Know If Your Accounting Software Is Truly In The Cloud

It’s three quarters of the way through 2020, and nonprofits managers and staff continue to adapt to the new normal. Though your mission has largely remained the same, the sources of funding have become less stable, management has become more challenging, and need has increased.

Pair this with a dispersed workplace and increased need for efficiency, many nonprofit managers have seen a continued and even accelerated push into the cloud. In fact, recent reports have seen massive increases in demand for cloud solutions as companies in both the for-profit and nonprofit worlds seek resilient, agile, and connected business models to enable a remote workforce.

Knowing this, even if software built to use the cloud is becoming more popular and sought-after, there’s still confusion regarding what actually is “the cloud.” Worse, a variety of unscrupulous software vendors claim to offer “cloud-based” products that barely fit the definition.

With money tight and challenges steep, the wrong decision can cut a lot deeper. Knowing the difference between a hosted solution and a true cloud solution is more important than ever.

Because there are quite a few benefits that come with the cloud, you might be wondering if your financial accounting software is truly a cloud solution or if it is cloud in name only. Here are the top three ways to tell:

  • Multi-Tenancy vs. Single-Tenancy

The main distinguishing feature of a cloud solution is that it is multi-tenant. This means the provider maintains a single, evolving, and always up-to-date version of the software for all its customers. 

Comparatively, in a hosted solution the provider maintains multiple versions of the software, requiring users to take responsibility for selecting and maintaining infrastructure (e.g., servers and firewalls), managing updates, and dealing with changes.

These products, called single-tenant, might be okay for organizations with a large and dedicated IT team ready to take on the time needed to manage this type of product, but not for a nonprofit where staff knows more about serving than servers.

More often than not, legacy software is provisioned as a hosted, single-tenant product because it was not originally built to be a cloud solution. Enabling a true cloud solution would require the provider to significantly rework the software.  Some providers use a web-based interface to “cloud-enable” a solution but still have a client-server based system that is used for more advanced functionality.

One big benefit to multi-tenancy is in the significant cost savings that comes from economy of scale. With every client working on the same servers and using the same software, infrastructure costs are shared, security and maintenance is more easily managed, and those working on the software see their dollars stretch further.  In addition, the solution provider manages the security and all the database maintenance tasks, making it more stress-free and reliable.

Single-tenant customers often have to worry about security, database maintenance, and backing up and restoring their data in the event of a disaster (whether natural or cyber), which further drives up costs.

  • Seamless Upgrades vs. Complex Upgrades

Because true cloud solutions are multi-tenant, upgrading the software is seamless for each customer. The provider does not have to upgrade each customized version for each client, as in a single-tenant solution. 

This means multi-tenant cloud solution upgrades are not only faster to deploy but also far more cost effective. Every client is running the same version of the software, so the provider can upgrade to a new version without any downtime. Additionally, many cloud software providers deliver robust, easily managed, and free upgrades two to four times per year. 

Upgrades for customers of single-tenant solutions aren’t likely to be free. In fact, they’re typically expensive. The hours needed to complete an upgrade project require internal, and likely external resources. Pair this with rigid and upgrade-resistant integrations requiring specialists to fix and the costs start to add up.

  • Configuration vs. Customization

As written above, single-tenant solutions are customized for each customer. This might seem like a benefit, after all, shouldn’t the software do exactly what you need it to do? 

But, with customization comes complexity. The more complex your software, the harder and more expensive it is to upgrade. Some clients even get stuck on an old version of software because it becomes impossible to upgrade to a new version without spending a lot of money.

Being on a true cloud solution doesn’t mean you can’t have anything customized to your needs. True cloud solutions use configuration to address specific needs. The software is designed to be configurable, so it doesn’t compromise future upgrades. In addition, true cloud solutions allow for easier integrations with other software solutions through the use of an application programming interface (API) so that integrations don’t break with new software upgrades.

Benefits of Cloud Accounting Software

The cloud has enabled financial accounting software to be deployed, managed and upgraded more easily. Designed on a flexible, resilient, and secure platform, it’s easy to get up and running with a solution that works for you.

On top of that, cloud-based solutions are faster and more efficient, delivering real-time data that helps leaders make proactive, strategic decisions to help deliver on their mission. 

Nonprofits continue to face a variety of challenges on the way to accomplishing their mission. However, with true cloud solutions configured to the specific needs of both end users and executives, nonprofit leaders can free themselves from the complexities of IT management, spend less time on fixes, and put more focus on their mission.

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Shereen Mahoney is a technology consulting partner and the nonprofit industry leader with the national accounting and consulting firm Wipfli. Her email is smahoney@wipfli.com