Understanding Cloud Computing

Cloud computing refers to the on-demand access to computing resources over the internet. Resources can be a software, storage space, hosting platforms, digital infrastructure, etc.

Cloud computing helps businesses to streamline business processes, reduce cost, and minimize the need to buy costly IT hardware and software. It is usually based on a subscription model and you pay for what you use. It can be upscaled and downscaled as and when required.

Cloud computing technology has 3 main models for working:

1. SaaS (Software as a Service)
   1. SaaS refers to a cloud computing model where a software is hosted online and users can access it over the internet. The users pay via a subscription model. The software can be accessed from anywhere and at any time.
   2. A user can access the software, it can be an operating system, any application, data, etc.
   3. The user connects to cloud-based applications or software over the internet.
2. PaaS (Platform as a Service)
   1. PaaS is generally for the technology developers, where they can build, test, manage, deploy, and run applications from a server to give services to a network, middleware, etc.
   2. PaaS can be used to deliver cloud based applications or a full enterprise level application..
3. IaaS (Infrastructure as a Service)
   1. A cloud service model where virtual IT infrastructure is accessed over the internet at a subscription model.
   2. Services are related to virtual servers, virtualization, virtual machines, cloud storage, etc. 

Example of Cloud Based Applications

Examples of Cloud Computing Applications
SaaS Examples	PaaS Examples	IaaS Examples
Google Workspace Microsoft 365 Salesforce Dropbox Slack Zoom	Heroku Google App Engine Microsoft Azure App Service Red Hat OpenShift IBM Cloud Foundry AWS Elastic Beanstalk Kubernetes	Amazon Web Services (AWS) Microsoft Azure Google Cloud Platform (GCP) IBM Cloud Oracle Cloud Infrastructure Alibaba Cloud

Benefits of SaaS for Accounting and Finance

The use of SaaS in the accounting and finance verticals of a business offers the following advantages:

• Automation and integration: Automating mundane and repetitive tasks reduces the scope of manual errors. Repetitive work like invoicing, payroll management, tax calculations, etc., can be easily automated and tracked from a user-friendly dashboard. Integration with third-party apps expands the scope of work and adds more features, too.
• Real-time analysis: As per PwC research, there is 21% faster decision-making when companies have access to real-time data. The SaaS platform is instantly updated and you can easily generate analytics, charts, trendlines, etc. It helps you make decisions as the factors are unfolding rather than reacting to the damage that has already been done.
• Scalability: SaaS-based accounting software like QuickBooks, FreshBooks, Akounto, etc. allows users to upgrade or downgrade the subscription according to business needs. This helps businesses pay for what they need and use and not unnecessary features that are not being used.
• Multi-user access: You can add your accountant, investor, finance head, customer, etc. You can also alter the authorization as to what they can see, edit, or change. Some users can be “view only,” while some can create “filtered reports.”
• Multi-location access: According to McKinsey, 74% of companies report faster access to financial data when they use cloud-based accounting or finance software/ application. To connect to the SaaS platform, all you need is an internet connection from any compatible computing device. Then, you can log in and access, process, enter, or manipulate the data easily.
• Cost Efficiency: According to research by Deloitte, companies that use cloud-based financial solutions save 30% on IT and overhead costs. SaaS also helps firms and small businesses save upfront IT costs, including hardware, software, network, etc.
• Security and privacy: SaaS grade security is backed by international standards and ISO requirements. Most of the SaaS also applies data privacy standards like the GDPR and other similar standards to gain the safety certification. Usual SaaS features have inbuilt encryption, multi-factor authentication, server location rules, access to inhouse data restrictions, and protocols to recover from any disaster.

SaaS is Changing Corporate Work Processes

With more than 70% companies (Gartner survey) adopting SaaS based solutions, the impact of SaaS technology is felt worldwide, in terms of increasing efficiency, speed, collaboration, cost minimization, and much more.

SaaS has changed the way companies build their workflow, organize their workforce, deploy IT infrastructure, build teams, etc. Following are the main takeaways of SaaS impacting corporate working environments:

Flexible working

SaaS offers connectivity from anywhere and any device, enabling remote working, flexible schedules, decentralized team structures, flat organizations, etc. 

A very rudimentary example of SaaS application can be the use of Google Workspace, where emails have made postal mail completely redundant and integrating it with calendars, tasks, chats, have enabled greater communication and team working. Similarly, using Google Docs and Worksheets have enabled working from different locations and sharing a same workspace to pool-in ideas and build a workflow in a geographically distributed team but a single point of control helping to streamline operations.

