It is hard to think of two terms that have been used more frequently in the last decade than that of cloud computing and e-commerce. Advancements in automation and cloud based computing in the recent past have assisted e-commerce businesses, particularly with the introduction of platforms such as Shopify, Neto and Wix. As a result, businesses have been exposed to a new way of conducting their business, but may fail to fully appreciate the implications of using new technology.
This article aims to highlight the benefits of cloud computing to e-commerce businesses and, as clients, what you need to consider when looking to implement cloud based solutions.
What does Cloud Computing mean?
Cloud computing is the on-demand availability of a computer system and resources, especially data storage and computing power, without direct active management by the user. The term is generally used to describe data centres that are available to many users over the internet i.e. iCloud, Dropbox and OneDrive.
What are the advantages and disadvantages of cloud computing and accounting?
There are many advantages of cloud computing, particularly in our area of expertise, cloud accounting. Generally, advantages of cloud computing include; scalability, speed, cost reduction and business continuity. Relating this to accounting, the advantage of using a cloud based system is the ability to access essential financial and business data, anywhere and anytime, the user wants to with easy and secure sharing. Cloud accounting systems also allow for access to automatic updates of regulatory and fiscal guidelines, such as tax and wage rates, managed backups and the ability to work on or offline, depending on the system chosen.
Expanding on the advantages to e-commerce businesses of cloud computing:
Scalability refers to a business’ ability to cater for changing demand and market conditions. For example, a business that is scalable is able to upscale or downscale their services according to demand, traffic and seasonal spikes. The main form of cloud computing that allows for this flexibility is known as Software as a Service or SaaS. SaaS allows for a business to access software from the internet, from any device, at any time, lowering required capacities on servers. Staff can access these services with personalized logins suitable to their access level to increase response times to changing market conditions. Examples of SaaS services include; MailChimp, DocuSign and Google Apps.
For an e-commerce business, speed plays an important role in driving the customer’s online experience and can help or hinder the customer’s overall opinion of the business. A study by Akamai found that 40% of customers abandon a webpage if it takes more than three seconds to load. Many large corporate businesses invest a lot of money in shaving the time it takes for their website to load and respond – down to the millisecond.
Historically, to launch an e-commerce platform, there was significant investment required in the technical architecture of the underlying business. With new services available in cloud computing of SaaS, IaaS (Infastructure as a Service) and PaaS (Platform as a Service), it is much easier to limit your investment in a new e-commerce venture and test the waters as most of these services use a subscription model, charging users at regular intervals to reduce upfront costs.
Redundancy in Cloud Services/Business Continuity
As opposed to desktop or server based businesses, the cloud often adds a layer of protection for a business’ data from disruption caused by catastrophic losses or security threats and can assist with business continuity.
Before considering cloud computing, it is important to understand the risks involved when moving your business into the cloud. The following are some important issues to consider – Privacy and Service Level Agreements, Security and Data Protection, Location of Data, Legislation & Regulations.
Often the location of data in a cloud based system is not readily identifiable, it is hard to know exactly how secure your data is. This is especially true when using SaaS and other platforms. If you use these services for your business, it is important that you review the level of protection that your data is afforded and put in place extra precautions to ensure the security of your data if required. As governments increase legislative and regulatory controls surrounding privacy and data, the reputational risk is too large if you cannot adequately secure your customers’, suppliers’ and employees’ data. The Federal Government also has put in place some regulation around certain industries requiring their data to be stored within Australia. It is important for you to consider if this applies to you.
Following on from this, it is important to review the platform you are implementing to ensure you understand who owns the data stored on that platform. You may assume that products in the same industry would have the same position on this; however they may be quite different. For example, Office 365, Amazon and Google have different positions on who owns the data on their platforms.
Things to consider when selecting cloud software?
If you are looking to implement a cloud computing or accounting package, there are few items to consider:
- Are you replacing an existing system? What functionality does the new software/system need to have?
- Transaction/Customer Journey – what elements of the customer experience are you trying to automate or make better?
- What security measures are in place around that platform to protect your data? Do you need to perform your own backups? What extra protection can you put in place for data security i.e. strong authentication protocols
- Does the cloud software integrate with your accounting package? Ideally if this can be done, great efficiencies can be gained from the accounting side of your business
If you are interested in implementing cloud computing or accounting for your business or you’re looking to set up an E-Commerce platform, please contact us at William Buck to see how we can help.