ACCOUNTING IN THE CLOUD

ACCOUNTING IN THE CLOUD Otili Dimitriu "Alexndru Ion Cuz" University of Isi, Romni dimitriu.otili88@yhoo.om Mrin Mtei "Alexndru Ion Cuz" University of Isi, Romni mri_mrtinik@yhoo.om Abstrt: Aounting in the 21st entury nnot be imgined without the support provided by informtion tehnology. The innovtive loud omputing phenomenon hs proven its vlue not only in the IT industry, but lso in the ounting field. Thus, new onept hs emerged: loud ounting is the next big thing tht is promising to reshpe the ounting funtion. By using this servie-bsed model, ompny will be ble to ess its finnil dt over the internet, through web browser. Given the ft tht dt is not stored lolly, the ountnt, the business owner or other business prtners n ollborte in pperless environment nd shre finnil dt regrdless of their physil lotion. The purpose of this qulittive pper is to review the most signifint fetures of the loud ounting model, s onvenient mens to improve performne for both the ounting profession nd the business itself. Keywords: loud ounting, loud omputing, informtion tehnology, ounting, innovtion 1259

1. INT TRODUCTIION In n in nresingly dynmi n nd ompetitive business s environme ent, people nd omp nies re ompelle ed to dpt nd to onssiously evo olve. As mtter m of ft, this truth hs been known k for thousnd ds of yers. There is nothing perrmnent ex ept hnge.. This stte ement ws ttributed (Engel et e l., 2007) to Herlituss, n influen ntil Greek philosopher th ht lived in ntiquity (ro ound 500 B.C.). Yers Y lter, in i the 19th entury, Ge eorge Bernrd Shw no oted tht prrogress is im mpossible without hnge, nd d those who o nnot h nge their minds m nno ot hnge nything. In the 21st d by the e irreversible e nd ellerted exp nsion of infformtion entury, hnge is espeilly driven ogy. The digitl evolution n hs gretlyy impted lmost everyy re of tivity (even our dily tehnolo lives), nd this tren nd is very likkely to onttinue in the foreseeble e future. Givven the ft tht the ent is very ompetitive nd unpredi tble, omp pnies hve to keep up with the eonomii environme urrent dvnes in the t IT field nd thus, imp prove their pe erformne nd effiienyy. me, the ou unting domin, in prtiu ulr, hs bee en dpting to t the ontinuous develo opment of Over tim IT solutio ons. After the utomtion of ountting dt th t strted in the t lte 1950 0s, the emerrgene of finnil softwre in lte 1970s ws w the nextt mjor step tht hs onsequently improved the e prtie unting. Finn nil softwre enbled ountnts s to do theirr job fster, more effiie ently nd of ou ensured substntil ost svingss. The rise of o the interne et in the 1990s ould be onsidered the most h brought forwrd fte er the inven ntion of the personl signifint innovtion tht the IT domin hs er. Subseque ently, the inte ernet hs sp pred in lmo ost every dom min nd h s beome vluble ompute sset tht most peo ople ould ffford. Indeed d, our entire soiety s is hig ghly onneted thnks to o internet tody, world-wide w o ollbortion is ruil. Du ue to the spe eed nd gillity of the bsed pplitions nd e trditionl business b mod del. internet, it hs lso reshped the st dede, tehnology t e evolved rpid dly nd new w brekthrou ugh for the IIT field hs emerged. e In the l Cloud o omputing n be desribed s the delivering of o omputer power, stor ge, infrstruture or softwre e, s servvie, over the Internet, on o py-pe er-use bsis. In ft, this shift from m offering produtss to deliverin ng servies hs h gretly elerted f yers (C Consumer Eletronis in the pst fifty Assoittion, 2014) nd the s servie feture of loud d omputing hs h proven tto be disrup ptive wy of ttin ning IT resou ures. Due to its multip ple benefits (espeilly for the busiiness field), this new perspettive hs been tken into onsidertio on by mny ompnies. In the Europe en Union, th he use of loud tehnology is greter g in o ountries like Finlnd F (51% %), Ielnd (4 43%), Itly (4 40%), Sweden (39%) nd Denmrk (38% %), while the verge usge of loud ompu uting servie es mong Europen E Figure 1). enterprisses is 19% (F Figure 1:: Use of loud omputing se ervies (% of enterprises) e 60 51 50 40 30 20 10 4 43 40 39 38 29 28 28 24 22 21 19 17 15 15 15 14 13 13 13 12 2 12 12 11 10 0 8 EU-28 8 19% 8 8 6 6 5 0 N NL IE UK HR BE SK MT SI CZ EE ES LT PT LU FR R MK AT DE CYY HU BG EL PL LV RO FI IS IT SE DK NO Soure: Ginnkouris G & Smihily (Eurrostt), 2014, p. 2. A 2014 globl g softw re qulity sssurne rep port suggests s tht loud omputing is getting more e populr over tim me. The stu udy shows tht t loud doption is ontinuously expnding g. In 2014, 28% of pplitions were ho osted in the loud, nd by 2017 the e perent of loud-bsed d softwre will w rise to Q Repo ort, 2014-20 015). Aord ding to 20 014 study 35% s reported byy the reserrh (World Qulity ed by Ciso Systems, S by 2018, 78% of o worklods s will be proessed by lo oud dt en ntres nd publishe 1260

