THE SAGE GUIDE TO Cloud Computing

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1 To download the Sage Guide to Cloud, visit sage.co.uk/exchange Or for any further information concerning the Guide, please THE SAGE GUIDE TO Cloud Computing What is Cloud Computing and what does it mean for you? Paper from well managed forests Sage (UK) Limited 2010 registered in England No

2 contents Page 3 Foreword Page 4 Demystifying the Cloud Page 5 Cloud Computing vs. Software as a Service Page 6-8 The future of accountant services software Page 9-11 Cloud Computing benefits Page The here and now of web-based technology Page Who is using the Cloud? Page Cloud security Page 18 The future of the Cloud Page 19 Summary and sources of information Foreword Welcome to the latest in our Sage Guides Series, designed to keep you informed of all the hottest industry topics and how they might impact on you. Part 4 in our Guide series takes a closer look at the Cloud Computing phenomenon and outlines why it is becoming such a powerful, modern business tool. It presents a comprehensive overview of this innovative shift in IT and details the benefits it could bring to you and your clients. We hope you ll find it interesting reading. 3

3 Demystifying the Cloud What is Cloud Computing? The concept of Cloud Computing isn t something new. In fact, it is a resource most of us have been using for some time most commonly to check s and share information via social media sites. Put simply, it is using the internet to access technology-enabled services; all you need is a web connection. So if you log-in to check your Hotmail account from a home PC, or to access your Amazon.co.uk account or if you use a work computer to update your LinkedIn page you re already using the Cloud! In the IT sector, for example, Dell already provide their external support remotely which is only possible via the internet using Citrix to access PCs. Working in this way means the firm can outsource support services to India, where costs are cheaper, and pass on these savings to customers, resulting in a lower price tag service. Cloud Computing and SaaS what s the difference? There is often confusion about the difference between Cloud Computing and SaaS (Software as a Service) and it is important to draw distinctions between the two. The main difference is their scale and application. While Cloud is taken to mean the whole, hosting internet system, SaaS is usually considered to be a more specific service being offered. In its most basic form, SaaS is any application that your firm runs and uses but that is not located on your premises. It is a licensed product that is owned, delivered and managed remotely by one or more providers. Sometimes referred to as software on demand or the application layer, users access services in exchange for a fee on a pay-for-use or subscription basis. It facilitates a sharing of application processing and storage resources in a one-to-many environment allowing several users to share and work on data at once. There are two main types of SaaS: 1 A true SaaS solution built completely in the Cloud. Examples include: Sage s CRM system or Hotmail Scalable, tailored web technology According to publisher, Gartner, to qualify as a true Cloud Computing resource, operations must be massively scalable. 2 A solution that is accessed via the internet but not hosted entirely online, in the Cloud. Examples include itunes an application you buy from the web and download to your desktop and applications downloaded to smartphones from the internet and played locally This type of web-hosted technology is already a huge part of our lives, with almost a third of the UK population using itunes (more than 20 million subscribers) and Hotmail alone (a further 23 million account holders). For accountants, easily-tailored web technology offers more flexible ways of connecting with and working on live data. Information can be maintained and secured remotely removing the need for backing-up and storing in-house. 4 5

4 Cloud Computing the future of accountant services software? The combination of speed and flexibility offered by Cloud Computing means that it is being talked about as the future of accountant services software. It will undoubtedly revolutionise the way new products and services are developed, managed and consumed, and so redefine the way we do business. As such, we need to be ready to understand, embrace and assess what this way of accessing information can do for us. In addition, there are already clear signs that a hybrid of web-based and desktop solutions, such as Microsoft Outlook, is out-stripping the pure on-premise software market. Subscription-based payment for all software and services is the future. Being informed about what this might mean for practices is one of the ways we can all move forward and prepare for the changes ahead. The fact that British businesses are relative newcomers to the Cloud Computing web-based technology market makes this even more pressing. As BBC Online s Business Editor, Tim Weber, puts it: Cloud Computing is not new; although it s fair to say that businesses have been slow on the take-up. We may have lagged behind other countries in adopting Cloud Computing as a commercial tool, with the USA and other major European nations leading the way. But all this is about to change. Earlier this year the government announced plans to introduce its own internal Cloud Computing system which it hopes will shave 1.6 billion from its software purchasing and storing bill. Now UK industry leaders are looking for ways to exploit Cloud Computing more effectively too; after all, the technology is already there. They are taking a closer look at the benefits this online technology can bring and developing long-term strategies for its implementation. With an estimated nine million young people due to enter the employment market in the next three years all of whom are used to working and communicating in the online world the speed of change can only increase. Accessing services via the web is their generational comfort zone. They ve grown up with using internet-hosted services like Facebook and Hotmail to communicate with friends, and itunes to purchase and enjoy music. As they begin to carve out careers they will want to take the strategies they use when sharing personal data and apply them to business. For us here at Sage, it s about offering our clients the choice and flexibility that they want in terms of how they access services and, just as importantly, how they pay for them as you-go or via subscription. 6 7

