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2Cloud Based Accounting Information Systems Adoption in Business Organisations

СLОUD BАSЕD АССОUNTING INFОRMАTIОN SYSTЕMS АDОРTIОN IN BUSINЕSS ОRGАNISАTIОNS

Сlоud Based Ассоunting Information Systems Аdорtiоn in Business Organisations

Introduction

In the face of the ongoing economic and financial crises worldwide, firms are looking for and focusing on ways that will allow them to consolidate both their ICT systems and services in a manner that increases the returns on their investments. In line with this endeavour, the discovery, adoption and development of more effective information systems (IS) seem to be a common practice in most of the contemporary business organisations. It has led to the birth and large-scale adoption of such enterprise systems (ESs) such as cloud computing whose primary aim is to solve the challenges that are synonymous with the traditional On-Premise ES (Loo et al. 2011, pg. 1). On the same breadth, this three-part report presents the issues surrounding the adoption of cloud-based accounting information system in business with a leading argument that such systems are set to revolutionise the contemporary business organisations.

Overview of Cloud Computing

The term ‘cloud computing’ connotes an internet-based computing whose primary operational principle is to provide processing resources and data to shared computers as well as other devices when the necessity arises (Qusay 2011, pp. 16-21). The recent past has seen most businesses adopt cloud-based computing as an integral part of their ICT systems. The justification for such a change is the superiority of the cloud computing systems in comparison with the traditional information systems. In particular, the adoption of the cloud computing has greatly affected the standpoint on outsourcing of ICT related processes and facilitated the creation more effective service avenues that comprise a combination of outsourcing and cloud. Besides, cloud computing features a large variety of functionalities in both small, medium, and large enterprises. Cloud computing comes with storage solutions that enable the businesses to not only store, but also process their organisational data in third-party centres of data located at a distance from the user (Haghighat, Zonouz, Abdel-Mottaleb 2015, pg. 7905-7916). Similarly, cloud computing functions to achieve economy of scale and coherence over an electricity network for the businesses that have adopted its usage. In some quarters, advocates of the system claim that it allows business organisations to save upfront costs of infrastructure like in the purchase of servers. In that manner, it enables the organisation to concentrate on their core objectives rather than wasting money on computers and the related infrastructure. The adoption of the cloud-based AIS systems in the commercial sense has led to the invention of several such systems whose applications vary depending on the business context. The first and most common example of cloud computing is the Webmail system which includes Google Mail, Microsoft, and Yahoo Mail. Others include the online storage services like Humyo, Microsoft’s Skydrive, Amazon’s S3, and ZumoDrive which facilitate cloud storage of accounting information and critical data. Another commercially used cloud-based AIS system is the Google Wave, where one can create a document and share with others, allowing them to propose or make changes on the document without having to be in the same location with the creator of the document. Such a system facilitates accounting practices and activities and allows businesses to carry out their day-to-day accounting work seamlessly.

Benefits and Challenges

A discussion of the challenges and benefits of accounting requires a holistic understanding of the accounting process first, as shown in the figure below.

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Source: Lim (2013 pg. 97)

Most of the literature materials reviewed in this report acknowledge the transformational nature of cloud-based computing, especially in the accounting firms. It has changed both the ways in which the field runs its services, and interact with clients on a daily basis (Carrol, Merwe, & Kotze 2011 pg. 1). The general benefits attached to the adoption of the cloud-based AIS include its inherent ability to ameliorate efficiency in within the organisation, thus, enhancing service to the clients, and subsequently maximises the returns vis-à-vis the investments. Besides, the organisational software and data stays updated and readily accessible whenever and wherever a need arises. Finally, this system is expected to seamlessly automate company-wide updates as well as backups in a manner that eliminates or reduces the productivity downtime and other costly mistakes. Even so, concerning the accounting process diagram above, one can identify more specific accounting benefits attached to the adoption of the cloud-based AIS. Dillon, Wu & Chang (2010 pg. 27-33) notes that the adoption of the cloud-based AIS facilitates the overhaul of an accounting IT infrastructure with minimal maintenance costs and prices. Upgrading of accounting technology can be costly, especially in the contemporary world. Cloud computing enables low-cost IT infrastructure overhaul, which reduces not only the maintenance costs, but also the power consumption costs, allowing the accounting firm to succeed in their related cost-cutting measures. Besides, the adoption of cloud-based AIS translates into a coherent move to a paperless office and the abandonment of the bulkiness associated with a ‘paper office’ in an accounting context as cloud computing enables the real-time storage and backing of data. Evidently, this practice also enhances the security and reliability of data. Similarly, the adoption of the cloud-based AIS ensures accounting productivity anywhere, and anytime. One can work from home, school, office, or vacation at their will through their phones as long as they can access the internet. Security of the accounting data not only comes from the fact that the data is backed up in real-time, but also from the offsite data storage property of the cloud accounting (Iyer & Handerson 2012, pg. 3-4). Such storage effectively prevents disaster associated with data storage like fires, and technical hitches. Cloud-based AIS only allows data access through secure login into the portals making them highly secure and protected from unprecedented disastrous occurrences. Likewise, the adoption of the cloud-based AIS is an assurance of a promising future for accounting, both as a field and the related organisations. The simpler scalability allows the accounting companies to expand with minimal infrastructural costs.

