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Cloud based Accounting Systems Proof Reading Service
In this report we are going to discuss regarding the various pros and cons of the traditional accounting system as well as cloud based accounting systems. A detailed comparison of these systems has been done in order to find out the appropriateness of the accounting systems as per the size and nature of operations of the company. After that a discussion has been held on the risk and limitation of the cloud computing system to asses that what are the possible measures that have to be taken to attain maximum benefit from the application of the system. In the next section a discussion has been held on the type of companies with respect to size, longevity and nature of work will be most benefited from the adoption of the cloud based accounting system. In the recommendation section recommendations has been made on what type of companies should go for what kind of accounting system based on their requirements and limitations. The conclusion section cater the understanding regarding how a company can successfully go for any accounting system with the application of proper safe guarding measures.
A businesses owner is also the marketer, a sales person, and also an admin person. A business owner has to overview all the above-mentioned operations of the business in order to succeed in the market. A business owner also has to save time, money, and to minimize the operational complexity. One way of achieving all these is to adopt a commensurate accounting system. A business owner has to properly assess his business requirements and accordingly he have to opt for either a cloud based accounting system or a traditional accounting system. While choosing an accounting system a business owner should properly tally the business requirements with possible pros and cons of an accounting system.
Cloud-basedaccounting system:Cloud computing refers to a Internet-based computing that offers shared computer processing to resources and data to the user computers and devices that demand the service.
Traditional accounting system:Traditional accounting system are the software packages that are managed locally and run on intranet and do not offer remote access.
Differences between a cloud based accounting system and a traditional accounting system
Traditional accounting system
Cost and time of implementation
Cloud-basedaccounting software requires less time and cost for installation. Therefore small companies with small capital often prefer cloud-based accounting software over the traditional accounting system (Kavis, 2014 ).
Traditional accounting systems requires more time and money to be installed properly (Gelinas, Dull, R & Wheeler, 2011).
Nature of work
A business that works with remote employees often prefers Cloud-based accounting system. Because these businesses prefer the convenience and accessibility of a cloud-based accounting software (Gelinas, Dull, R & Wheeler, 2011).
Traditional accounting systems cannot be accessed from a remote location that is why companies that are working with remote employees do not prefer this system
Small companies due to the limitation of their capital often fail to provide adequate information to their data. In such a situation the companies that are hiring the Cloud based accounting system can get adequate security from the company that is offering the service.
In Traditional accounting system, the company itself has to arrange for data security (Gelinas, Dull, R & Wheeler, 2011).
Control over data
Companies that are looking for tight control over accounting data, do not prefer this system as there remains a scope of unauthorized remote access (Kavis, 2014 ).
Companies that are having sensitive data information prefer to use the traditional accounting system as under this system data cannot be accessed by unauthorized persons via non-secure wireless network
Period of longevity of the company
If the company is a start-up company and not sure about its own longevity, then the company prefers to hire the cloud accounting system from a third party as the system can be installed with limited capital and time (Beloglazovet al.2011).
Big established companies always prefer to have the traditional accounting system which may require greater time and money to install, but such system remains completely under the control of the company. Here third party invention is not required (Kavis, 2014).
License of the accounting system or software
A company hires the cloud-based accounting system, therefore not the owner of the license (Beloglazovet al.2011).
The company that installs the Traditional accounting system is the owner of the license
System location is the location of the company whose service has been hired
Here the system location is chosen by the company
System hardware is included within the service that is offering the cloud accounting service for hire
System hardware have to offered by the company who is installing it
Windows & SQL Server
Windows & SQL Servers are included within the service that is offering the cloud accounting service for hire (Beloglazovet al.2011)
Windows & SQL Servers have to provide by the company that is installing the traditional accounting software (Beloglazovet al.2011).
The maintenance cost is are included within the service that is offering the cloud accounting service for hire
The company that is installing the traditional accounting software has to maintain a separate provision for maintenance cost (Gelinas, Dull, R & Wheeler, 2011).
Separate IT resources are not needed in case of cloud accounting software
Here the IT resources are either have to provided by the installing company or third party support to be taken to get those resources (Gelinas, Dull, R & Wheeler, 2011).
