The Issues of Cloud-Based Accounting Information Systems Adoption in Business Organisations - Essay Example

REPORT ON THE ISSUES OF CLOUD BASED ACCOUNTING INFORMATION SYSTEMS ADOPTION IN BUSINESS ORGANISATIONS Student’s name Course title Instructor’s name Date of submission Introduction The advent of technological revolution has had a tremendous effect of the lives of human beings across various walks of life. In addition, the technological impact has also impacted the ways of doing business across various enterprises globally. Various core functions that serve vital roles to the operations of firm such as accounting, finance, human resources, marketing and many others benefit greatly from technological integration into their routine activities. In the same light, the accounting information systems in business organisations such as the usage of cloud computing accounting information systems (AIS) and software come in to assist the accountants to achieve increased productivity and improved efficiency. This report attempts to give more perspectives into the concept of cloud computing and its integration into accounting systems. The benefits and challenges will be looked at as well as giving recommendations highlighting the best approach to employ and guarantee success. Overview of cloud computing Cloud computing from the perspective of accounting involves a software used for accounting that is hosted on a company’s remote servers that serves various employees and departments connected to it (Christauskas & Miseviciene, 2012). Cloud computing capabilities allow users to store financial data, or even various accounting software on hosted sites. The cloud computing software provides accounting capabilities that suit the business operations. Specifically, the accounting data is fed into the cloud for processing and later returned to the user. Therefore, the users conduct operations offline and away from the company’s working area and computer station. Accountants access the servers on the cloud remotely while away from the company location, for example, through the internet or by accessing the services of the cloud computing service provider. Examples of commercial cloud-based AIS systems available in the market include FreshBooks, QuickBooks, Kashoo, Outright, and Xero (Simkin, Rose & Norman, 2015). The advantage of these software is their ability to be used by small and medium enterprises that are trying to break-even and achieve better accounting standards given the present business conditions. For instance, Xero provides an opportunity for employees of small businesses to achieve teamwork potential by giving room for online collaboration and also allows for customizable invoice systems (Christauskas & Miseviciene, 2012). The service providers often peg a charge based on the amount of usage achieved by the accounting department. The accounting information systems play a number of critical roles to the organisation. These systems provide loads of information that support various departments of an organisation to achieve various organizational goals and governance (Martens, & Teuteberg, 2011). Challenges and benefits Benefits The cloud based AIS adoption presents a number of advantages to any organisation. The employees, such as accountants, have the liberty to access the accounting information from a variety of internet access devices at any particular time and at any place (Asatiani & Penttinen, 2015). The ability to use the system from anywhere allows the accountants to boast of the freedom to work from home or away from the office. Therefore, this shifts the attention to actual presence in the office to the overall productivity achieved by the employees based on the roles and targeted performance levels. The automatic storage and backup of important accounting data (Pendley, 2015). The keeping of important information in the AIS system hosted on a remote server provides an alternative to keeping manual records that may too cumbersome to manage and retrieve for future usage. The data backup capabilities also gives the company some sort of security in case of a disaster like a fire. The data backup works closely with the disaster recovery protocols that the cloud-based AIS to allow the company to retrieve important information (Pendley, 2015). The system also allows for multiuser access meaning that various actions may be achieved at same time without affecting the operation of the system (Martens, & Teuteberg, 2011). A number of users may derive maximum utility out of the AIS system without affecting the usage of the system by other users. As a result, the system allows for high productivity and performance of the system improves tremendously in supporting the accounting functions (Asatiani & Penttinen, 2015). Moreover, the AIS system hosted on a cloud server boast of the ability to print reports directly from the host data sources. The system also allows for upgrades to newer versions of the software at minimal interruptions. The system upgrades ensure that the system remains in stable condition to support various functions attached to it. The upgrades also ensure that the security protocols are not obsolete thereby ensuring high levels of the privacy and confidentiality of the information stored in the system. The upgrades also ensure that the AIS keeps up with the latest trends in the technological front (Asatiani & Penttinen, 2015). The improving technology aims to improve the productivity of the AIS system and thus support the working of the accountants. Challenges Although the software itself is inexpensive, the challenge for small business owners and their employees remains the technicality of the system. The employees need to obtain proper training on how to use the software appropriately and thus achieve the maximum utility and output from its usage (Asatiani & Penttinen, 2015). The training needs to come from a group of professionals that sets the new AIS on course to achieving maximum success in the organisation. Computing the exact amount of usage of the cloud servers attributable to the