only 22% will be proessed by trditionl dt entres (Ciso, 2014). Computerworld s nnul forest survey onduted in 2014 on 194 IT exeutives predits tht IT spending on loud servies will ontinue to inrese in 2015. Over 40% of the respondents believe tht in 2015, their ompnies will llote more funds on loud-bsed pplitions (Computerworld, 2014). Cloud omputing is one of the top IT trends for 2015, s stted by Grtner, the world's leding IT reserh nd dvisory ompny. Grtner lso delred loud tehnology s new stndrd for pplition development: "loud is the new style of elstilly slble, self-servie omputing nd both internl pplitions nd externl pplitions will be built on this new style (Grtner, 2014). Indeed, lmost every IT reserh firm or IT expert foresees tht loud doption is elerting beuse the loud is enbling ubiquitous omputing, thus improving the wy tht orgnistions nd individuls like ess resoures nd shre knowledge or experienes. The loud is reshping the mnner in whih people nd ompnies ollborte, store or shre informtion nd proure omputing resoures for both their personl nd professionl use. If we onsider our highly ompetitive nd dynmi business setor, we will notie tht it is grdully turning into digitl environment s the loud prdigm is onsistently evolving, expnding nd merging with different fields nd professions. As ntiipted, loud tehnology hs lso spred in the ounting domin. The ounting profession hs ontinuously dpted to the eonomi ontext nd to IT developments; nowdys, loud servie providers re lso offering loud-bsed ounting solutions. Therefore, the ounting funtion n be leverged through loud omputing tehnology. By using loud ounting, ompny n ess ounting softwre through web browser, over the internet. Insted of being instlled on the user s omputer, the pplition is run on the loud provider s servers. This is n importnt shift beuse it enbles ountnts nd business owners to onnet to their finnil ffirs t ny time nd from ny lotion, hene ddressing the need to hve n up-to-dte overview of the business. In this theoretil pper, we debte the tul vlue of loud omputing tehnology for the ounting domin. The purpose of this study is to ssess the most meningful hrteristis nd dvntges of loud-bsed ounting pplitions. The pper lso exmines some of the most notble issues relted to loud tehnology, s pereived by ounting professionls. 2. WHAT IS ACCOUNTING IN THE CLOUD? The ounting profession hs generlly proven to be reeptive towrds IT innovtion nd there is no doubt tht the loud omputing phenomenon hs the potentil to remodel the ounting softwre mrket (Htherly, 2013). Given the ft tht the loud omputing doption trend is ontinuously rising, severl ompnies from ll over the world hve lredy embred loud-bsed ounting softwre. Doing ounting in the louds ensures the sme funtionlities s the trditionl ounting softwre tht is lolly instlled on the user omputer. The prtiulrity of loud omputing resides in the wy tht the softwre is being essed: through web browser, by using n internet onnetion. This is tully the reson why loud tehnology is sid to be delivered s servie, rther thn s produt, just like utilities (e.g., eletriity, teleommunitions). Consequently, one of the most signifint fetures of loud ounting softwre is the possibility to hve rel-time ess to finnil dt, regrdless of the user s physil lotion. There is no need to purhse, instll nd mnge expensive infrstruture or pplitions. Cloud tehnology enbles business gility beuse the ompny n ess omputing resoures on demnd, depending on their speifi needs in ertin period of time. Cloud ounting, lso known s online ounting, web-bsed ounting, rel-time ounting or loud finnils, is grdully repling stnd-lone ounting softwre. Nowdys, finnil exeutives re interested in ost-effetive nd prtil ounting solutions tht, besides performing utomted tsks nd delivering detiled sttements, re lso flexible enough in order to djust to different business needs or mrket onditions. An pproprite nd vluble ounting pplition should not only be ble to gther nd proess finnil dt, but should lso enble mngers to mke onvenient nd timely deisions. In order to ddress these issues nd mke the ountnt s job esier, loud ounting softwre hs been developed nd, s time goes by, inresingly more ompnies re reognising its vlue s n effetive mens for sving time nd money. 1261

