Accounting Software As Software-As-A-Service: Advantages And Disadvantages

Accounting Software As Software-As-A-Service

In the mid-80s, accounting software became very popular with midmarket companies. Personalized accounting became an indispensable tool for businesses as personal computers became cheaper. Users took advantage of computer technology because financial report preparation was easier with the help of accounting software. Automated accounting also began to attract users who had previously shied away from inflexible and restrictive time-sharing computer systems. Now, a majority of companies are still using accounting software installed on computers at the office. With technological improvements and the opening of branch offices in various parts of the country, users are becoming increasingly interested in shared remote computing.

Because company workforces are becoming scattered, there is now a growing need for mobile computing that can access records even when the user is in a remote location. This new kind of technology makes use of the Internet, which is now relatively cheap—connection of remote offices does not require T1 communication lines nowadays. Through the Internet, connection can be dependable and fast. Because of the high cost of maintaining a backup system, workstations, and hardware (usually required by previous versions of accounting software), software-as-a-service has emerged as a popular choice for clients who find maintaining software and hardware systems tiresome.

Software-as-a-service can be defined as any kind of hosted software which can be the same as a remote computing environment. A user needs to login through a remote connection to a company-owned computer that is maintained and reserved by a third party for the exclusive use of that company’s users. Another kind of software-as-a-service is an application used by various companies which share the same software. Because this software is shared, it can’t be customized to fit the needs of a particular company. Any software upgrade is usually deployed automatically and does not require any intervention from the user.

One of the pressing problems software-as-a-service faces is that when there is no Internet service for whatever reason, the users will not be able to access the accounting software. They have to wait for the Internet connection to be restored before they can access the software again. It is possible for a company to be forced to stop its operations when there is no Internet service.

Security is also another concern which is brought up every time there is discussion about the possibility of using software-as-a-service. The company’s data is often stored in a remote location, and the company has no way of protecting that data against theft or hacking. Hackers could gain access to the accounts data, which in turn makes it possible for the company to lose that accounts data.

However, software-as-a-service also has its benefits. A primary benefit is that the company does not have to buy hardware, because the SaaS provider will be shouldering such costs. The accounting software can be accessed using an Internet browser, access does not require any computer memory or special hardware, and upgrades are automatically deployed. There is no need for a company to spend money on consultants, and neither are the company’s operations disrupted when the SaaS provider deploys a software upgrade.

As the software-as-a-service model is becoming more popular, a lot of technology experts are suggesting that companies switch their accounting operations to a purely online SaaS, while there are also some who suggest that the operations be divided by having some applications installed locally and some applications hosted remotely. This approach, known as the hybrid approach, is being adopted by a growing number of companies. It is widely believed, however, that for small- and medium-scale businesses, the traditional on-premises accounting software will still be popular.

By Florence de Borja

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