It was some 600 years ago that Luca de Pacioli (he is to accounting what Thomas Alva Edison is to the world of electricity) published his work on the double entry system of accounting – it is he who gave us the two words Debit and Credit. Little did he anticipate that the tenets of his publication would remain unchanged even after 6 centuries; especially with the advent of new technology each day.
Every transaction has 2 facets i.e. double entry, debit and equivalent credit. Arithmetically debit = credit and hence like a 2 person zero sum game their summation has to be always 0. This formed the basis of writing the fundamental accounting application program and of the host of accounting software that has come up worldwide today.
Technology has contributed greatly to simplify how we do trade and commerce – a la e-commerce. It has also changed the way businesses functions internally. It has brought in controls in the business processes; has resulted in great savings of time and has improved the administration of business itself, greatly.
Accounting being the guardian cog in the wheel of business, accountants around the world have adopted the latest technology of their age – from the humble standalone accounting package, to — as it stands today – a part of the Enterprise Resource Planning package based on the power of the internet.
Internet has changed the way we do accounting too; all thanks to ‘cloud computing’. Now what is this animal on the prowl?
To borrow from Wikipedia Cloud computing involves deploying groups of remote servers and software networks that allow centralized data storage and online access to computer services or resources. Simply put, it is the delivery of on-demand computing resources—everything from applications to data centers—over the Internet on a pay-for-use basis.
Now, businesses are increasingly relying on remotely maintained hardware and software, accessed through the internet or intranets in a virtual setting that has been collectively dubbed “The Cloud.” Instead of buying or leasing software and investing in the hardware on which the programs would run, businesses are increasingly adopting software as a service (SAAS) models. In the SAAS model, capital investment in hardware is reduced because the performance demands on the user’s machine are much reduced, as is the need to constantly update software versions on that hardware. A large corporation that sought in the past to manage data and reporting across global geographies no longer needs to maintain its own server farms and enterprise software packages, instead giving its employees access to such functionality from anywhere a secure web access is available.
I am no IT person to probe into the ‘bits and bytes’ of cloud computing . Did you know online banking is nothing but ‘banking on the cloud’? Did you know you purchased your favorite book online by ‘shopping on the cloud’? Ever used Google Docs to create documents or Dropbox to save / share files? Yes, it is true – we have all been on the cloud long before we knew what it was.
Now then… when the entire world, powered by ‘cloud’, is moving this fast can we accountants stay far behind?
‘Accounting on the cloud’ has brought the tremendous benefit of – “anytime, anywhere”. The financial position of your business is now only a ‘fingertip’ away. Entrepreneurs no longer have to wait long hours to get those numbers before a critical business decisions. You can work from the comfort of your home and yet stay in control of your business. What’s more; your data has never been this secure. You no longer have to worry about your computers crashing or data being lost to virus attacks. It’s all safe – up in the cloud – protected by the best data security applications one can imagine. No one can access your data but you.
Accounting on the cloud is a relatively new phenomenon in India. That said, there are plenty of accountants and Small Business Owners who are reaping the benefits of having taken the first headlong plunge. While we do concede that much needs to be done before cloud accounting fits well into the relatively complex Indian business scenario, we are sure that the future lies here.
In the days to come, accounting on the cloud may well be a robust alternative to traditional accounting systems. It has the potential to put a smile on the face of its sternest critics.
I welcome you to the world of ‘cloud accounting’ and open up the platform for conversations on the subject.
P.S. Luca .. are you listening !
A.Sen & Co.