3. WHY CLOUD ACCOUNTING? Aording to prtitioners, online ounting n benefit both ounting professionls nd the business itself. The most signifint dvntge of loud tehnology is the bility to ess resoures remotely nd bsed on request, thus enhning business gility nd impting the entire eonomi field. Due to the tul lotion of finnil dt (on the provider s dt entre) nd beuse it is essed over the internet, loud ounting enbles users to operte their dt t ny time nd from ny lotion. Both lrge nd smll enterprises hve the opportunity to quire high-end tehnology for low prie; they only py periodi subsription fee, bsed on their needs (usge) insted of investing in expensive hrdwre nd pplitions. One of the most noted benefits of loud tehnology is relted to substntil ost svings in IT budgets. In the trditionl ounting model, ompnies hve to invest signifint resoures in: building nd mintining their own infrstruture, instlling pplitions on eh existing omputer nd updting them. This issue n be diffiult tsk, espeilly for strt-up ompnies, but it n be esily solved by n online ounting solution. Cloud-bsed pplitions re delivered s servie, thus users only py periodi fee for using the ounting softwre. For lrge enterprises, dopting loud-bsed ounting softwre n resume to simply shifting wy from investing money in lienes, IT stff nd other neessry devies. However, the ones tht n benefit the most from inresed effiieny nd redued mintenne osts re smll nd medium-sized ompnies; in the old-fshion ounting model, these ompnies would hve to invest in expensive softwre nd resoures; for mny of them, suh investments re simply not ffordble. Aording to Grtner nlyst Dvid Mithell Smith, nowdys ompnies re moving beyond seeing loud tehnology only s mens to redue IT osts; mny orgnistions re now wre of other importnt pbilities of loud omputing like elstiity, slbility nd its self-servie nture. (Computerworld, 2014). By dopting the loud model, businesses n esily sle up nd down nd immeditely dpt to the inresingly dynmi nd hllenging eonomi ontext. Given the ft tht loud softwre is delivered s servie, ompnies hve the possibility to dpt their finnil pplition depending on the neessry level of servie or volume of work. In ddition, by dopting loud ounting solution, users n utomtilly perform repetitive nd resoure-onsuming tivities, hene optimizing the business workflow. Other importnt hrteristis of loud ounting re the ese of use nd the intuitive design; loud ounting pplitions n be pprohed by both finnil experts (ountnts, uditors) nd nonexperts (business owners, business prtners). Another useful feture refers to the ompnies possibility to use tril version of the loud ounting solution. By doing so, ompnies re ble to deide whether the loud ounting model is suitble for them, before mking long-term ommitment. The loud model enbles ollbortion nd ommunition between users nd different business ssoites, who re ble to simultneously nd remotely ess urte nd rel-time finnil informtion, no mtter their lotion. A simple exmple of loud-bsed ollbortion feture refers to the online pyment of lients invoies tht n be mde effortlessly. This shift from pper-bsed ounting reports to timely finnil dshbords n ensure greter insight into the business profitbility. Another relevnt spet tht should be onsidered by orgnistions is the inresed level of seurity ensured by loud pplitions. Users hve got restrited nd speifi levels of ess to the loud solution. The ompny s finnil dt, hosted in the loud, is regulrly bked up nd losely proteted though enryption nd omplex seurity protools. Cloud ounting n definitely be useful tool for ny protive business. However, speilists reommend rigorous pre-doption evlution (Osintsev, 2013). The urrent loud ounting mrket is vrious nd very populted, therefore ompnies hve to give their undivided ttention before ommitting to ertin provider or solution. The most suitble online ounting pplition hs to mth ll their prtiulr requirements nd objetives. Orgnistions should ber in mind tht 1262

