Is On Demand Accounting Software Right for You?
Most corporations find it extremely challenging to choose from among the many accounting software packages on the market today. Perhaps one of the toughest decisions an organization will face during the evaluation and selection process is whether an on demand accounting software solution is the right choice for them.
On demand accounting software, also commonly referred to as hosted accounting software or Web-based accounting software, provides all the same features and capabilities as on-site accounting software solutions. However, it is not installed and maintained at the company’s site. Instead, it is “rented” from a third-party application service provider (ASP), who takes on all responsibility for its deployment, storage, and ongoing administration. Businesses simply pay a monthly fee to utilize the system and its functions, while the ASP handles the rest.
There are countless advantages to this approach, and the many businesses that have opted for an on demand accounting software system are reaping significant benefits. However, there are several drawbacks as well, and on demand accounting software may not be the right choice for every business.
Below is an overview of the primary “pros” and “cons” of an on demand accounting software solution:
- Affordability. Unlike their on-site counterparts, on demand accounting software systems are far more affordable and budget-friendly. Companies pay “as they go”, with little or no upfront costs.
- Rapid deployment. With on demand accounting software, there is nothing to install. All hardware and software components are already implemented at the third-party provider’s site. Some minimal set up of accounts and passwords, and some basic end user training, are all that are required.
- Minimized technical administration. Since all upgrades, enhancements, maintenance, support, and other post-installation management activities are overseen by the ASP, on demand accounting software places virtually no additional burden on internal IT resources.
- Accelerated ROI. On demand accounting software requires little initial investment, and gets up and running quickly. This, in turn, accelerates return on investment.
- Potential security risks. Most viable on demand accounting software providers are utilizing highly effective security measures such as firewalls, data encryption, server partitioning, and multi-level password protection – making their offerings just as secure as any available on-site solution.
However, if an on demand accounting software vendor is not chosen wisely, and the appropriate controls are not in place, the confidentiality and integrity of sensitive financial data could be put in serious jeopardy.
- Reduced control. Any time an organization selects an on demand accounting software solution, they relinquish a certain amount of control over the application and all its associated data. However, if a viable ASP with a solid reputation is contracted with, this will never pose an issue.
- Increased long-term TCO. While initial expenditures are low, the costs associated with on demand accounting software extend throughout the life of its use. Over the course of five or more years – when most companies who have purchased on-site accounting software solutions have long since paid up – that can all add up, increasing total cost of ownership over the long term.