Collaborative working

Sharing the work documents, workspace, communication (Slack), task prioritization (Trello, Jira), project management with the teams enables everyone to be on the same page and all the stakeholders are updated and in the loop. Implementation of management techniques like Sprint, Agile methodology, Project Management – PMP, SCRUM, etc. via technological tools like Microsoft Teams, Jira, Monday.com. etc. helps teams to work more efficiently. According to Accenture, there is a 20% better completion rate when Microsoft Teams are utilized to foster collaboration.

Increased process efficiency

Coca-cola company reported a net increase of 30% in sales productivity when they used Salesforce for managing their supply-chain operations. Integrating SaaS based automation provides a common yet unified platform from where all the operations can be controlled, any updation is shared with the team members in an updated manner, various tools like report generation, mass-email, time tracking, employee management, financial records, inventory sheets, etc. can be easily correlated building a complex web of interconnected operations within the whole organization.

Also there is reduction in manual work which minimizes the scope of errors. Automation and technological deployment can be scaled up and down easily thereby being affordable and scalable on-demand.

Reduced IT cost

No need to buy multiple software licenses and expensive hardware. Online hosting of software on a SaaS platform enables sharing of resources offering economies of scale. 

In a very simple example, buying a separate software license of Adobe Photoshop will be very costly for an organization, as compared to using Adobe Photoshop online and subscribing for other users. With minimal hardware requirements, all the users can access a very resource-heavy software which is hosted online. All the users need not buy an expensive computer system.

Subscription based model offers organizations to deploy an asset lite model strategy and benefits all types of companies be it a startup, solo-entrepreneur, small and medium businesses, or a large business. SaaS based software offers an organization to access and use a professional grade software at an affordable price and no need to buy pricey computers to run those software, because they are hosted on the internet and can be accessed from anywhere.

Real-time data for quick decision making

The unified platform offered by SaaS technology that is updated in the real time enables business to take decisions proactively. In case any course correction is needed then it can be done promptly, earlier the decisions were taken after the damage has been done. This enables better response to the uncontrollable business environment and takes strategic decisions. Small businesses, using accounting software have reported a 15% more accuracy in financial management.

Cloud Based Accounting Software

Cloud-based accounting software or SaaS-based accounting software is an online accounting software which is accessed online. Examples of cloud based accounting software include QuickBooks Online, Akounto, Wave, etc.

Cloud-based accounting software market is growing rapidly with a CAGR of 8.6% and has touched $4.25 billion  (approximately). 

Cloud based accounting software offers a common but unified platform where the accountant, management, CPA, bookkeepers, etc. can track the financial position in real time. Any change done in the real-time gets updated and the users can take actions accordingly.В  You can access the accounting software online via an internet connection. Some companies additionally provide mobile apps (with limited capabilities) to access your accounting information.

There are a few users, usually around 10 who can access the accounting software via a subscription model. Upon this, more users can be added by buying more subscriptions, which is a fraction of the price of a whole software if purchased standalone.

Soniya Malik, the CEO and Founder of Akounto says, “Cloud based accounting software is cost-effective, and very important from a strategic investment point of view. The ability to upscale and downscale on demand gets the value of every cent invested. The multi-location means, you can offer your services remotely and even on the move. This is a game-changer for a bookkeeping agency, a freelance bookkeeper, and a startup that wants to outsource its accounting services. Integrating technology into business gives you cost leverage and also reduces the impact of human error.” 

Cloud based software is different from traditional software as you need not pay a hefty upfront amount and purchase multiple licenses for every user. This is cost effective and you also get automatic updates, upgrades, scheduled backup, and support incase of any disaster. The cloud based data security and privacy laws are extended for every user.

Cloud based accounting software is one of the first steps for the automation of the finance department in any business.

Conclusion

Automation and digitization of the finance department as a whole and financial services in particular gives strategic advantages to a business. As a bookkeeping service provider, you can scale up your services and onboard more clients, and at the same time, you can scale down where the client base is small. As a small business owner, you can buy a subscription to an accounting software and add the bookkeeping service provider or a freelance bookkeeper as a user. You can control and edit the access and user controls limiting the exposure of information and the impact of the user’s actions.

Cloud computing enables small businesses to avail premium services at affordable prices and implement asset-lite model to gain competitive edge.

Visit Akounto’s blog for more information related to upgrading and uplifting your business finances.