suessful ounting softwre seletion proess depends gretly on preliminry ssessment of the ompny s individul needs nd the potentil solution s fetures. 4. WHY NOT CLOUD ACCOUNTING? There re, of ourse, number of onerns ssoited with loud servies tht re delying lrgeof loud- sle doption. Seurity brehes nd the loss of the internet onnetion re exmples relted issues pereived by septil prtitioners. Nevertheless, these vulnerbilities n be redued by mens of ler-ut ontrtul terms (Cloud Stndrds Customer Counil, 2015). The privy of sensitive dt nd its protetion from unuthorized ess, in other words, the seurity of dt is onsideredd the most signifint obstle for loud servie doption. This ft is onfirmed by 2014 Eurostt reserh on the use of loud servies by the Europen Union enterprises. Aording to this study, the risk of seurity breh is the top ftor tht is limiting loud doption (Figure 2). The survey shows tht 57% of lrge enterprises nd 38% of smll nd midsize ompnies believee tht the seurity onern is serious thret to loud-bsed servies (Ginnkouris & Smihily, 2014). Figure 2: Ftors tht re limiting ompnies from using loud servies, by size lss, EU-28 (% ompnies tht re using the loud) Soure: Ginnkouris & Smihily (Eurostt), 2014, p. 7. However, prtitioners nd business owners should be wre tht in most ses, speilized loud servie provider n tully ensure better level of seurity thn the one tht ompnies would usully estblish for their own lol omputers (espeilly smll nd medium-sized enterprises). An expliit pproh to risk mngement should be tken into ount by ompnies, regrdless of their size. Responsible loud providers re ble to implement protive seurity nd privy poliies for the loud servie. In ddition, they develop risk response pln tht n help ompnies hndle different seurity-relted problems nd gurntee thtt mission-ritil pplitions n seurely run in the loud (Computerworld, 2014). We should lso mention tht, in generl, ertin level of risk is inherently epted, even if the ompny s dt is stored lolly on its own servers or in the loud. Moreover, loud servie providers re required to omply with ertin seurity stndrds, thus ttesting their integrity nd redibility. Prtiul seurity ertifitions re lso neessry, beuse they onfirm tht the loud provider is ble to offer high qulity nd relible servies. Conerns relted to pplible regultion nd the lotion of dt n be ddressed throughh speifi nd detiled lusess tht should be inluded in the servie ontrt. An interruption of the internet onnetion might ffet the ompny s tivity. This issue n be mitigted if the loud servie provider hs greed upon rigorous servie-level greement with his own network provider. In this se, the user does not hve to experiene ny downtime. Theree re lso ertin providers tht enble users to ontinue their tivity by not only working online, but lso offline. Furthermore, ompnies re onerned bout the loss of ontrol over their dt.. In order to eliminte this risk, ompnies re dvisedd to refully understndd nd negotite the terms of the greement 1263

before ommitting to ertin loud servie provider. A well-defined servie level greement is ritil for the business ontinuity nd the sfety of the ompny s dt. As in the se of ny other new prdigm, loud ounting is lso onfronted with people s septiism nd ritiism. Some professionls re rejeting this new tehnology beuse they onsider it disruptive in omprison to the trditionl wy of doing ounting. Suh n ttitude n be ssoited with the fer of the unknown. In ft, Amerin writer H. P. Loverft one sid tht the oldest nd strongest emotion of mnkind is fer, nd the oldest nd strongest kind of fer is fer of the unknown. The lk of knowledge or insuffiient informtion onerning the benefits of online ounting n be nother reson tht prevents doption (or eptne). Regrdless of the ontext, innovtion nnot emerge without the novelty of different perspetive. In the lst dede, drmti hnges hve been ourring, espeilly in the IT field. Cloud-bsed solutions re getting inresingly populr in the business environment, nd the ounting profession hs to keep up with tehnologil dvnes. A new pproh is not neessrily mislultion nd mentlity shift is sometimes required in order to evolve nd dpt. As mtter of ft, by onsidering the loud lterntive, ompnies n give tehnology the hne to prove its vlue by helping businesses grow nd optimize their workflow. The ounting domin hs been ontinuously dpting to the eonomi ontext nd loud-bsed solutions re new business pproh tht n ssist professionls nd the entire eonomi lndspe. Aountnts should be reeptive nd sty informed bout ll urrent or upoming digitl dvnements so tht they ould experiene their full potentil. 