By Steven Cohen, Managing Director Softline Pastel, part of The Sage Group plc.

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I recently realised that the term ‘cloud computing’ is not as broadly understood as I had assumed. Maybe it’s because I work in the tech sector that these buzz words are part of my everyday vocabulary but I was surprised to discover that 77% of professional accountants claim to have no understanding of what accounting in the cloud is.

This statistic comes from independent research we recently conducted. And what is interesting to me is that while a large proportion of professional accountants don’t know what cloud computing is, 53% would recommend an online accounting product to their SME clients. So, there’s obviously confusion out there because cloud computing and working with an online application is exactly the same thing. And accountants are clever people, so if they are grappling with the principles of the cloud, so must many others!

Cloud computing 101

When we refer to the cloud we’re talking about where the program is hosted, or stored, and the answer is that it lives on the web and not your computer. It’s the same as your Facebook account where all your information is stored ‘somewhere on the internet’.

Facebook (although I am not an avid user) is a great example. When you’re using it, I guarantee that you don’t think about whether it’s the latest version or if the information you see is the most current. You just know that the answer is yes and that somebody clever ‘out there’ is taking care of everything!!

Well the ‘out there’ is the cloud! Perfectionists will criticise me for this – but the heart of the argument is that the cloud refers to the web or the internet – they’re basically the same thing.

So, what are the advantages of the cloud?

I’m finding that in my personal life, things are getting messy. Between my desktop, laptop and iPad, my data is stored in too many places and I’m struggling to remember which version is the most current. But I firmly believe that this is the transition phase of migrating from the traditional way of doing things to having all my stuff working from the cloud. And I’m starting to make the shift by storing the documents that I work on regularly in Dropbox; a data keeper in the cloud. Dropbox makes sure that my data is always up to date and I can access it from anywhere, so I’ve already solved two main issues – my data is current and safe!

The anecdote: encyclopaedias go electronic

Remember Encarta – Microsoft’s excellent encyclopaedia that was around in the late 90s and early 2000s? I love this analogy. Let’s trace it from the beginning: For hundreds of years leading up to the 1980s, encyclopaedias like World Book and Britannica were actual physical books. There were usually 24 hefty books in a set; one for each letter of the alphabet as well as the annual year book which intended to keep the base information relevant.

Then a massive shift; encyclopaedias went electronic and two meters of shelf space in every home were freed-up. Encarta was available as a disk and offered something like 60 000 pieces of reference material including interactive images, timelines and maps. The ability to simply click links and jump around topics was great; you got the info you wanted quickly and knew it wasn’t dated. But can you believe that Encarta – this great invention – couldn’t have lasted for more than 10 years because the whole thing shifted to the cloud and is now called Wikipedia.

Books were our point of reference for several hundred years and now we just don’t use them anymore.

The moral of the story?

The world has changed – there’s a new way of doing things. Using the encyclopaedia example, no one questioned the shift to online – in fact it was a welcome progression, so why are we apprehensive about cloud computing when we make so much use of it already?

If businesses do not adapt to this new, and better, way of working, they run the risk of very quickly becoming prehistoric in their service delivery which is just not a sustainable strategy for success.

To read Part 2, click here