While the adoption of the cloud-based AIS comes with myriad accounting benefits, it also features some challenges. The primary accounting challenge is the identification of a champion who will lead and steer such a project to its successful conclusion (Hoberg, Wollersheim & Krcmar 2012, pp. 12). Cloud-based computing is a relatively new concept in the market. Thus, most companies struggle and find it stressing to find the right leader to lead the adoption of the cloud-based AIS in the companies. It is worth noting that failure to find the right person for this job risks the reliability and security of the accounting information. The leader will be in charge of the most pivotal aspect of accounting- the data. Leaving the accounting data in the wrong hands is a suicidal mission that may lead to the collapse of the company. Another noteworthy, but common, accounting challenge with respect to adoption of the cloud-based AIS is change management. Implementation of change, especially one of this magnitude, is always a difficult endeavour largely due to the longer periods needed for people to adapt to the change and the resources required for a successful implementation (Salleh, Teoh & Chan 2012, pg. 1-12). Correspondingly, the company has to incur extra costs in the training, education, and preparation of the staff members for the change. Internet reliability and application integration challenges have also obscured most organisations’ endeavour to adopt cloud-based AIS. Cloud computing solely relies on strong and reliable internet connection without which the concept cannot work (Ghasemi, Shafeiepour, Aslani & Barvayeh 2011 pg. 112-116). Besides, the related software must integrate with the accounting systems in the company in a manner that takes into account the issues of compliance and security, making the adoption a challenging task.

Recommendations of Success Factors for Cloud-Based AIS Adoption

Concerning the accounting benefits and challenges associated with cloud-based AIS adoption, a variety of success factors were identified from the literature reviewed. The most important success factor is the availability of a holistic, dynamic, and flexible leader (Salleh, Teoh & Chan 2012, pg. 1-12). A leader is required to run the project and ensure its successful completion. It is noteworthy that the leader, otherwise described as a champion, should be preferably a member of the organisation. This is particularly advantageous in the sense that an insider understands the organisation more than an outsider would. Such a leader would design the best models for the introduction and implementation of the change while limiting the accompanying challenges. Besides, a good leader will adequately prepare the staff members as well as the entire workforce for the change and how to handle it for better results to be realised. On that note, the leader must possess a large reservoir of both technical and interpersonal skills. The success of the adoption of the cloud-based AIS directly depends on the leadership to which it is attached. It is also recommended that the company evaluates and establishes whether its current internet reliability is enough to sustain the internet connection requirements of cloud-based AIS. In this manner, the organisation will be sure of service coherence and no service interruption during, and after the adoption of the new system. The company would as its technology provider to help with the evaluation of the internet connection needs of the new system. Besides, thorough training and education in relation to the impending change is recommended before and shortly after the company adopts the application of a cloud-based AIS. Teamwork is another vital recommendation.

Conclusion

A critical examination of the report reveals that the concept of cloud computing is gradually gaining momentum and its application is forming the core of most organisations. It thus follows that it will affect a firm either directly or indirectly making it an indispensable aspect of an organisation’s ICT framework. The challenges notwithstanding, a company cannot ignore the momentum at which the concept is growing, and its evident impacts on an organisation. Seemingly, the benefits outweigh the challenges with the bottom line being its significance on cost-cutting. Moving from the traditional system to the cloud-based AIS requires a critical consideration of the recommendations contained in this report. The recommendations allow for the maximisation of the benefits and minimisation of the associated challenges.

References List

Carroll, M, Merwe, A & Kotze, P 2011, ‘Secure Cloud Computing: Benefits, Risks and Controls’, Information Security South Africa (ISSA).

Dillon, T, Wu, C, & Chang, E 2010, ‘Cloud Computing: Issues and Challenges’, In 2010 24th IEEE International Conference on Advanced Information Networking and Applications (pp. 27–33).

Ghasemi, M, Shafeiepour, V, Aslani, M & Barvayeh, E 2011 ‘The Impact of Information Technology (IT) on Modern Accounting’, Procedia — Social and Behavioral Sciences, 28, (2011), pp. 112–116

Haghighat, M, Zonouz, S & Abdel-Mottaleb, M 2015, ‘CloudID: trustworthy cloud-based and cross-enterprise biometric identification’, Expert Systems with Applications, 42(21): 7905-7916.

Hoberg, P, Wollersheim, J, & Krcmar, H 2012, ‘The Business Perspective on Cloud Computing — A Literature Review of Research on Cloud Computing’, In Americas Conference on Information Systems (AMICS) (p. 12).

Iyer, B, & Henderson, J 2012, ‘Business Value From Clouds: Learning From Users’, MIS Quarterly Executive, 11(1).

Lim, FPC 2013, ‘Impact of Information Technology on Accounting Systems’, Asia-Pacific Journal of Multimedia Services Convergent with Art, Humanities, and Sociology, 3 (2), 2013: 93-106.

Loo, ID, Bots, J, Louwrink, E, Meeuwsen, D & Pauline, M 2011, ‘The effects of ERP-Implementations on organisational benefits in small and medium-sized enterprises in the Netherlands’, Enterprise Systems, Accounting, and Logistics, 8th ICESAL 2011.

Qusay, H 2011, ‘Demystifying Cloud Computing’ The Journal of Defense Software Engineering. CrossTalk, 2011 (1): 16-21.

Salleh, SM, Teoh, SY & Chan, C 2012, ‘Cloud Enterprise Systems: A Review of Literature and Its Adoption’, PACIS 2012 Proceedings, Paper 76.