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James Bourke

The Move Toward ASP Solutions

How CPA firms can benefit from them.

November 24, 2008
by James Bourke, CPA, CITP

It is amazing to look back on the evolution of computing in the accounting profession. It wasn’t that long ago that many firms were filling out grid sheets and sending them to outside providers who would input data and generate tax returns on their behalf. When technology reached the price point where it became “affordable” to bring the process in-house, during the early ’90s, vendors offered solutions that allowed for in-house processing and preparation. Now, with Web-access being the driving factor behind today’s advancements and the need to have anywhere-anytime access to data, ASP (Application Service Provider) solutions, also referred to as SaaS (Software as a Service) and Cloud Computing are starting to take hold.

Background

Simply put, an ASP solution is one where the applications and/or data basically resides off-site and access to such information is provided over some form of computer network. The vendor hosting the ASP solution conveniently deploys upgrades and updates during off-hours, without the need of having to send costly CDs or program updates out to end users. In addition, many ASP solution providers have relationships with offsite data storage centers, allowing for their client data to either be hosted at their facilities or continually backed up to these data centers.

Benefits

End users have begun to realize that this platform for computing really is the way to go. Some of the advantages of the ASP platform include:

  • Software-integration issues are eliminated from the client site;  
  • Vendors can build and maintain more robust applications than the in-house technology staff;
  • Software applications are kept up-to-date, available and managed by the vendor;
  • Improved reliability, availability, scalability and security of systems and performance;  
  • Isolation of IT costs for the ASP model is limited to a predictable, previously negotiated, monthly fee;
  • Redeploying IT staff and resources to focus on other technology projects within the firm impacts the firm’s bottom line;
     
  • Increase in accessibility to applications and data;
  • Decrease in down-time related to hardware or application failures;
  • Increase in ability to respond timely to client requests for data;
  • Increase in level of security and protection over client private data.

Need for ASPs

Before looking at deployment of an ASP model, you need to ensure that your firm is on top of bandwidth issues and that you have a wide open pipeline to the Internet. When your firm goes from relying on an internal-technology infrastructure (such as a local or wide area network) to support its processing operations, to one that relies on telephone companies and Internet service providers (ISPs), care should be taken to ensure reliability and redundancy.

Regardless of the provider selected, a backup pipeline is a must for a firm operating under the ASP model. If a firm is going to rely upon this pipeline to process client data and in turn, generate revenues, it needs to make sure that if its primary pathway to the ASP solution provider fails, that an alternative pathway is open and ready to take on the load.

A common mistake for a company is the reliance on the same vendor for that alternative pathway. The flaw in that choice, besides utilization of the same vendor, is the fact that more often than not, a failure does not occur at the line level, but instead at a switching or central station. If the vendor’s lines (both backup and primary) are all going through the same station, both lines will be down at the same time.

Therefore, it is highly recommended to diversify in the selection of primary and secondary vendors and to select among different connectivity solutions with those vendors.

Benefits

ASP solutions not only allow your company to run its applications and access your client data remotely, they are also providing platforms that allow firms to be able to offer this level of computing to your firm’s clients.

Many firms throughout the country are working in conjunction with third-party ASP solution providers to offer this same level of computing to their clients. This SaaS, cloud-computing model has recently begun to take off.

Applications such as accounts payable, accounts receivable, sales order processing, time and billing, payroll, inventory management and general ledger are a few programs that function ideally on this platform of computing.

Firms are finding that there are opportunities for new revenue streams from their existing client base, not to mention the creation of additional ways to keep clients for “life.”

Under the typical scenario, the firm charges a “fee for use” to clients that decide to utilize this method of computing. In addition, now client data is stored in locations and at facilities that are easily accessible by the CPA firm, allowing for easy access to such data.

Clients are generally comfortable with this approach, as they see it as simply expanding the existing role of their trusted advisor — their CPA.

CPA2Biz and Bill.com are currently collaborating on a SaaS offering to CPAs. This new Web-based accounting service automates the accounts payable process for your clients and makes proper procedures a part of their daily routine. The result is faster, more accurate processing that frees your clients to focus on their core business. For more information and to learn about the benefits of SaaS, visit CPA2Biz.

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James C. Bourke, CPA, CITP, is a Partner at WithumSmith+Brown, where he is Director of Firm Technology. He is a past president of the New Jersey Society of CPA’s and currently serves on AICPA Council and the Chair of the AICPA CITP Credential Committee. He was recently named by Accounting Today as one of the Top 100 Most Influential People in the Profession.