This kind of support is provided by the third party under cloud accounting system (Gelinas, Dull, R & Wheeler, 2011).
This kind of support is provided by the third party under traditional accounting software
Number of users
Any number of users can share the system as per the capacity
The numberof users of the system is limited by the license
Risks or limitations in adopting a cloud-based accounting system
Many companies do not prefer the cloud-based accounting system due to the various shortcomings of the system. The major shortcomings of the system have been discussed below.
Cloud-basedaccountingsystems are based on the internet, therefore access to the system is fully dependent on your Internet connection. Besides like any hardware, a cloud service provider can fail for any one of a thousand reasons. If internets service fails or any other hardware issue arises then the business may have to face a prolonged spell of frequent service failures or service slowdowns and this may cause severe financial loss to the company (Gelinas, Dull, R & Wheeler, 2011).
Security and privacy:
Security and privacy are still one of the major concerns for which most of the people hesitate to rely on cloud-based services. Cloud service providers are expected to manage and safeguard the underlying hardware infrastructure of a deployment. Howeveras the system allows remote access, therefore the scope of unauthorized invasion always lies into the system as no system is perfectly secure. Therefore clients have to carefully weigh all the risk scenarios before installing a cloud computing system (Armbrust et al.2010).
The threatof attack:
In cloud-based accounting system, every component is potentially reachable from the Internet andanything connected to the internet is not perfectly secure. This characteristic of this accounting system makes this system vulnerable to severecyber-attacks. Even the most technically efficient teams can suffer severe attacks and security breaches if they are using cloud-based accounting systems (Hall, 2012).
Limited control over the system:
The users of cloud-based accounting systems have limited control over the function and execution of the infrastructure that has been deployed by the host. System providers often limit the accessibility of the customers to the alteration of data and services but customers are not allowed to alter the backend infrastructure as per their requirement.
Businesses that will be benefited from the installation of cloud-basedaccounting systems:
Generally, small size companies and start-ups that are limited on capital but are in need of cutting-edge technology and works with a large number of remote employees should be benefitted from the application of cloud-based accounting systems. Cloud-basedaccountingsoftware can offer them the value, security, and level of expediency they require. Thecloud-based accounting software can help these companies to have a successful and fruitful commercial future.
The above discussion clearly signifies that most companies which use the cloud-based accounting system hire the service from a third party. The third party is completely responsible for providing security,privacy, and maintenance of the interface and the underlying hardware. Therefore it can be recommended that small companies that are constrained with limited capital should be benefitted from the use of cloud-based accounting systems as these companies do not have to bother about the maintenance of the system.
On the other hand in case big companies that are established and have a substantial amount of capital at their disposal should be benefitted from the adoption of the cloud-based accounting systems. The same provides ease of data handling and convenience of access from anywhere.
The traditional accounting system offers tight control over data and there is no scope of unauthorized remote access to the sensitive information as the system is not connected to the internet and the numbers of users are limited by the license. Hence it is ideal for smaller organizations which are also constrained for funds.
Thus the above discussion signifies that both the traditional accounting system as well as the cloud-based accounting systems will deliver some risks and benefits when they will be applied. After installing an accounting system a company should continuously monitor the performance of the existing accounting system so that additional measures can be taken to ensure data security as and when required. However a company will be able to derive maximum benefit from the application of these systems if it takes proper measures to overcome the loopholes of the system while considering the requirements of the company.
Hall, J. A. (2012). Accounting information systems. Cengage Learning.
Gelinas, U. J., Dull, R. B., & Wheeler, P. (2011). Accounting information systems. Cengage learning.
Kavis, M. J. (2014). Architecting the cloud: Design decisions for cloud computing service models (SaaS, PaaS, AND IaaS). John Wiley & Sons.
Armbrust, M., Fox, A., Griffith, R., Joseph, A. D., Katz, R., Konwinski, A., ... & Zaharia, M. (2010). A view of cloud computing. Communications of the ACM, 53(4), 50-58.
Beloglazov, A., Buyya, R., Lee, Y. C., & Zomaya, A. (2011). A taxonomy and survey of energy-efficient data centers and cloud computing systems. Advances in computers, 82(2), 47-111.