Archive for September, 2008

Threats to Cloud Computing

Given all the advantages and benefits of cloud computing, it is worth noting some of the obstacles to this service as well. As described by BusinessWeek here, “North American broadband penetration still lags that of many countries in Europe and Asia, and without high-speed connections—especially wireless ones—cloud computing services won’t be widely accessible.”  Further, the practice of storing large amounts of confidential user data along with software is likely to raise concerns about privacy protection, as discussed by Chirag Mehta in his blog. This second point is especially true for small to mid-size accounting firms, since the majority of their clients are private businesses whose business information is extremely sensitive. Last, the Amazon Web Services EC2 web outage is still fresh in the mind of many critics of cloud computing. A power outage faced by the third-party providing cloud computing service(s) could bring business to a complete halt for the users. Even several hours of this could be devastating for an accounting company during the busy tax or audit season, and could severely compromise the firm’s reputation.

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Terremarke Enterprise Cloud

After reviewing several cloud computing services providers here, we chose the Terremark Enterprise Cloud. Along with all the benefits listed in the previous post, the two key reasons for our choice are: (i) service is specifically designed for small to mid-sized firms; and (ii) service is specifically designed with accounting firms in mind, as listed on the company’s website:

“Highly secure platform; certified as PCI DSS Compliant and built on a service delivery infrastructure that meets SAS 70 Type II requirements, essential for companies subject to information security regulations like Sarbanes-Oxley, HIPAA and GLBA.”

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Applications of Cloud Computing

We are going to briefly differentiate between three main services offered through cloud computing, as discussed by Dion Hinchcliffe here.

Storage – computer data no longer has to be stored on site. Instead, they can be backed up at another location supervised and run by a third-party.

Applications – computer applications can be stored and accessed online. This would allow better control over application usage, in addition to giving easier and increased access to users.

Computing – the ultimate in cloud computing, with the entire computing process from data storage, application storage, to memory usage offered through a third party through the internet. There are several advantages of cloud computing for the accountancy profession. As Mircea Goia noted in this entry, it allows the capacity for application growth (scalability), superior work capacity (performance), and minimal failures (reliability) as the needs of the firm evolve. Moreover, Sai Jandhyala noted here several advantages of cloud computing and we discuss below their real life application for a small to mid-size accounting firm: 

  1. Improved accessibility and flexibility: This includes but is not limited to the client’s workplace, travel destination, and home. The flexibility to work from home is an enticing perk for many potential employees. Employees could even access needed applications via cellular devices.
  2. Increased productivity due to decreased latency and multi-tenancy: Latency is decreased due to increased accessibility (people can work wherever and whenever). Multi-tenancy is a core feature of cloud computing as people can work together online and collaborate regardless of location. This is imperative as teams of accountants working on the same client routinely need to communicate.
  3. Increased security:
    • Computer-specific malware or malfunction – if a specific computer is attacked by malware or crashes; sensitive documents are safe since they are not stored on the computer but rather off-site, work can be resumed on another computer.
    • Heightened security – dedicated providers of the service would concentrate efforts in safeguarding their plentiful clients’ sensitive data. The centralization of the application (economies of scale) through cloud computing would significantly reduce the monetary impact of such measures on a sole client, by segregating them across several existent users.
    • Centralized location of confidential documents – with regards to client information, sensitive data will no longer be left on often unsupervised laptops and desktops, but would instead be stored offsite at a third party location, guarded through superior technology.
  4. Better infrastructure at a lower cost (hardware/software):
    • Reduced capital expenditure – the firm does not have to invest in software and hardware services, as it will be handled by third-party providers. Similarly, the firm will not have to worry about obsolescence or upgrades either; so the firm can focus on its core business. The firm would merely pay a subscription fee and/or payments based upon usage.
    • Scalability – during the busy/off seasons for individual departments – i.e. tax and audit – the firm can allocate computing resources from one department to another or increase or decrease its total resource usage.
    • Increased performance – specialized hardware/software that individual firms cannot afford will be provided by third party providers who are able to achieve economies of scale.
  5. Boost support for accounting clients by offering real-time support with the use of online applications such as HumanClick or BoldChat. These can also be utilized for communication amongst employees.

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What is Cloud Computing?

Imagine eliminating your employees’ need to work on select computers with needed applications installed on the mainframe. What if your staff members could work collectively and access their applications anywhere, whilst auditing clients that are oceans apart? Technological advancements – particularly the introduction of ‘cloud computing’ – have now made this a reality. As Presto Vivace outlined in his blog, cloud computing utilizes a combination of the Internet (‘Cloud’) and computer technology (‘Computing’). IDC recently made a post defining the newfound development as the technological backbone of ‘cloud services’; which is the real-time delivery of services and solutions to consumers via the Internet. In large, such cloud services are monetized by means of subscriptions and/or usage of the product. This in itself has several cost benefits for clients, as will be outlined in future posts pertaining to the advantages of cloud computing. Further characteristics of cloud services include its (1) accessibility via the Internet; (2) browser-based interface; (3) dependence on third-party sources; (4) need for minimal IT proficiency; and (5) ability to share resources.

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