accounting department may pose significant challenges (Pendley, 2015). Once most companies procure the services of cloud computing providers in the market, the allure to integrate the system to all areas of operations increases. However, the organisation might not be able easily compute the exact figure of costs and savings corresponding to the usage of the new cloud based AIS and thus determine the overall economic viability. In as much as the functionality of the cloud-based AIS improves as technology gradually improves, the proliferation of newer versions requires the employees to require constant training. Such training ensures that they stay up-to-speed with the newer versions and successively renders some features in the old system obsolete. The organisation, thereby, foots the extra costs incurred. The advent of technological revolution and the subsequent adoption of cloud based AIS into organizational operations presents new challenges with regard to ethical dilemmas (Asatiani & Penttinen, 2015). The amount of information handled by the systems presents new issues concerning the rights and responsibilities in the use of information. The law seems to fail to provide sufficient guidance on the same. Martin-Flatin (2014) suggests that with the use of the internet and cloud-based storage of data, accountants are faced with new challenges about control and access. The staff in the accounting department may also misuse the cloud-based AIS and decide to use the system for their own selfish and unauthorised needs. As more businesses applications are delivered as cloud-based services, more identities are being created for use in the cloud. The influx of identities presents a new dimension of challenges that entails the management of identities and ensuring that multiple identities are kept secure. Recommendations Coming up with a number of controls that govern the usage of accounting information systems (Martens, & Teuteberg, 2011). For instance, companies may decide to have a log-on screen that requires all employees to tick that they have read and understood the policy on the usage of the system before the get access to the company’s network and information resources. The accountants need to ensure that they safeguard their administrative rights for using the system. Therefore, this would involve keeping passwords private and guarding against the leaking of such vital information to third parties (Pendley, 2015). It is prudent to first conduct an analysis of an organisation to determine its needs and make a decision on the most appropriate design of the cloud-based AIS that will achieve maximum results. For example, look at the company’s revenue cycle, expenditure cycle, payroll cycle, and the financing cycle (Martens, & Teuteberg, 2011). The accountants have the responsibility to occupy a critical position in the whole process of adopting the cloud-based system tailor-made the firm’s accounting needs. The company needs consult experts prior to making critical decisions regarding the adoption of cloud-based AIS (Asatiani & Penttinen, 2015). The experts would provide critical perspectives to the company before they actually embark on the development and implementation of the new AIS. In addition, the experts would also provide the relevant training. Such training prepares the users on the best approach to achieve maximum value for money. The issue about identity management for all applications and systems integrated into the cloud-based systems needs attention (Prasad, Green & Heales, 2014). The company needs to make sure that it negotiates for a flexible, user-centric identity management system from the cloud services provider. It needs to support all the identity mechanism and protocols that exist and those that are emerging. As far as identity management is concerned, the users need to be empowered with the knowledge on the execution of effective identity management protocols every time they use the cloud-based AIS system (Pendley, 2015). Such functionalities would also ensure that privacy and confidentiality issues of information are dealt with accordingly. Conclusion In a nutshell, the adoption of a cloud-based AIS by an organization marks a new set of dimensions in achieving improvement of operations by embracing technology. The new system may pose significant challenge to the users but the benefits that the organisation stands to gain far outweigh the underlying costs. As a result, appropriate measures need to be taken to ensure that the new systems achieves its desired objectives and to ensure that any risks posed to the business are mitigated effectively (Martens, & Teuteberg, 2011). The companies operating in today’s marketplace need to embrace change and appreciate the advantages that technological progress accord to their business operations. Therefore, firms need to adopt cloud based accounting information systems and usher in a new dawn in the way firms operate in the 21st century. References Christauskas, C and Miseviciene, R 2012, Cloud–Computing Based Accounting for Small to Medium Sized Business, Engineering Economics, 23(1). Asatiani, A and Penttinen, E 2015, Managing the move to the cloud – analyzing the risks and opportunities of cloud-based accounting information systems, Journal of Information Technology Teaching Cases, 5(1), pp.27-34. Top of Form Simkin, M. G., Rose, J. M & Norman, C. S 2015, Core concepts of accounting information systems, Hoboken, NJ: Wiley. Martin-Flatin, J 2014, Challenges in Cloud Management, IEEE Cloud Comput., 1(1), pp.66- 70. Pendley, J 2015, Information Security and Cloud-Based Computing: Tools for the Corporate Treasurer, J. Corp. Acct. Fin., 26(3), pp.27-30.Bottom of Form Prasad, A., Green, P and Heales, J 2014, On governance structures for the cloud computing services and assessing their effectiveness, International Journal of Accounting Information Systems, 15(4), pp.335-356. Martens, B and Teuteberg, F 2011, Decision-making in cloud computing environments: A cost and risk based approach, Information Systems Frontiers, 14(4), pp.871-893. Read More