Though it’s not a hugely popular notion yet, there are compelling reasons the software-as-a-service (SaaS) or on-demand model can make sense for users of accounting software, especially SMBs.

Granted, most of the major accounting software players in Canada did introduce Web-based solutions over the past few years and subsequently retreated, but the consensus was that while the market wasn’t ready, the concept was sound.

Perhaps interest is beginning to stir. There are a few smaller, hosted accounting software players making a go of it in this space. Of course success in any technology area can only happen when the market is truly ready.

Here are three reasons the SaaS accounting model might be a good fit for your company:

  • Costs be gone!: The first reason for going the on-demand route is to cut the costs of maintaining your computerized accounting environment. Much less server space is necessary and you’ll cut down on purchased software licences. SaaS might also mean that you can get more for less. “A small business can get mid-sized accounting solution power without having to buy software that would normally cost $10,000 to $30,000 with all the software, hardware and staff that they would require to make it work,” explains Grant Rowson, manager, technology solutions and manager of the Thunder Bay, Ont. office of BDO Business Technology Solutions Inc. “So it’s not to say that they’d get it dirt cheap, but for a monthly fee that they’re paying they don’t have to worry about putting in that high end software. The host worries about that for them.”
  • Feel more secure: Every week it seems a story appears in the computer technology trade press about a new security breach. But experts often say that these breaches really could have happened to anyone; they’re not just black and white cases of neglect by the keepers of the data. So, one might ask, how is the little guy, such as a small business owner or mid-sized company, supposed to secure that information when not everybody with a dedicated department and an enormous IT budget can? Rowson says most hosted accounting solutions – at least those run by “viable players” – have been built with security in mind. “They’ve spent their time thinking about this and they’ve built a real Fort Knox around their servers and their communications, things that no small to mid-sized business could ever afford to do,” he says. Still, says Michael McDerment, CEO of Toronto’s FreshBooks, which runs an online invoicing and time tracking service, some people will never be completely comfortable online. “I don’t think they’re really thinking about it correctly. It’s irrational, because this is our full-time business, and if we muddle this up we are out of business, whereas for them, if their computer breaks down chances are they haven’t backed up their QuickBooks files recently and that data’s gone.” FreshBooks, for its part, backs up all customer data in three separate locations using RAID technology. If any drive on any of one of its servers goes down it’s all mirrored “so nobody even notices.”
  • Convenience on the go: If your business has a roving sales force, purchasing people or an owner who travels a lot, the on-demand solution means they can access their applications from just about anywhere. They don’t even have to be carrying expensive laptops; infrastructure requirements are almost non-existent. Any PC with a Web browser can get them into their accounting system and let them do things in relatively real time. Rowson says this is especially important going forward as Google and others try to find ways to use more mobile applications on smart phones, cell phones and PDAs such as BlackBerrys. “One of the things that will stem from that is finding a way to connect your accounting, contact management and CRM systems on those mobile devices. So if I’m at a tradeshow and somebody wants an order, in theory I can be checking availability of inventory live right on my cell phone right in front of me.”

Grant Rowson is manager, technology solutions, and manager of the Thunder Bay, ON-based office of BDO Business Technology Solutions Inc. Michael McDerment is CEO of Toronto’s FreshBooks, an online invoicing and time tracking service.

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