1. fear of the unknown
2. fear of security
3. lack of control over data/systems
4. previous investments in technology
5. previous investments in people
6. lack of connectivity options
7. cost compared to current IT spend
8. contract rigidity
9. concern about the provider viability

I’ll be writing an article to tease these out in the coming weeks.  Stay tuned.

p.s.  I would love your comments on why you wouldn’t take your firm to the Cloud  (and of course, we welcome any comments on how).

• Flexibility
• Scalability
• Business Ability
• Affordability

Article link here

The webpage, www.xcentric.com/cloud, walks you through a three-step process to explore the dimensions of the Cloud:
•    Step 1: Download the “Why Paper” on the benefits the Cloud offers CPA firms specifically.
•   Step 2: A webcast on what is behind the Cloud infrastructure, including data security, privacy and disaster recovery, and how a firm can leverage the Cloud.
•    Step 3: A free one-on-one consultation to help determine if the Cloud is right for your firm, based on a brief strategic and technical survey.

The idea behind the kit is to raise awareness about the Cloud and the significant benefits it offers CPA firms, while helping firms effectively assess whether or not the Cloud is a fit for them, based on their firm’s specific needs and structure.

Click here for more info or to get started.

Press Release

Have you made the leap to an electric toothbrush yet? If yes then you understand where I am going with this post. If not, that’s okay but know your life is about to change!

Don’t get me wrong, nothing is wrong with the old-fashioned toothbrush. It works as advertised. People have been using it for years, it is a good deal at $4 or less, and you just need water and toothpaste for it to work. So why would you change? You don’t have a cavity, the cost is nominal, and it’s a known quantity. I had the same thoughts at one point; here is a brief story about my journey.

It all began when I was on a trip and saw a friend brushing with a Philips Sonicare (I am not being paid for this) and began to question them on why they would dare spend $120 on a toothbrush. “I care about my teeth, that’s why,” they said. I was offended. I care about my teeth, I brush them 2+ times a day and floss when I can – how do they know I don’t care about my teeth?

This conversation started my research into the topic of electric toothbrushes versus the traditional type. I read websites, packaging, company promises, and asked my dentist and friends. In the end it came down to 2 things: 1) what did my dentist have to say about it and 2) what friends used the brush and did they have better teeth than my other friends who didn’t use the electric.

My dentist has a good business; I don’t think he was being paid off when he told me that I was crazy not to use the Sonicare (he even said to use specifically a Sonicare) and that it would be an investment that would pay dividends. Then I talked to my friends and I found a consensus amongst those who use an electric – they, by and large, have a whiter smile and a cheaper dental bill.

Within 24hrs after being convinced, I found myself on Amazon.com reading reviews on the different Sonicare brushes.  I took the plunge and haven’t looked back since. I now walk the streets with confidence as I flash my pearly whites. I no longer dread the dentist and even look forward to hearing their compliments at how good of job I am doing on keeping my teeth clean.

How does this have anything to do with Cloud Computing?  I’m glad you asked. Let me attempt to tie the two together.

Like a traditional toothbrush, a traditional network (*a server-based network inside your four walls, managed and replaced every few years) works as advertised. It’s been doing the job for years, it’s relatively inexpensive upfront, and is also a known quantity. You just need time (water) and money (toothpaste) to make it work. Why would your business switch?

I won’t be as offensive as my friend and say it’s because you don’t care about your business, I know you do! But have you considered making the switch to Cloud Computing? Maybe yes, maybe no– either way, talk to your peers and industry consultants about the latest happenings with Cloud Computing.  Which option is the most efficient? Which one has the lowest cost of ownership? Which one keeps you more secure and your work flow cleaner?  In short, technology now has options – there are multiple models that will support your business model as a CPA.

In the end I made my toothbrush decision for 2 key reasons:
1)    Less Pain: I don’t have to tell you, toothaches ruin your day. It’s such a small piece of your body, yet it paralyzes you when something so fundamental goes wrong.  The technology parallel is alarming. As a CPA, it’s about you providing value to your clients.  It’s your experience, ability to listen, and guidance that creates the value. BUT if you have technology pains, it will hinder everything else in your business, including your ability to deliver.

