One of the hottest new topics in accounting software is Cloud Computing. Cloud computing, or Software as a Service (SaaS), has seen explosive growth even in the midst of a sluggish economy. But what does Cloud Computing mean for nonprofit organizations?
Today most nonprofit organizations are using on-premises or traditional accounting software solutions. Traditional on premises providers include Abila Fund Accounting, Blackbaud Financial Edge and QuickBooks. As nonprofit organizations look to replace their accounting software, cloud based, software as a service (SaaS) is becoming the preferred option for business management technology.
The main differences between on-premises software and cloud-based (SaaS) solutions boil down to 5 areas:
- How you pay for the solution
- Where the solution is located
- How the solution is accessed
- How the solution is updated
- IT systems and support requirements
How You Pay For The Solution
Traditional software licenses require that you pay the entire license fee and first year maintenance and support upfront. From then on, you are charged an annual maintenance and service (M&S) fee that is based on a percentage of the purchase price. M&S covers the annual or periodic software upgrades.
Software as a Service (SaaS) is structured so that organizations pay a monthly, quarterly or yearly subscription fee. Sometimes SaaS can be less expensive than traditional software, but it is also possible that the long-term cost can be equal to or greater than traditional software when other savings from reduced IT infrastructure and personnel savings are not considered However many organizations appreciate the cash-flow friendly nature of periodic versus lump sum payments.
Where The Solution Is Located
You house traditional software. After you purchase your license, the software is installed on your servers. Each end user has a workstation that is connected to server physically or via VPN (virtual private network). If the software is located in your office, the system is only as secure as your office is, meaning your location could be vulnerable to natural disasters, burglary, or disgruntled employees.
When investigating a Cloud-based SaaS solution, you should always research the security. But global brands house their solutions in state-of-the-art data centers that provide more security and protection that most organizations could ever dream of affording. In addition to having top of the line environment for the servers, the locations are built to withstand earthquakes, and utilize system security features that are designed to deter, detect, and deny access to systems by unauthorized parties.
How The Solution Is Accessed
As mentioned above, traditional software requires a workstation or laptop be connected to your server. If there is a problem with your server, you will not be able to access the software application residing on the server. Likewise if the server is irreparably damaged by fire or natural disaster, unless you’ve been storing a backup of your software in a separate, unaffected location, you will lose your software.
Cloud-based (SaaS) solutions can be accessed anywhere you have access to an Internet browser. That could be the office or it could be the public library, your personal laptop, etc. Obviously, end users use assigned passwords to access the solution. With web-based solutions, there is no need to critical information to be stored on USB flash players that are easily lost increasing the vulnerability of an organization’s data to hackers.
How The Solution Is Updated
Approximately once a year or every 18 months or so, on-premise software publishers issue product updates. This means you are responsible for keeping your software up-to-date. You must schedule a time to update the system and keep users off the system while the update is taking place. If you don’t regularly update your software, you can wind up several versions behind which, in addition to not having the latest software features, may lead to performance issues with the version you are using and a more complicated and lengthy update process.
Because cloud-based (SaaS) solutions reside with the publisher, version updates can be made far more frequently. This means you can enjoy enhancements to the software much quicker than with traditional software. Each time you log in, you will be logging into the most recent version of the software. A personal example of this would be Facebook or NetFlix. As a user, with each login you are connecting to the most recent version of the solution; any changes to the software have been made by the publisher. You aren’t sent new versions on CDs or asked to download a new version. It’s simply there. And because changes are occurring in smaller increments rather than larger periodic changes an organization’s yearly training overhead is minimized
IT Systems & Support Requirements
As mentioned above, traditional software solutions require that you run them on your own server and connect end users through your own network. This requires an investment in a network (infrastructure, equipment) and skilled personnel to support and maintain the network and servers.
Maintaining an organization’s hardware and software infrastructure can get very costly and the implementation process frequently bogs down. Upgrades to your departmental software might fall lower on the priority list than other IT projects. Upgrades are further delayed. If upgrading software requires an upgrade of the organization’s servers – additional costs come into play. Many nonprofits simply can’t afford the ongoing costs of adding and maintaining IT equipment and support staff.
One of the most attractive benefits of cloud-based (SaaS) is that you don’t require IT support of the solution. You have your subscription cost and the initial investment of time and money to receive training on your solution, but you don’t have to worry about software upgrades and server maintenance – that is the responsibility of the publisher.
This is why so many nonprofits have begun to investigate moving their business management solutions like fund accounting and donor databases to the cloud – it frees them from IT costs and the savings year in and year out can be substantial. Couple that benefit with the hassle-free nature of software upgrades and accessibility and it’s a compelling alternative.
Seek The Help Of A Nonprofit Technology Advisor
Just as there are differences in technology, solution delivery, and solution features and functionality – there are differences from organization to organization. One of the best steps to take when considering new software and new technology is to engage a technology partner who has a thorough understanding of nonprofit requirements to help you make your decision. That’s where Capital Business Solutions comes in. All of our clients are nonprofits. We have been serving them exclusively for over 16 years. Our team can help you evaluate and document which practices, processes, software and technology can most effectively and affordably serve you in fulfilling your mission.
Have questions about how cloud computing can create operational and economic efficiencies for your organization? Schedule a no-hassle consultation by calling us at (843) 971-9061 or filling out the form below.