2014 SaaS Survey Bolsters Cloud Adoption
The number of firms that maintained a traditional network infrastructure in-house declined in the past two years from 78% to 71%, while the number of firms that maintained their own network in a collocation facility increased slightly from 4% to 5.5% (most often for disaster recovery capabilities including better power, security and Internet). The majority of the decline (5.2%) in traditional in-house networks was due to firms moving their entire network to an external cloud provider and the remainder to a specific cloud accounting vendor (Thomson Reuters Virtual Office) that could host the majority of the firm’s applications.
Within the traditional firms hosting their own networks, all were using some SaaS applications with Tax Research being the most prevalent at 88% of respondents. This was followed by 80% of firms using SaaS portals, which was a 15% increase over 2012 findings. This year one of the fastest growing areas of cloud adoption was hosted spam/anti-virus management services such as AppRiver, Postini, MimeCast and McAfee/MxLogic, with 59% already outsourcing theirs and another 11% planning to add remailer services this year. The number of traditional firms that utilized external payroll services such as ADP, Paychex and Intuit Online, increased slightly to 61%, leaving a surprising third of the firms still doing their own payroll internally. The survey also asked which SaaS applications firms were planning on adding this year and the highest interest was in offsite data backup/archival (12%), accounts payable management providers such as Bill.com (11%), and tax workflow including products such as XCM, Thomson Reuters FirmFlow. Wolters Kluwer Workstream garnered 9% of the votes and hosted groupware such as Microsoft 365/Outlook also had interest within 9% of the firms.
When it came to firms’ major concerns about using cloud applications, downtime/outages/unavailability and increased cost over the length of the contract were the top concern with 88% of respondents being “extremely” or “somewhat” concerned and 84% of respondents being concerned about security or hackers. 70% of respondents picked Disaster Recovery/Redundancy as being the most important factor in determining whether the firm would utilize cloud applications followed by factors such as: “impact on overall IT cost/fixed cost per user,” “better data security in infrastructure’, and surprisingly “compliance with privacy regulations.”
Of the 17 firms that had moved their entire infrastructure to a cloud hosted environment, 47% utilized Xcentric, 12% utilized Peak10, and 12% utilized Cloud9 Real Data. Within this group, 44% had been in the cloud for three or more years and 72% stated they were “extremely” or “most” likely to renew when their contract expires, which was the same as in 2012.
The survey asked the firms in the hosted environment to rate various features and 83% felt the security was much better than in their previously hosted network, 78% felt increased mobility for staff was better, and 72% rated disaster security as “much better.” The lowest rated factor within this group was the impact on overall IT costs as eight firms rated their cloud host provider costs as “Much Better” or “Somewhat Better,” while eight firms rated their cloud environment as “Much Worse” or “Somewhat Worse” pointing to inconsistency in how services are delivered and the importance of firms thoroughly checking cloud hosting vendor references.
Firms were next asked when they believed the majority of accounting firm applications would be completely cloud based with 43% of respondents thinking between three and four years, 40% guessing it would take more than five years, and almost 8% saying that cloud-based applications would “Never” become the majority.
The survey asked with Cloud applications had provided the firm with the greatest efficiency and the top two applications were the same as in 2012: XCM Solutions workflow and Thomson Reuters GoFileRoom, followed by CCH Axcess Portal and QuickBooks. When asked which application firms wished were available in fully functional versions in the cloud, the top answers were Practice Management, Audit Engagement Binders, and QuickBooks, pointing to opportunities for the software vendors to target their development efforts.
With every firm using some SaaS applications, partners being exposed to more discussion of the benefits of cloud hosting by peers, and the vendors upgrading their applications to take advantage of today’s technology, we can expect to see continued transition to cloud applications now and in the near future.
Roman H. Kepczyk, CPA.CITP, AAAPM is the Director of Consulting for Xcentric, LLC and works exclusively with accounting firms to implement today’s leading best practices and technologies incorporating Lean Six Sigma methodologies to optimize firm production workflows. Roman is also the author of “Quantum of Paperless: A Partner’s Guide to Accounting Firm Optimization” which is available at Amazon.com and to members of the PCPS section.