2)    Lower Cost of Ownership: No way to slice it, an electric toothbrush is about 30x more expensive than a normal toothbrush upfront. BUT add a few cavities that could have been avoided by using a more proficient device and you are talking about a serious role reversal in the above cost scenario. Networks are the same way, where cavities and root canals come in the form of security breaches and downtime – a mismanaged network will cost you far more over the life of your business than a proficient computing model that has been realized with Cloud Computing.

• Real Time Collaboration – Emailing documents in circles, going through VPNs, and using thumb drives are examples of how data USED to move. Sure it still moves like that, however it has been proven that is not the most efficient or secure way of doing things and these college kids have seen it implemented on a mass level. Try telling them it can’t be done in a firm and you will get a blank stare.
• Anytime Anywhere Access – Internet as you know is the life blood to this whole conversation. These students seem to live in a connected state and they (and most of us by now) have now ingrained internet access into their lives. Home, work, cafes, parks, campus, phones, etc – they have rewired their lives in efforts to find a wire to the internet. They can smell the internet!
• Easy – We all know what easy technology is right? It just works. When you click it does what you expected it to do. When you try something for the first time you don’t have to read a ‘HELP’ section because you can just feel your way around. That is easy technology, and while it’s still not the norm, it is becoming the standard of those who gain market share.
• Fun – yes I said fun. Colleges are producing technology geeks in droves! People who have not only intertwined technology into their daily lives in order to get work done but also ones who go home and get right back on the computer to discover, share, and learn about the world and their friends.

To sum up: These college kids are what’s being called ‘digital natives’ and while that is important to know & understand that phrasing it’s more important that the non-digital natives are not the ‘digital naive’. Merging mindsets, not displacing or replacing, but merging will lead to a culture that is headed in the right direction.

Google Education Link

Outsourcing taboo?

Mention “outsourcing” in the accounting community and the first thing that comes to mind is sending tax preparation to India. To some that is a good thought, yet many others have an immediate and negative reaction.

However, since the invention of fire… oh, and the abacus… CPAs, themselves, have successfully convinced businesses that outsourcing their accounting and tax compliance functions is a good thing:

“Take advantage of our experts.”
“We do this all day long.”
“We have the credentials.”
“It’s too risky to do it on your own.”

These are all good points, and I agree completely – hence I use an accountant, and thus my own company uses a CPA firm to do its taxes. We couldn’t possibly compete with our CPA’s experience and, most importantly, I couldn’t do my day-job if I tried.

The paper-based to Internet-based transition is a perfect example of outsourcing’s advantages. As with tax research, technologies of all kinds are following suit. It’s pervasive. Software is being web-enabled. Servers are being virtualized. Networks are moving to the cloud (see Jason Conger’s article Is Cloud Computing just a fancy name for Virtualization?). And the younger generations are thankful for it. They get it. They want it. And they don’t understand why we’re resistant to the change.

What is the cloud?

Firms today are moving toward the inevitable – the cloud – a model where technology help desk, hardware, software, and management can be completely outsourced. No more servers, fewer IT people, improved productivity and more time to focus on the business.

If India just popped into your mind, you can rest easy. Few, if any, US-based hosting providers are opting to offshore their IT talent, so we needn’t worry about our precious client data traversing the globe to lands far far away. Plus, learning about the provider’s operations is a straightforward piece of the due diligence process.

Remember when the “web” became the catchy new term for the up-and-coming Internet? Well the “cloud” lives on the web and it’s the new hip way to refer to a cornucopia of outsourced web-based technologies. The cloud is best defined as a “pay as you go computing web-infrastructure, leveraged for economies of scale.” You will often hear the cloud referred to as SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), and even IaaS (Infrastructure-as-a-Service). Wikipedia is a great resource for learning more about each.

What can be put in the cloud?

All of your software will eventually live in the cloud- tax, practice management, engagement/trial balance, document management, QuickBooks™/Peachtree™, the aforementioned tax research, Microsoft Office™ collaboration tools (email, shared calendars, tasks). Nearly everything will go into the cloud; it’s just a matter of time.

You’d be surprised how many firms have already moved there. Small firms with two employees, large firms with hundreds of employees and everything in between. Multi-office firms and firms who need remote access are especially good candidates because everything is securely accessible via the web… from the cloud.

What does this mean for all of us?

