We sat down with Daniel to discuss the intersection of cloud computing and the accounting industry.
INTACCT: What are the main issues that accountants have today with IT?
HOOD: I’d say it's keeping up with the pace of change. Around 20% of accounting firms are all over new technology, but a big swath has a wait and see attitude. As partners age, they get into leadership roles and tend to be cautious on spending. They also may not want to learn a new technology if they are going to retire in five years. A lot of these systems are a serious investment. It requires months of training and a lot of effort to put in a new system for time and billing, tax preparation or practice management.
INTACCT: Is the cloud changing the pace of adoption of new technology?
HOOD: The cloud in all of its different forms has been around for about 10 years, but it has taken a very long time for accounting firms to adopt it. They've had concerns around the security of client data, and today they're worried about complying with new legislation and the heightened awareness around fraud and identity theft. Yet most often, the data will be ten times safer with the cloud vendor than internally. A lot of this is misplaced concern. Accountants are starting to get beyond the resistance because they’re seeing all the benefits. The software is easy-to-use, update and install, and they don't need on-staff IT people to run it. They can also serve their clients better because cloud computing is enabling them to discover and offer new services.
INTACCT: So running their systems in the cloud is also generating new revenue streams?
HOOD: If all of your clients’ data is in a portable format—that is protected, of course – and can be manipulated with business intelligance tools, your firm can analyze that data and uncover information to help clients. For instance, you can come back and say ‘Hey we found these six ways that you can save money or improve your processes.’ The firm can go beyond basic accounting to offering more strategic services to help clients make money or save money. The cloud is leveling the playing field for smaller accounting firms.
INTACCT: Are accounting firms encouraging their clients to move to the cloud?
HOOD: This is starting to happen, yes. The benefits to clients are similar but it's also good for the accountants, because it enables better workflow and data sharing. If client data is in the cloud, it’s real-time and you don’t have to worry about reconciliation and accuracy. So everyone’s working on the same set of data which ultimately can save the client some money by cutting down on hourly charges. Then, the accountant has more time to think about the client’s business instead of focusing on the grunt work of closing the books and basic compliance services.
INTACCT: Are an increasing number of CPA firms reselling cloud financials too?
HOOD: Yes, and midsize firms in particular are offering these services because it's easier for them to set up a new line of business compared with a smaller firm. In some cases, the firm doesn't even have to sell it – but may just give clients information about what's out there. If a company trusts its accounting firm and likes them, they are receiving an independent opinion and higher level of credibility in that software recommendation. Practically speaking, if an accounting firm recommends the software, they usually know how to work with it and can offer an extra set of help to the client, if needed.
INTACCT: What are a few considerations you would look at when selecting cloud-based financials?
HOOD: There's always the basic due diligence around the level of security the vendor has, what kind of service level agreements they offer, and reliability. You also want to make sure you have control of the data, so if your company ends up leaving the vendor or the vendor is acquired, your data is portable during any kind of transition.
INTACCT: Now for a couple fun questions…
If you could have dinner with any celebrity (business, sports, politics or
entertainment) who would it be?
HOOD: Trey Parker and Matt Stone of “South Park.”
What is the last movie/production you saw?
HOOD: Does the local production of High School Musical with my 10-year-old
niece in it count? Because it was pretty good.
What is your favorite restaurant, anywhere?
HOOD: Fraunces Tavern, downtown Manhattan, for a plate of oysters and a
pint of Porterhouse Red.