Should you have your accounting system on premise or the cloud?

All organisations require fast, accurate, business systems that give them a full perspective of their operations. Today there are many options for systems but one of the most basic decisions to be made is to decide whether you are going to have your accounting system on premise or host it in the cloud.

So what is the difference between “On Premise”, “Cloud Hosted” and “Cloud Native Applications” installations?

On-Premises software is typically installed and run on computers (usually on a server) within your office premises. Cloud Hosted could be On-Premise software hosted in the cloud accessed via the internet.

Cloud Native Applications, often called “computing in the cloud” are typically hosted by a third party, accessed via the Internet, and have been designed to take advantage of a variety of operating system platforms.

Which option is best for you will depend on your own business’ requirements. The key elements to consider are speed, cost, security (control) and flexibility. So let’s break the differences down for you.

Speed of Cloud Accounting versus on Premise Accounting

The first consideration should be your internet speed. Because cloud accounting systems utilise the internet, it is important to confirm you have a fast and reliable internet connect. If your internet is unreliable then you shouldn’t consider cloud accounting.

Cost differences of Cloud Accounting versus on Premise Accounting

On premise accounting systems will typically cost more up-front and will usually be seen as capital expenditure within your business. Cloud accounting systems usually have a monthly cost for both the licence cost and storing your information. While the costs of initially installing a system on premise are comparatively large, the ongoing costs of using the cloud however, will over time, level out against the initial cost or even outweigh it. When you break it down you have to compare the following factors.

  • Initial hardware and software costs against ongoing rental of cloud space
  • Cost of ongoing service issues on local systems – by this we mean the maintenance and upgrading of the systems

Security Considerations Cloud Accounting versus on Premise accounting systems

Cloud accounting systems must keep up to date with security to ensure that your systems are safe and secure. It is a good idea to review what the terms and conditions the provider states and what guarantees (if any) they give around security. Even then, you need to be comfortable entrusting your systems and data to a third party. With on premises accounting you will need to engage an IT company to install relevant security systems and procedures. The beauty of the on-site option is that you have full control of your security levels and access (including remote access by VPN if required)

Which is more flexible: cloud accounting or on premise accounting

Again it will largely depend upon exactly what you want to do, but both options can be adapted to suit your requirements. Some Cloud based options are said to be fully customisable, but there may be additional add on costs involved in building exactly what you want. On premise solutions can be basically built “from the ground up” with all your needs in mind and this can be a clincher for organisations operating in narrow niche markets that require customised system solutions.

On the flip side, mobile access to cloud based systems is much easier to arrange than with on premise based systems.

The bottom line

Essentially both platforms have their advantages and disadvantages. Your choice will largely depend upon what you need now and moving into the future. The ideal solution is one that lets you access and store critical data, while not compromising your firm’s budget and giving you the flexibility that you need. Ultimately the decision will be determined by your businesses specific requirements.

If you need assistance in choosing the right option, Acacia Consulting Services can assist you further. Give us a call today on +61 3 8560 5220 to discuss your accounting system requirements.