How To Start & Grow Your Business

Not So Fast: Cloud Hits Roadblocks

Terry Sheridan
Jan 12th, 2015
  • Estimated reading time: 2 min read
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    146 percent said security is their top concern. 2Despite fears, cloud-based accounting is fairly secure. 3It's only a matter of time for tide to turn.
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Sales-businessman with business growing graph cloud Photo Credit: Tom Wang Shutterstock

If your small-business clients are on the fence about cloud accounting, they’ve got plenty of company. A recent survey by market researcher and consultant Software Advice indicates a decidedly mixed view by respondents about use of the cloud. (Small businesses are those with annual revenues of $100 million or less.) There’s still a lot of fear out there.

We recently posted an article with similar findings, particularly about security, in a survey by CPA2Biz, the AICPA’s for-profit technology subsidiary.

“There’s a big divide between attitudes (people’s confidence) and behaviors (people’s adoption),” said market research associate Noel Radley, who wrote the Software Advice report, in an email.

That could be for a couple of reasons, she said. First, cloud-based products in accounting aren’t mature enough to compete with their on-premise counterparts at the same price point. And second, attitudes about cloud-based accounting aren’t at the tipping point to change behavior at the rate of other software markets.

With respondents split almost evenly in half over confidence in the reliability and safety of cloud accounting software, “you don’t have the critical mass you need to change people’s buying behaviors,” Radley said.

Here’s a quick look at the survey results of cloud usage for small businesses.

  • 32 percent were moderately likely to move to the cloud.
  • 26 percent said they were unlikely to use it.
  • 46 percent said security is their top concern.
  • 46 percent use on-premise software (software installed on their company servers).

According to the report, the findings indicate a strong potential for growth in the small-business accounting software market. “We feel that the mixed attitudes of those from small businesses may be quickly influenced as the cloud accounting software market matures,” the report states.

As an example, the security concerns may be rooted in a lack of communication rather than reality because software consultants believe cloud-based accounting often is more secure.

“Thus, the real question is not ‘if’ but ‘when’ the attitudes of small-business accounting software buyers will shift toward the cloud at the rates of other markets,” the report states.

In other words, you can’t run from the cloud. CPA2biz president and CEO Erik Asgeirsson said about the same thing in a news release: “Web-based services are here to stay. But firms need to do their homework, put in place well-defined service agreements, and choose vendors who have a demonstrated commitment to ongoing technology assurance services.”

This article was written by Terry Sheridan and published by AccountingWEB, a leading publication for the accounting profession in the United States.