Managing The Move To

The Cloud – Analysing

The Risks And
Opportunities Of Cloud-
based Accounting
Information Systems
TABLE OF CONTENTS

01 Introduction

02 Accounting Process

03 Cloud Computing
 01
Introduction
INTRODUCTION

● Pia Moksi is the sole owner and chief pharmacist of Kluuvin Apteekki, which is a pharmacy in
downtown Helsinki
● She found managing the pharmacy in the highly competitive environment of the Finnish capital
a difficult task
● As her business grew, the amount of administrative work increased manifold and she was left
with very little time to actually manage the business
● She mulled over shifting to cloud-based accounting services but given the unlimited options
available, the associated pros and cons of them all, she was in need of some guidance
 02
Accounting
Process
Setting the scene: Kluuvin apteekki and its
accounting process

● Kluuvin Apteekki- A privately owned pharmacy located in Helsinki city, with 16 employees, established
in 2011.
● The turnover of the company in 2014- €2.2 million.
● Growth- Main pharmacy in the city centre, a small pharmacy in the district of Merihaka which contributes
€419 thousand to the turnover.
● The pharmacy business in Helsinki: Competitive and highly regulated by the state. Prescription drug sales
and marketing, location of the pharmacies, their density in particular areas as well as the number of stores
each company can own simultaneously are tightly controlled. This leaves a limited space for creating
competitive advantage.
● Kluuvin Apteekki stands out by- offering exceptional customer service and by organizing clever sales
campaigns for items not regulated by state and has paid administrative efficiency to keep operation costs
down.
 Accounting process in
KluuvinApteekki
Accounting
● The overall accounting process in kluuvin
Apteekeki consists of five main groups of tasks
which are as follows Sales Purchases Payroll Reporting Payments

Supplier register Personnel Preparation of

Call register
maintenance register financial Salary payment
maintenance
• It represents a detailed itemization of maintenance reports
sales sales made, presented in data sequence. Product
Receiving
Basic payroll Payment for
purchases Annual salary
register data travel & other
invoice reports
maintenance maintenance expenses
• The purchase ledger is a sub-ledger in
Purchases which all purchases made are recorded Handling
Annual
Sending purchases Payroll Monthly tax
invoices pension
sales invoice calculations payments
reports
• It refer to all monetary transactions
Payroll between Ateekki and third parties. Handling
Handling other costs VAT payment
sales invoice
• All the financial reports which shows the
Reporting financial position of a firm at a given time Sending
Purchase
ledger
notes of maintenance
complaints

Payment • It refer to amount paid to employees for

services they provide Sales ledger
maintenance
Accounting process in
KluuvinApteekki

● The complexity of accounting

problems of each task can vary
greatly form company to company
● But many of the task are similar
across different companies a
generic accounting process in
Finnish is as follow
Difficulty to digitize
● Big suppliers usually enforce their mode of invoicing to small buyers, as well their information system
to process them
● Payroll processing is quite complex
● Errors in the reporting process might have far-reaching consequences and, hence associated with high
risk
● Person doing to the reporting process needs to be trained yearly
Accounting services in Finland

● Finland- Highly competitive market of outsourcing financial administration.

● More than 4000 independent accounting companies and more than 150 information systems (cloud-
based accounting information systems (AIS)) offer their services.
● AIS connects their system with third party digital services (banks and authorities) - to easily conduct
transactions and government reports electronically.
● Software providers operate through accounting companies.
● Accounting companies sell software to their customers bundled together with the accounting services.
Thus, the software providers accentuate the features that allow for simultaneous work on the data by
multiple parties (such as the accountant, the client company, and the auditor), paving the way for more
efficient outsourcing arrangements.
● Problem- Client companies become highly dependent on the cloud service provider
 03
Cloud Computing
Cloud Computing
Cloud Based AIS- Advantages
● Makes accounting easier by greatly automating the process.
● Integrates data integrating all the company data into one service,
● Access in real time.
● Outsourcing possibilities in a flexible manner. Because everything is on the internet, it is very flexible.
Outsource what is required and can maintain control over the process.

What is cloud computing?

● IT service model
● Self-service fashion (Hardware and Software services are delivered on demand to customers across
distributed IT resources and network)
● Independent of device and location.
 Secure solution
Provides on
demand Stays within the company IT
Private Cloud High Control
SAAS- Ready to use
Software As A software over the Expensive as company takes all
Service network responsibility

Maintained by cloud provider with

its own infrastructure
Example: Google
Docs, Google Drive Little Investment
Full benefits of Scalability

Deployment
Deploy own Public Cloud

Models
software, Third Accomodate fluctuating demand
PAAS-
Three party software
Platform As A
Models compatible with Security and Privacy concerns
Service
cloud providers
environment
High reliance on the service
provider
Fundamental Combination of Private and Public
Resources Cloud
Control on crucial parts
IAAS- Public cloud- routine and
Computational
Infrastructure computing intensive tasks
Power Hybrid Cloud Model
As A Service
Complexity of service
Arrangements
Networking and Security Breach
Software
Leaks of Data
CLOUD COMPUTING

● The main value of cloud computing for businesses derives from offering resources in an economical,
scalable and flexible manner
● Pia evaluated three systems highlighting the important dimensions-user interface, integration capabilities,
modularity and price.
● Some of the concrete features of cloud computing are as follows-
 lower costs as the whole service runs on the computers of the service provider.
 cloud-based systems are delivered as SaaS, which means that there are no costly investments
into the software licenses.
 The user can pay for everything based on usage
 cloud-based software claimed that their systems could integrate all the company’s processes
in the same place and allow access 24/7 from any Internet connected device
 data does not have to be stored and processed by the clients’ computers which means that
services can be rearranged in real time which adds to the flexibility.
CLOUD COMPUTING

Accessibility

● Accessibility was more tangible and extremely interesting as now she could work from
anywhere and stay in constant touch with her accountant.
● Simultaneous checking from anywhere of accounts and transactions
● Privacy issue as data has to be shared constantly, as there is a chance of data being misused.
● There is a possibility of being locked-in to one provider, there was no proper mechanism to
transfer data from one service provider to another.
● Integration issues with her existing data bases, software & other cloud services.
● Migration issues
● Challenges: all the data shared to software provider, resistance to changes, impact on business
greater risk
 Process Arrangements in Cloud
● Technology is an important piece in a jigsaw, but without appropriate process, cloud would have limited positive
effect.
● Pia conducted an Internet research of outsourcing options and even met representatives from a couple of accounting
companies offering their services regarding outsource all of the accounting or just the payroll and reporting to the
third party.
● First reason was the desire to have more time to concentrate on the core business of the pharmacy by outsourcing the
accounting things.
● One of the biggest benefits of outsourcing is the ability of the company to concentrate on core competences.
Focusing on core competencies, in turn, frees up resources to be used more productively.
● There is always a uncertainty that outsourced professionals would have same commitment to my business as we do?
● Outsourcing seemed to be cost reduction.
● Accounting takes a lot of my time, and pia found it unworthy of her time
● Estimating the costs of outsourcing also seemed to be a difficult task.
● Pia also doubts the service contract- as the fine print in the contract may always turn against her
● She is currently thinking of starting slow, try outsourcing some processes and continue others by herself for a while.
 THANKS!
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