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Pros & Cons of Online Accounting
Updated October, 2005. Originally published February, 2005.
Online accounting has evolved a great deal in the past couple of years. According to a recent review, online systems now match or surpass desktop systems in many ways. If you're considering the switch to online accounting, here is a quick overview of the pros and cons.
Pros
1) Low up-front cost. Unlike traditional client-server systems (which typically cost $25K-$50K just to get started), online accounting requires no up-front investment in hardware, software or maintenance contracts. Instead, companies pay a monthly fee (i.e. the "rent vs. own" school of thought).
2) Quick set-up. Since there's no hardware/software to install, companies can start using the system immediately.
3) Greater security. Despite initial fears about the internet, most people now realize that online systems provide the best protection. The service providers- Intuit, Intacct, NetSuite, etc.- all use world-class data security technologies (far greater than most companies' in-house systems). Best of all, your data is automatically backed up and stored off-site (which is a lot better than carrying it around in the trunk of your car).
4) Anywhere access. Because it's web-based, online accounting allows business owners to access their accounting records from any location (home, office, road, wherever).
Cons
1) Less customization. Generally speaking, online systems do not have as many features as traditional accounting packages (which have been around a lot longer). For larger companies who require customized capabilities (advanced reporting, complex inventory, etc.), online accounting may not be the best choice.
2) Switching costs. For companies that are heavily invested in an on-premise enterprise accounting system (Great Plains, MAS 90/200, etc.), the benefits of switching may not justify the costs of learning a new system for a while.
Conclusion
All in all, online accounting seems best suited for small to mid-sized companies who are a) ready to upgrade to a new system, b) don't want to make a large investment in hardware/software, and c) have relatively straightforward accounting (i.e. minimal customization). In particular, online accounting seems like an ideal fit for companies with multiple locations (franchisees, etc.), business owners who travel a lot, and entrepreneurial companies who want to outsource their accounting and/or work with an outside CFO.
Posted by
at 03:54 AM October 24, 2005
I've been using NetSuite for about 3 years now. I like it quite a bit, though I find the limitations on their reporting system extremely frustrating.
For example, there isn't any way to easily do a more than one period compare in financials, even though it's offered for payroll.
The dashboards are great.
It's difficult or impossible to do financial ratio reports (quick ratio, roi) from within NS.
Some days its very slow, and I had a lot of resistance from my team because of the slowness. They all refused to use it.
I'm evaluating Compiere and SugarCRM as a replacement, but it's hard to think about switching when I know that doing so will boost my sysadmin costs dramatically.
I love being able to do my account from my browser, anywhere. My work day is so much more flexible, and I am able to travel and still get lots done.
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