In short, all of our technology will eventually live in the cloud, and we will be better for it. This transition will allow us to focus on what we do best in our businesses, leaving the rest for people who focus, and are experts, on what we don’t care to do or are not good at. Technology is a cornerstone to most of our businesses in terms of success — we can’t live without it. But ask yourself why you started your business to begin with. If ‘technology management’ or ‘technology services’ isn’t core to your firm’s purpose and mission, then it likely falls squarely into the ‘headache’ category. Aside from the distractions related to doing technology well, there are inherent risks to consider. Security, reliability, performance, compatibility, redundancy, and obsolescence are just a few that come to mind.

As a profession, accounting firms can no longer be a pioneer on the outsourced technology/hosting front. The good news is that many firms have made the transition successfully and they’re asking themselves why they didn’t go there sooner. Their client data is far more secure in a SAS-70, type II data center than it ever was in their closet at the office. These firms now live in a world where they spend little, if any, time planning for technology upgrades or future IT expenditures, working on IT staffing issues or fretting over security concerns.

Just as in most successful transitions to outsourced services in the past, we are much better off after the change if we can just get ourselves to start the move in that direction. Of course, there’s always the alternative of walking uphill, in the snow, barefoot. Think fancy three-ringed binders on beautifully ornate book shelves.

By the way, has anyone seen the tax binder containing Revenue Code KGF 6386 Z9 C644 1979? It’s not where it should be!  Hello?

What is Cloud Computing?

The term “Cloud Computing” comes from the symbol usually used to depict the Internet on network diagrams. That term would lead one to believe that some portion of their computing environment “lives” on the Internet (and that assumption would be true).  This type of computing environment is quite a departure from most computing environments today where all computing resources are owned and/or operated within an organization’s LAN/WAN infrastructure.

So, Cloud Computing is some type of service.  Cloud Computing can be a service for a single piece of software (like Google Docs), a single component for software (like Microsoft SQL Data Services), Virtual Servers (like Amazon EC2), etc.  The main advantage to Cloud Computing is the service provider takes care of all the capital expenditure (CapEx) and a percentage of the operational expenditure (OpEx) depending on the type of service.  For example, Google Docs takes care of 100% CapEx and 100% OpEx, whereas Amazon EC2 takes care of 100% CapEx but maybe 25% OpEx.

What is Virtualization?

Virtualization is another hot topic today.  A lot of people think virtualization means server virtualization, but the truth is virtualization is a very broad topic.  There are many types of virtualization including server virtualization, application virtualization, desktop virtualization, operating system virtualization, presentation virtualization, etc.  (I will cover the various types of virtualization in a future article).  But, for the purposes of this article, we will focus on server virtualization.

A virtual server is basically the same as a physical server based on outward appearances.  Virtual servers perform the same functions as physical servers.   In fact, it is nearly impossible to distinguish a physical server from a virtual server when logged on to the server console (unless you start to go look at drivers).  The key difference between physical servers and virtual servers is that virtual servers are not installed on the physical hardware (they are hardware agnostic).  Virtual servers are installed on something called a hypervisor.  This hypervisor allows you to run many virtual servers on a single piece of physical hardware (there are a lot of other benefits to server virtualization, but for the purposes of this article we will focus on hardware independence and consolidation).

So, Cloud Computing doesn’t need Virtualization then – right?

Well, technically, Cloud Computing doesn’t require virtualization.  But, in order for Cloud Computing to be a practical service offering, you need the economies of scale and automation capabilities of virtualization.  Otherwise, the cloud service provider would need to manually provision services per client with dedicated hardware.

Nicholas Carr draws a nice analogy in his book titled Does IT Matter? Up until the last decade of the nineteenth century, most manufacturers relied on water or steam power to operate their machinery.  These power systems were large, complex, and expensive.  Around the turn of the century, construction of central power stations in cities brought the operating benefits of electric power to small manufacturers.  These small manufacturers couldn’t afford to build their own infrastructure, but they could afford to purchase power in small quantities from a utility.  Eventually, all manufacturers converted to using power from utility companies.  Electric power is now a commodity instead of a competitive advantage.

Look for these topics in future articles:

• Types of Cloud Services (*aaS)
• Types of Virtualization
• Offline Computing in an Online World
• Virtualization and Service Oriented Architecture

Notebooks have traditionally been a desktop computer in laptop form. Possessing tons of horsepower needed to run the operating system along with all your applications. However, as connectivity is on the rise along with the trend towards Server-based computing ( or SaaS, ASP, Cloud Computing, etc) – so goes the release of leaner laptops called Netbooks.

See this WSJ article for more info – Click here