Entertaining toddler princesses is a walk in the park for Sharon
Chase. Accounting for the money she earns from it is a hairier
proposition.
Chase found it frustrating to juggle the multiple
bank and PayPal accounts used to pay vendors - not to mention the other
software she employed to stay on top of Princess Sharon Events, her
birthday entertainment service company in Cohasset, Mass.
"Everybody
said QuickBooks is so simple, and I'd get lost," she says. "I get
intimidated. ... And I started trying to make a spreadsheet, and I'd
sweat and throw it away."
Then Chase stumbled onto Outright.com,
unwittingly joining waves of other small-business owners who have
turned to "cloud computing." That's the tech industry's way of referring
to applications online that allow users to input, edit and manipulate
data stored on servers located elsewhere, often hosted by the
application developers.
Outright.com, Chase says, is less
intimidating and simplifies the accounting by allowing her to juggle
multiple accounts, generate reports on spending patterns and itemize
even obscure expense categories, such as her PayPal fees and the iTunes
songs she buys for party entertainment. "It's a
kindergarten-in-the-rug-kind of experience," she says.
Drawn by
the promise of simplicity and low cost, entrepreneurs are increasingly
tapping into the cloud to conduct business in ways that make pen and
paper - and desktop software - obsolete.
Cloud computing started mostly as backup storage. But because
software resides in the cloud and not on an isolated computer at a desk,
developers can integrate multiple applications in one, simultaneously
sync data across numerous devices and update information real-time for
mobile device users.
Cheap and easy cloud-based applications can
be used for a range of tasks and services, from bookkeeping to
conference calls to managing complex projects with far-flung colleagues.
A survey of information technology professionals by Spiceworks
this year found that 62% are using some type of cloud application, up
from 48% at the beginning of the year and 28% a year ago. "If you're
starting a business, the world is your oyster and you can do things in
super cool ways with the cloud," says Jay Hallberg, co-founder of Spiceworks, a social network for IT professionals.
Cloud
options also free entrepreneurs from having to staff a large IT
department, by passing the maintenance burden to application developers.
"Sometimes we release multiple (versions of our application) a day,"
says Mike McDerment, co-founder and CEO of FreshBooks, an accounting application online for small-business owners.
SIMPLICITY
Traditional desktop software often sought to be all things to all users, pleasing few.
But
many cloud-computing developers, in marketing their products, tap into
the anxiety of small-business owners by selling simplicity and focusing
on underserved niche areas.
John Bracken founded Speek.com,
a Washington, D.C.-area start-up that enables cloud-based
teleconference calls, to ease the cumbersome task of rounding up
attendees and dialing on speakerphones. An average call takes five
minutes to coordinate, he says. "No one knows who's coming. You beep and
you say 'Who's that?' " he says.
With Speek.com, users tap on a
personal, dedicated Speek.com link that works as a call invitation. And
Speek's hub in the cloud links attendees to the call. About 90% of usage
is small business, Bracken says.
With a niche focus, developers
can also breed innovations that weren't possible with software that came
in boxes, such as integrating the functions of other software by using
open developer tools, says Rene Lacerte, CEO of Bill.com, which specializes in billing.
On
Bill.com, users can tap into banks' online banking tools and other
broader accounting suites, such as Intacct and Quicken. "In the last 10
years, the cloud changed the paradigm about how software is built,"
Lacerte says.
COLLABORATION AND MOBILITY
The cloud
also makes it easier for users to collaborate on projects and enables
multiple users to get access to the same application at the same time
without losing their data or mixing it up. Callers on Speek.com, for
example, can upload files to its servers, and opt to have them synced
with Dropbox accounts.
Michael Hsu, founder of Deep Sky
Accounting in Irvine, Calif., says his operation has been mostly turned
over to cloud-based applications to eliminate the confusion and
inefficiency of "too many hands in the jar."
One of Hsu's
clients, an interactive marketing agency, previously used a spreadsheet
to track invoices and checks, occasionally leading to outdated
information and checks that were issued without authorization. Using
cloud-based applications - Intacct, Bill.com, and GetHarvest.com for time tracking - everyone works from updates that can be seen online by all instantly, he says.
"It's
about the whole concept of having one ledger. You have one thing in
common, and you're just editing it," he says. "Back in the old days, you
send it back and forth with clients. Now all of us can work together."
Freed
from the fear of mismatched information and outdated data, users of
cloud-based applications collaborate twice as much as those using
similar software on desktops, says Dan Wernikoff, general manager of
Intuit's financial management solutions division, which has released
cloud versions of its products, including QuickBooks.
A cloud
version of QuickBooks has been around since 2000, but users were not
comfortable storing data online. It struggled to get new customers. In
the first eight years, it landed only 100,000 customers. But with the
advent of smartphones and online data-storage products easing such
fears, Intuit has seen about 300,000 more customers in the past four
years, Wernikoff says. About 40% of first-time customers are trying
online products. "Next year, it'll be the bulk of our new users," he
says.
The emergence of mobile technology also partially explains
the rush to cloud computing by entrepreneurs. Not tied to the office and
typically dealing with a workforce that's widely spread out throughout
the country, business owners are opting for the any-screen-anywhere
strategy.
"Consumers want immediate access to information wherever they want," says Kevin Garton, chief marketing officer of The Neat Company,
which recently released cloud and mobile versions of its
document-filing system - NeatCloud and NeatMobile. "Cloud acts as the
central database and as the synchronization device for desktop and
mobile devices."
With so much data stored, cloud companies can
also dive deeply into customers' usage patterns for information that may
prove useful. For example, FreshBooks offers a feature that compares
your business' performance with competitors in several benchmarked
areas, including how long it takes you to get paid and the average
invoice size.
QuickBooks has a feature that can comb through your
transaction data from the customer list and filter information on those
who haven't visited in 12 months. Business owners can use the
information to, say, offer a special discount.
NOT ALWAYS PERFECT
Cloud
computing comes with several caveats. The ability to tap into the cloud
is only as good as your Internet connection and the capability of your
host's servers. "Cloud may not be enough. There is a speed problem
working with large files," says Vineet Jain, CEO of Egnyte, whose firm develops software that allows companies to integrate the cloud with local area network servers in the office.
Security
remains a chief concern. Many security issues from the cloud's early
years have dissipated, and much of cloud-stored data is encrypted or in
read-only mode for non-owners. But nearly three-quarters of respondents
in the Spiceworks survey cited a lack of control and security issues as
their biggest concerns.
"It takes a long time for everybody to
get comfortable with the idea," says Hallberg of Spiceworks. "It's not
in your physical control. Despite what vendors say, (converting to the
cloud) is not just drag and drop."
USA Today