Accounting In The Cloud: Is The Private Or Public Cloud Better For Your Business?

Accountants | Bookkeepers | Cloud

Simply put, the cloud is the way of the future for businesses. Endless statistics, research and studies say you should be in the cloud – if you aren’t there already.

Earlier this month, an Oxford Economics and SAP study found that 55% of enterprises believe the cloud will enable them to launch new business models within three years, with 58% anticipating a drive in top-line revenue growth because of the cloud. In January, a Goldman Sachs study predicted spending on cloud computing infrastructure would grow at a 30% Compound Annual Growth Rate between 2013 and 2018. Also in January, American market research firm, IDC, predicted that by 2016 there would be an 11% shift of IT budget from traditional in-house IT delivery to cloud-based delivery. In November, a Computerworld study found that 42% of IT decision makers were planning to increase spending on cloud computing in 2015. Meanwhile, Founder and CEO of Saugatuck Technology, Bill McNee, predicted that more than 60% of enterprises would have at least half of their infrastructure on cloud-based platforms by 2018.


Convinced? If you own an accountancy firm, switching from traditional accounting software to cloud-based accounting software can have many advantages. Cloud accounting software can provide more efficient workflows, freeing up your time to improve other areas of your business. It can be more cost-effective, more secure – as long as you choose the right provider – and it can provide more convenient access to data. But, before you switch, you’ll need to consider the pros and cons of the public and private cloud.

What are public and private clouds?

In general terms, there are two types of cloud: public and private. The public cloud provides cloud services via a third-party provider. The private cloud is a purpose-built, private platform, customised and used exclusively by one organisation. This platform can be based either “on-premise” (hosted within the organisation’s own datacenter) or it can be externally hosted.

Last July, a global survey by US analyst TBR found that companies interested in moving to cloud computing are increasingly choosing the private cloud over the public cloud. The survey showed the public cloud has grown 20% year-over-year, however, the private cloud is expected to grow 40% to 50% each year for the next several years. But which option is better for cloud accounting?

Public vs. Private

Cost
Many argue the public cloud is cheaper – you pay monthly for access, without having to cover set-up or ongoing costs. If you opt for the private cloud, upfront costs can be enormous, plus you pay for upgrades, maintenance, management, and eventually, replacement of obsolete technology. Organisations with existing data centres may incur lower costs if they are simply expanding their current system.

Set-up
Joining the public cloud is simple: your provider does everything for you. Simply pay your monthly fee and you get fast access to the cloud. By choosing the private cloud, you either have to pay for someone to set up the service for you, or have the skills to do it yourself. Connection is obviously not immediate, as you have to wait for the platform to be built.

Management
Choosing the public cloud means offloading all management concerns to your cloud provider. Choosing the private cloud means providing ongoing management to ensure it is run efficiently and effectively. However, it’s worth noting that onsite management can provide greater levels of control.

Security
In last year’s Netskope study, 66% of IT officials and security practitioners surveyed believed their organisation’s use of a cloud resource diminished its ability to protect confidential information. Research indicates many professionals believe private is more secure than public, as private platforms are only accessed by the organisations that manage them.

However, the public cloud may be safer. The ever-changing landscape of cloud security means cloud providers constantly have to stay up-to-date with fixes, updates and upgrades. Large-scale data centres used by public cloud providers can be better equipped to deal with this than privately-owned cloud platforms relying on in-house management.

Customisation
Creating a private cloud platform allows you complete customisation to satisfy the needs of your company. While there are various options on offer in the public cloud, you still have to choose from the options available.

Scalability
The public cloud offers immediate, on-demand scalability – if you need more capacity, simply expand your service. When demand drops, scale back. To allow for increased demand in the private cloud, you must build in extra capacity – which can be costly if it goes unused most of the time.

Making a Decision
As with any decision in business, weigh up the pros and cons according to your situation. Look at cost, security, upkeep, scalability and customisation – find out what’s out there and do your research.

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