in reducing my worry about potential problems. I feel more secure knowing that all our programs (i.e. Microsoft Word and Excel, QuickBooks, XCM, Creative Solutions, Lacerte, Act!, tax tools and more), client data, and firm information are on secure servers hosted and backed up in a more protected fashion than on servers in our back room. We have almost no downtime now, either. The downtime we have experienced is usually with our local internet provider, but we can access the internet anywhere these days so we can be productive at home, a client’s office or the local coffee shop.
Our cloud provider also monitors our servers, speed, program updates and makes recommendations to us even before we know we may run into a potential problem, like decreased speed during busy season, which they addressed by increasing our memory. We did find that the original hour a month of support we had originally subscribed to was not enough and we really need about three hours a month to ensure regular maintenance occurs such as updating our Lacerte program and other tax software and setting up new employees.
As with any change, we have learned many lessons that other practitioners should consider as they contemplate moving to the cloud or implementing other technology tools and solutions. Three “must dos” for CPAs evaluating a move to the cloud include:
- Do the research. Make sure your cloud provider is a good fit for your firm and develop a list of questions that you ask each of the vendors you are considering. Thorough due diligence on the front end will help ensure the vendor is right for your firm and provide an apples-to-apples comparison. Ask questions about their typical client profile size and industry, the software applications they support and offer, what you can expect during the transition from your local server(s) to the cloud, their support processes and response times and their average percentage of downtime. And, be sure to check references!
- Plan your transition. Anytime you make a technology change, it is typically more painful than you expect. That said, we found our transition to the cloud to be smoother than expected partly because of the due diligence and planning we did up front and because our employees didn’t experience a change to the programs and applications they were using. Our provider, Cetrom Information Technology, Inc., created a “test” instance of our scenario in the cloud a few weeks before we made the switch so we could test it, confirm logins and access, and prepare our team members. We closed on a Friday, gave our vendor our drives and Monday we were live. We didn’t have any big issues to resolve and we were business as usual.
- Talk to your peers about their experience. My peers in my PCPS Small Firm Networking Group and at the AICPA Practitioners Symposium and Tech+ conference have been invaluable in providing me guidance about how to approach the transition to the cloud and the real benefits they realized immediately, such as increased efficiencies, flexibility for staff and clients, and peace of mind knowing that cloud providers have secure backups.
If you’ve been watching other practitioners to see if the cloud is here to stay and their client data and firm’s programs are truly safe and secure, you need not wait any longer! Now is a perfect time to gain efficiencies and provide your staff and clients more control and flexibility in how and when they work with your firm by moving to the cloud. You’ll wish you had done so sooner!
John C. Graham, CPA, PFS is the owner and founding member of Graham & Company, P.C. in Boulder, CO.