5 One of the ways in which Sage is using the Cloud... At Sage we recently implemented our GoToAssist service, whereby customers can give us access to their in-practice software and IT systems via the internet. This means that a physical visit isn t required if the customer doesn t want or need it. In the short term this is an instant, efficient service for our customers; in the long term it allows us to develop a Cloud support community that we hope will help us stand out within the industry enabling us to provide the levels of high-speed, interactive support that will become increasingly expected. What can Cloud Computing bring to your practice? Online technology offers tremendous scope for faster, flexible ways of operating for all types of businesses. And for accountants and their clients, the range of benefits is vast. As well as providing easier access to new products and services, it can help practices maximise efficiency and instill an even greater joined-up way of working. Benefits include: Increased flexibility: Anytime, anywhere access can help practices save time and embrace diverse, multi-location working Tapping into a hosted service promotes flexibility of usage and payment Employees can access services easily using an existing internet connection and web browser Cloud solutions make collaborative working easier; for example online payments via e-banking Working in a live data environment means you re not having to wait for a person to manually submit, exchange or process information A great example of the flexibility Cloud offers can be found when purchasing insurance online; it s not just for getting quotes and advice, you can also set up a legally binding contract with a few clicks of a mouse. 8 9

6 Value for money It is a device independent of technology meaning you don t have to invest in an expensive IT infrastructure to get started or expand Remote hosting means firms can scale use up or down quickly, to meet peak or quiet time demand Pay-as-you-go invoicing keeps costs down you re charged according to usage You can dip in and out using as much or little as you want, for as long as you need to Users can leave the service without incurring costs Overall, it should be more cost-effective to access Cloud-based solutions than to use traditional software or desktop models It is a tax efficient technology no capital expenditure means it can be considered a business cost Cloud gives less market entry barriers to new and small businesses by enabling them to compete with larger businesses at lower cost It is a green solution. The data centres used are more efficient than internal business networks resulting in a reduction of carbon footprints across the business community Enhanced customer service Cloud Computing reduces distance between you and your clients It enables quick reactions and responses to situational changes offering increased scope for growth You are always working from the latest software versions Solutions can help accountants provide the Virtual Finance Director service that many clients want It provides task-centric solutions, tailored to the specific business requirements of you and your clients Web-based technology enhances mobile working, freeing up quality time to spend with clients and allowing you to work from their offices when necessary You can enjoy desktop downloads Reliability Services are fast to set up and deploy Cloud solutions should be more reliable than traditional internal systems as you are paying for expertise to supply back up and contingency processes Practices can benefit from automatic application of security and software patches and/or upgrades Automatic upgrades means there is no need for the multiple versions required with traditional desktop models 10 11

7 Cloud Computing the here and now How is the Cloud currently being used? Following on from the popularity of web-based technology in the personal arena, we are seeing more widespread adoption in business too. Much of its use is as a hybrid solution as part of a combination of desktop packages and online applications, accessing music via itunes or sharing pictures on idisk. The two are no longer seen as exclusive and form an increasingly integrated approach. Accountants may work from a virtual desk: a series of documents and files stored securely and worked on in the Cloud. The technology works in the same way as a computer game that is accessed via an application, with scores logged and saved online. This combination of ways to share data is set to define how we use web-based computing and access services and information through it in the future. Provided you have internet access, you can connect to the data and information you need, in any location. 12

8 Who, and what, is driving the Cloud? Much of the growth of Cloud Computing so far has been driven by the demands of the IT industry itself and customers need to do more for less. The development of effective outsourcing working within a flexible, global market has also driven firms to seek out offshore solutions, especially in the arena of technical support. IT has been the enabler but globalisation and economic change have been the drivers of this change and made it possible. The flexibility offered by hosted online services means users can do business anywhere in the world and is rapidly opening up new ways of working. Examples of how we address the on-demand, pay-as-you-go economics of Cloud Computing include packages like Sage Pay s payment processing. Online 24-hours a day, Sage Pay offers constant availability and security enabling users to sell goods across the internet, to anyone across the globe, and is currently used by more than 31,000 UK businesses. A further 8 million people use Sage Pay s web-payments services to purchase goods online so it s clear to see the opportunity that the Cloud creates. It is a concept that opens up the possibility of genuine mass mobility and a new work/life balance. And the industry is keen to embrace this. Services like Google Docs and Gmail have already provided us with a host of fresh and productive ways to work and live in this globalised world. Some see Cloud Computing itself as the ultimate form of globalisation, allowing users to outsource work to other countries and vice versa for cost efficiencies. And the expansion of the outsourcing market has only fuelled our desire for the type of smart, flexible solutions online working offers. These fundamental shifts are coming together to create a real appetite for new Cloud Computing services and a willingness to embrace different ways of accessing and sharing. The IT industry itself has provided much of the energy for this change. And specific sectors have been able to streamline their processes by using Cloud. The rise in hosted Consumer Relationship Management systems (CRM) is an obvious example. Ideally suited to the on-demand, pay-as-you-go economics of Cloud Computing, packages like Sage s online CRM product allow real-time invoicing and processing. It enables a sales or marketing team to communicate with customers, keep track of campaigns and use client details for detailed profiling or forecasting. A further 8 million people use its web-payments services to purchase goods online so it s clear to the see the opportunity that the Cloud creates