5. CONCLUSIONS In n inresingly hllenging eonomi ontext, enterprises n either grow or perish just s quikly; the differene might reside in their bility to dpt to tehnologil dvnes. Up until now, digitl tehnology, in ll its vrious forms (e.g., the internet, wireless nd mobile omputing, rtifiil intelligene, robotis, big dt) hs gretly improved not only the business workflow nd its effiieny, but lmost every re of our dily life. The ingenious nture of the loud omputing phenomenon is but form of retive destrution. Joseph Shumpeter, the Austrin eonomist who introdued this onept to eonomi theory in 1942, beme known s prophet of innovtion. He believed tht retive destrution ws in ft, the hert of ny progress. Innovtion in the 21st entury is linked to loud omputing, disruptive tehnology tht n reshpe the business environment s we know it. We should be wre tht, whtever the future will bring, the loud prdigm might be losely relted to it. Cloud ounting, n innovtive tool designed to ssist ounting professionls, hs the potentil to drmtilly shift orgnistions strtegy from the old-fshioned, retive wy of doing business to protive, tehnology-bsed pproh. We would like to point out tht our qulittive study is business oriented. The pper is bsed on pertinent issues derived from ounting prtie nd up-to-dte studies nd reports published by mrket reserh ompnies, loud ounting providers nd other speilized orgnistions. We did not intend to present n exhustive reserh, nor tehnil report on loud ounting solutions. The rtile is designed s ondensed review foused on the vlue or utility of loud-bsed pplitions for both the ounting profession nd the entire business field. Compnies n gretly gin by dopting loud ounting softwre, if they onsider spets like osts, ollbortion, nd even seurity. Besides explining some of the most relevnt benefits ensured by these solutions, we hve lso rgued the vrious issues relted to loud-bsed solutions nd we proposed severl mens to ddress suh risks. Ultimtely, we hve ome to the onlusion tht loud omputing tehnology does support ountnts tivity nd n, in ft, mke their work lot esier. ACKNOWLEDGMENTS This work ws supported by the Europen Soil Fund through Setoril Opertionl Progrmme Humn Resoures Development 2007 2013, projet number POSDRU/159/1.5/S/134197, projet title Performne nd Exellene in Dotorl nd Postdotorl Reserh in Eonomi Sienes Domin in Romni. 1264

This work ws supported by the Europen Soil Fund through Setoril Opertionl Progrmme Humn Resoures Development 2007 2013, projet number POSDRU/159/1.5/S/142115, projet title Performne nd Exellene in Dotorl nd Postdotorl Reserh in Eonomi Sienes Domin in Romni. REFERENCE LIST 1. Ciso. (2014). Ciso Globl Cloud Index: Forest nd Methodology, 2013 2018. Retrieved from http://www.iso.om//en/us/solutions/ollterl/servie-provider/globl-loud-indexgi/cloud_index_white_pper.pdf 2. Cloud Stndrds Customer Counil. (2015). Seurity for Cloud Computing - Ten Steps to Ensure Suess. Version 2.0. Retrieved from http://www.loudounil.org/seurity_for_cloud_computing_version_2.pdf 3. Computerworld. (2014). Computerworld Forest Survey. Retrieved from http://resoures.idgenterprise.om/originl/ast-0133468_cw_2014_11_forest.pdf 4. Consumer Eletronis Assoition (United Sttes of Ameri). (2014). Five tehnologies to wth in 2015. Retrieved from http://ontent.e.org/pdf/2014_5teh_web.pdf 5. Engel, S. M., Soldn, A. & Durnd, K. (2008). The Study of Philosophy. Sixth Edition. Lnhm, Mrylnd, United Sttes of Ameri: Rowmn & Littlefield Publishers. 6. Grtner. (2014). Grtner Identifies the Top 10 Strtegi Tehnology Trends for 2015. Retrieved from http://www.grtner.om/newsroom/id/2867917 7. Ginnkouris, K. & Smihily, M. (2014). Cloud omputing - sttistis on the use by enterprises. Eurostt. Retrieved from http://e.europ.eu/eurostt/sttistisexplined/index.php/cloud_omputing_-_sttistis_on_the_use_by_enterprises 8. Htherly, D. (2013). The filure nd the future of ounting Strtegy, stkeholders nd business vlue. Frnhm, Surrey, Englnd: Gower Publishing. 9. Osintsev, A. (2013). Wht Orgniztions Wnt in Aounting nd Finnil Softwre. Tehnology Evlution Centers - Mrket Survey Report. Retrieved from www.tehnologyevlution.om 10. World Qulity Report 2014-15. (2014). Sixth Edition. Conduted by Cpgemini, Sogeti nd HP Softwre. 1265