Opportunities for accounting firms moving to the cloud
From allowing for a remote work environment to eliminating the need for on-site data centers, cloud-based solutions have fundamentally changed how businesses operate, approach staffing, and serve clients. Is your firm among them?
In today’s dynamic and competitive business environment, owners and partners of accounting and audit firms should, at least, be considering cloud-based technology as part of their broader strategies. Those who fail to do so risk losing their competitive edge.
Underscoring this point, The CPA Firm Management Association recently concluded the 2024 IT Survey and found that the shift to the cloud continues to grow. According to the findings, 65% of survey respondents said they are utilizing an external cloud provider.
Furthermore, the International Accounting Association (INAA) stated that many organizations around the world have embraced the change, as 81% of all enterprises reported having a multi-cloud strategy already laid out or in the works.
Given the benefits to be gained — such as improved efficiencies, the ability for staff to work remotely, and reduced IT, hardware, and upgrade costs — it is no surprise that cloud adoption is taking hold. There are, however, other considerations at play and challenges that accounting firm leaders may face when looking to move to the cloud.
To help firms navigate the change, this article will take a closer look at both some of the opportunities and challenges that firm owners and partners should consider.
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Data security in the cloud
As the gatekeepers to vast amounts of sensitive client information, data security is paramount for accounting and audit firms. Firms have a fiduciary duty to keep client data safe and secure, and failure to do so can jeopardize a firm’s reputation, result in monetary penalties, and even criminal liability. It is a risk that firm leaders cannot afford to take.
According to the 2023 Annual Data Breach Report recently released by the Identity Theft Resource Center (ITRC) the number of data compromises in 2023 (3,205) increased by 78% compared with 2022 (1,801).
The ITRC report also found that the Financial Services sector was among the three industries that reported more than double the number of compromises compared with 2022.
Given such findings, it comes as no surprise that many accounting firms (57%) cited cybersecurity risks as the top technology challenge facing their firm in 2024, according to Accounting Today’s “The Year Ahead: 2024 in Accounting” report.
The challenge of moving data
Migrating data to and from cloud platforms can pose security risks; therefore, it is imperative that cloud-hosted data and apps follow proper security protocols.
Such security measures involve strictly enforcing password policies, leveraging multi-factor authentication (MFA) tools at all levels within the firm and on all devices (even cell phones), and setting access levels to the minimum level required for staff to perform their work. Failure to implement these types of security protocols can quickly spell trouble.
Firms must ensure they are operating in a secure cloud environment and are leveraging solutions with properly configured cloud security.
The solution to secure cloud audit data
Firm leaders can better protect client data and their business by implementing a strict security policy and by turning to a reputable cloud-based solutions provider.
A reputable solutions provider can offer data center facilities that employ best practices in security and technology, have in place security parameters that are designed to protect sensitive data, and use redundant power sources.
When looking to leverage third-party APIs, it is critical to make sure that the third-parties are a trusted source. Find solution providers that protect your firm’s data with multiple layers of security, including network security, virus protection, and encryption schemes.
It is also important to educate employees on the evolving security threats that organizations face. They must understand the importance of strictly adhering to security protocols and how not to fall victim to phishing and related scams employed by cybercriminals.
Furthermore, ensure that security policies and best practices are regularly updated and scaled as deemed necessary.
Unlock growth opportunities in your firm’s move to the cloud
The cloud is the gateway to greater operational efficiencies and more strategic growth opportunities. This is important for firms looking to maintain their competitive edge and drive greater profitability across the practice.
In audit, for instance, adopting cloud-based solutions enables firms to use advanced technologies like analytics and artificial intelligence (AI) to provide clients with deeper analysis and higher quality audits, while mitigating risk.
In fact, the 2021 KPMG Finance And Audit Technology Survey, conducted in partnership with Forbes Insights, found that the majority of finance executives surveyed (80%) believe the cloud is a must have for external auditors. Furthermore, 34% of respondents said the cloud has the potential to dramatically transform the external audit.
The transformation is well underway as the use of cloud-based solutions and reliance on continuous auditing increasingly reshapes the audit landscape.
Meanwhile, a growing number of accounting firms are sharpening their focus on providing more forward-looking, strategic advisory services in light of growing client demands and the commoditization of compliance-based offerings. The cloud can pave the way for such services.
Leveraging the cloud and automation tools has become table stakes as it enables firms to weed out mundane, time-consuming tasks like data entry. This means accounting staff has more time to focus on higher-margin, higher-value services like advisory.