9 Cloud Security Security Solutions Fact and fiction Getting it right Many accountants will have genuine and understandable worries about data security in the Cloud. The adoption of online services is dependent on trust and those that have done well are the ones who have installed trust in their user base, such as the online banking sector. The most common concern is about how and where information is stored, and about how safe those facilities are. People want to be reassured that their data won t be compromised or lost if hosts go out of business. Security needn t be an issue when it comes to using Cloud Computing services as long as you take the time to research and review the type of contract agreement you want. When choosing a vendor make sure you discuss how and where they will be storing and possibly using your data, and clarify who owns it. Drawing up a contract agreement that lays out these boundaries and solutions to any possible problems will ensure the process is a transparent one. Working together in this way will ensure increased efficiency and offer peace of mind for you and your clients. In reality, security is as much a priority for the providers as it is for accountants Contract checklist 16 and their clients. Just as we all spend time researching an online banking facility and only working with someone we trust teaming up with a reputable company is key. We trust banks to store and safeguard some of our most confidential and sensitive data. And those working to provide SaaS and web technology offer the same high levels of security. Where personal details are stored, this security will be even tighter. For many, Cloud Computing and SaaS can actually be seen as offering a safer option than traditional desktop storage methods. No longer depending on computers and hard disks for storage cuts the risk of loss induced by viruses, cyber-attacks and technical failure. And several high-profile cases of British civil servants losing government laptops have highlighted the danger of transporting sensitive data held on a real machine. Vet vendors rigorously to ensure they give you a contract agreement that suits you Don t be afraid to be stringent in your requirements Assign risk responsibility there should be absolute visibility of who takes care of what Obtain express statements that the vendor complies with all relevant data regulations Ask how your data might be used. Can it be audited? If so, you need to understand where it is held and how it can be accessed for these purposes Vendors must agree with you on how you can get your data back at any given point and in what format that data will be given Check data security and encryption methods/service levels expected Make sure any legal positions are clearly defined. For example, the customer owns their data under copyright and data protection laws but the vendor owns the database rights under the EU Database Rights laws. Where does this leave both parties? This needs to be clear and agreed with contingencies in place Any possible data replication (backup servers and so on) needs to be stated by the vendor and agreed by the customer As a customer you are responsible for the health of your data. As such, you must ensure it is clean before feeding it into any new Cloud solution Take a close look at the terms and conditions. If you need to chase up points or they are overly ambiguous or complicated, beware. 17

10 The Future Its obvious benefits and global reach have already made Cloud Computing a vital business tool. And it s clear that accessing services in this way will form an essential part of all our futures. So what will be next? What is the Cloud Computing vision going forward? Experts agree that a shift towards even greater outsourcing is likely. With 59 per cent of UK government and public sector teams already using online software services and 51 per cent reporting substantial cost savings it is set to dominate the IT industry landscape. The rise of Cloud Computing will certainly fuel the SaaS business as more and more desktop applications will turn into services or online/offline apps and the speed of development is likely to accelerate too. Large vendors like Amazon, Google, Microsoft, Yahoo and IBM are sure to dedicate even greater resources to speed up their output to remain competitive and keep pace with demand. Most accountants who aren t already using Cloud Computing are certainly curious. And in an economic climate where everyone is looking to maximise efficiency, in the future it will offer too many benefits to ignore. Working in the Cloud offers practices a range of low-cost, highly flexible solutions that will eventually free up even more time for partners and staff to spend on offering allround business advice and services. Being able to do this benefits their clients bringing time and cost savings and allowing them to work on live data and to share information. As this develops, online accountancy itself will evolve and expand. Summary Cloud Computing offers scope for more flexible, mobile and collaborative working It is already an established part of the way we share personal information now it is being used to access business data too Working in the Cloud has many potential benefits for accountants; for example instant, remote access of clients IT systems can save time and money, and enhance client relationships Finding the right vendor and establishing designated areas of responsibility with your practice will help online services run more smoothly Cloud Computing can provide a more secure way to run your practice removing the need to physically store files and cutting the risk of technological errors The hybrid solution seems to be the most widespread current use of the Cloud: i.e. a combination of desktop packages and online applications Working in the Cloud provides a range of low-cost, highly flexible solutions that can eventually free up time for you and your staff to spend on other in-house or client-focused services Sources of information