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James Bourke

Cloud Computing — Where Would We Be Without the Internet?

By now as a practicing CPA, you have undoubtedly been hit from all sides about the benefits and advantages of cloud computing. Have you ever thought about where we would be without the Internet?

July 25, 2011
by James Bourke, CPA.CITP

TechBytes

Think back, it was not that long ago that the personal computer (PC) was first introduced into the profession. In my own firm, I witnessed how the information technology explosion of the 80s changed my firm and our profession forever.

When first introduced, the PC revolutionized the way that we processed work throughout our profession. The days of seven- and 14-column pads were slowly disappearing as we used early spreadsheet applications to work up trial balances, financial statements and cash-flows projections. Early word-processing application allowed for the quick and easy preparation, update and revision of financial statements and other reports.

The introduction of the PC also allowed us to be extremely productive and significantly cut down on the amount of time spent on engagements through the use of pro forma spreadsheets and reports from those previously prepared.

As vendors serviced our space began to deploy PC-based applications to meet our demands, we witnessed the migration of work from offsite data centers to within the walls of the CPA firm. No one area was more impacted than tax preparation. The days of a CPA firm filling in grid sheets and waiting hours or even days to receive the completed return were over.

Soon after PCs began to proliferate throughout our profession, the Internet went through a similar growth period. Early versions of web browsers allowed CPAs to access and research information that made us more productive.

With the explosion and growth of the Internet, vendors began to realize that its infrastructure allowed for greater flexibility in application delivery.

However, although the Internet did indeed provide 24/7-access to a significant amount of information, many in our profession were concerned about the security surrounding private and confidential client information. Primarily, most were concerned about the unknown, the unknown being where that data was stored and what controls were in place to ensure that data would not be compromised.

As time passed, financial institutions, online retailers, credit card companies and others began to use the Internet as their primary channel to reach consumers and store their confidential and private information. With this came federal rules and state regulations regarding the protection of consumer data.

It was not long before our profession also began to embrace the Internet as a place to access information and store data. The "cloud computing" model has finally caught on. In fact, a recent Gartner forecast reflects the significant impact cloud computing will have on the software marketplace:

When we speak about cloud computing, it helps to understand it in terms of what it means today. Today, cloud computing can be generally broken down as:

  • Software as a Service (SaaS)
  • Platform as a Service (PaaS)
  • Infrastructure as a Service (IaaS)

The following chart helps to explain each of these areas:

When we speak about cloud computing, it helps to understand it in terms of what it means today. Today, cloud computing can be generally broken down as:

  • Software as a Service (SaaS)
  • Platform as a Service (PaaS)
  • Infrastructure as a Service (IaaS)

The following chart helps to explain each of these areas:

Today, many in our profession are taking advantage of one or more of these platforms.
So where would we be without the "Internet" and specifically "Cloud Computing"? The answer is simple … "it is where we wouldn’t be!"

We have made tremendous progress in our profession thanks to the Internet and cloud computing. Putting the benefits of social networking aside, today’s CPA firms utilize this model for tax preparation, engagement management, practice management, research, forms preparation and data management, including data storage and delivery as well as for the receipt of data from clients and other third-parties.

In addition, firms are using this model for human-resource management including hiring, employee evaluation, compensation, benefits and more.

The cloud-computing model has given rise to vendors offering integrated accounting services (see related story in this issue), online bill pay and outsourced CFO functions to their clients. The cloud model is a perfect conduit for leveraging each of these services.

As evidenced above, the cloud computing will continue to evolve and expand its reach. As CPAs we are perfectly positioned to seize the opportunity and understand how to market services to companies actively engaged in this space.

Security remains the number one concern of most CPAs and in helping ease that concern, the AICPA currently offers tremendous resources to help manage the risks associated with using a cloud provider. The resources bring its members and consumers up to speed on the Service Organization Control report options (or Service Auditor’s reports).

AICPA members also have access to "locked" content available to members only. Additionally the Cloud Computing Task Force is trying to put some materials together. Visit the AICPA’s Information Technology Section’s website for more information about their designation and members-only content. This information includes white papers, PowerPoint presentations, brochures and more to educate the CPA on how to leverage their knowledge and take advantage of opportunities that will continue to exist.

The opportunities that cloud computing will continue to create are endless. There is no better time than now to get up to speed and take advantage of the benefits of cloud computing within your own practice and leverage the education and resources currently available at AICPA.org.

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James C. Bourke, CPA.CITP.CFF, is director of Firm Technology at WithumSmith+Brown. He is a past president of the New Jersey Society of CPAs and currently serves on AICPA Council and is the Chair of the AICPA CITP Credential Committee. Accounting Today has continually named him as one of the Top 100 Most Influential People in the Profession.