And, as noted earlier, moving to the cloud enables accounting firms to leverage advanced technologies like data analytics and AI, which is essential when looking to take your firm’s advisory services to the next level.
The challenge of cloud integration
One of the greatest challenges that firms may face when moving to the cloud is a lack of integration and standardization. Maximizing the benefits of cloud-based technology is critical to driving future growth opportunities for the firm.
Technology solutions that do not have robust integration capabilities can result in significant inefficiencies within the firm and can increase the risk of errors. The cloud-based solutions, and any third-party apps being used, must have the ability to communicate with each other to ensure a seamless flow of data and fuel automation.
A resistance to change can also be a challenge for firms. Some staff members, especially more seasoned professionals, may be reluctant to change how they work and serve clients. For instance, bidding adieu to spreadsheets and paper-based workflows may not be a welcomed change for some staffers.
The problem is that a lack of standardized workflows within the firm leads to significant inefficiencies and hinders the firm’s ability to reap the full benefits of the cloud.
The solution: Identifying the right cloud-based tech
When looking for cloud-based solutions that will best fit the firm’s needs, begin by reflecting on the inefficiencies that impede productivity. What are the pain points within the firm that must be addressed?
Ensure that the systems have strong integration capabilities to drive automation, eliminate data silos, and mitigate the risk of human error. Requesting a live product demo can be a great way to see how the solution works and better understand its integration capabilities.
As it relates to change management, transparency and communication are key. Be sure that the staff clearly understands why the firm is transitioning to the cloud and how the shift will benefit them in their work. Employees will be less concerned about change when they feel as though they are part of the conversation and understand why the change is taking place. This will help drive employee engagement and ease any concerns they may have.
Strengthen client relationships
Today’s clients want and expect more. As a firm leader, it is important to make sure that staff have the proper tools and resources at hand to meet rising client demands and expectations.
Consider this: research indicates that 30% of clients who leave their CPA firms say it’s because of poor client service.
There are several ways in which migrating to cloud-based technology can help accounting and audit firms strengthen client relationships. For instance:
- Two-way, secure client portals can improve collaboration between staff and clients.
- Staff have greater access to real-time data, which enables them to answer client questions faster and with greater accuracy.
- Staff can help clients make more informed business decisions by using cloud-based solutions and advanced technologies to perform enhanced predictive modeling, forecasting, and scenario planning.
- Audit firms can better analyze vast amounts of data, detect anomalies, and deliver more insight-driven audits.
By improving operational efficiencies and delivering higher-value services, accounting and audit firms can strengthen client relationships and sharpen their competitive edge in an increasingly competitive business environment.
The challenge: Stubborn clients
Firms may encounter some clients who insist on using their current software. When staff must constantly switch software applications to serve clients, this can result in major inefficiencies and added strain on staff. And if a client is using a desktop solution, this can make it difficult for firms to gain access to that client’s data.
In addition, failure to follow the firm’s policies and procedures can lead to difficulties. For instance, if a client continuously emails sensitive documents versus using the firm’s secure portal, despite repeated requests. This can put both the firm and the client at greater risk.
The solution to tricky client asks
Standardizing the tech stack is critical. When moving to the cloud and building out the firm’s tech stack, it is important to stress the importance of standardization.
When clients are leveraging the same tech stack as the firm (or at least systems that are compatible with the firm’s tech stack), it enables staff to better serve clients and meet expectations.
If a client fails to adhere to the firm’s policies and procedures, then it may be time to reevaluate that client relationship. Not every client is an ideal fit and, in some instances, it may be best to help them transition to a new accounting firm.
Evaluating your firm’s move to the cloud
Change isn’t coming. It is already here. However, successfully transitioning to the cloud involves understanding both the opportunities and challenges the may arise.
Are proper security measures in place? Does the software have strong integration capabilities? Is there a lack of standardization? Do employees understand why the firm is moving to the cloud and the benefits to be gained? These are some of the factors that firm leaders must consider for success.
Help ensure that the initiative remains on track and milestones are achieved by identifying a champion, or even establishing a committee with representatives from each department, to spearhead the project.
Furthermore, be confident that your firm is on the path to success by turning to a trusted partner like Thomson Reuters, whose portfolio of cloud-based technology includes the Cloud Audit Suite. To learn more about how advancements in technology can help your firm sharpen its competitive edge, check out the Thomson Reuters white paper, “Winning strategies for revolutionizing your audit: Harnessing the power of AI.”
