They may go by names both now familiar and new, such as “ASP” (application service provider) or “SaaS” (software as a service), but hosted apps are catching on as firms find new benefits in somebody else maintaining the software. Proponents say that eventually, maybe soon, this method of delivery will change the way all software is accessed. Going this way, however, can affect firms’ technological needs, hardware, software, staff, and support, as well as raise other concerns. Still, some firms, even small ones, find the idea appealing. “All we need is an Internet connection and a computer, and we can access our data,” says Tracy Knowles, partner with the ParsonsGroup, Dothan, Ala. “One benefit for us is that our hardware and networking costs have been reduced significantly. In addition, our mobility has increased tenfold. One of my partners actually spent the entire month of October at the beach, but she was able to still work and stay connected as if she was sitting in her office.”
Trey James, CEO of Xcentric Group, says his company has seen a 300-percent increase in CPA firm-hosting revenues since 2005, and projects doubling revenue growth in 2008 from 2007. “Firms are realizing that growth must, in part, come from increasing the return on their existing staff,” he maintains. “This has translated into a laser focus on core competencies, rather than on technology. Very few CPAs started their firms with the intention of becoming technology experts. Hosted and fully managed apps provide a welcomed escape from IT headaches.
“Multi-office firms are allowed to take a large step towards gaining a single-office culture,” he adds. “The remote access capabilities allow firms to ease staffing issues by enabling long-distance or part-time work-at-home staff to access the firm’s resources. Generally, hosting companies have the economy of scale to do security, redundancy, and disaster recovery well, whereas the average CPA firm may choose not to meet the expense of these necessary expenditures.”
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A Real Migration?
“Eight years ago, we started offering hosted applications, and very few clients adopted this method. Five years ago, we started to see adoption by our clients grow as disaster recovery, work-from-home staff, and use of online banking and other SaaS-type accounts” increased, says Andrew Hatfield, chief strategic officer of Dallas-based Acct1st Technology Group. “Three years ago, our client base was about 30 percent hosted and 70 percent traditional. Today, our client base is 69 percent hosted and 31 percent traditional. In 2007, our sales were nearly 80 percent hosted and 20 percent traditional.”
The topic still has doubters. Roman Kepczyk, consultant with InfoTech Partners North America, contends that firms are in fact “barely” going toward hosted apps. “The standard solutions of banking, payroll, research, and forms have all been standard practices for awhile, but we are just now seeing firms look into outsourcing their tax, document management, and accounting,” he notes. “While the CSI virtual office was a success for smaller firms, larger firms haven’t really adopted it. There are exceptions, such as Thomson GoFileRoom and TaxRS, but that is only in larger firms, and there are also the hosted solutions through Xcentric, where they maintain the entire infrastructure regardless of the vendor. We believe CCH’s future emphasis on hosting its practice, document management and audit, in addition to the Global fx Tax will start seeing users next year, but won’t take off until there’s enough demand, which occurs when firms have to build a new infrastructure and don’t have the resources.”
