The Future is Finally Here: How Web 2.0 & SaaS are Shaping Your Profession & Your Firm

Technology thought leaders and pundits have been extolling the virtues of
web-based applications for more than a decade, boldly proclaiming that the benefits
to end users and software developers would completely change how we use the
Internet and technology.

Many in the tax and accounting space were, as is their nature, skeptical,
and more than a few were concerned about the security implications of client
data being outside of the firm’s physical control. These were legitimate
questions, of course, but professionals soon realized that their data was often
safer in a secure and encrypted data facility than it was in their office, where
fire, theft or natural disaster could wipe it out.

The result of this eventual, if reluctant, embrace of remote data tools is
that in 2010 there are now web-based options for virtually every professional
tax and accounting application. Likewise, while many professionals scoffed at
the business value of social interactive sites, a few found ways to use Twitter,
LinkedIn and Facebook to their advantage, and are now counseling their peers
on how to achieve the same digital success.

Some Brief Definitions
The term SaaS is still not an automatically recognizable acronym by many professionals,
even if they may be using it. Simply put, Software-as-a-Service is a different
method for software companies to deliver their products, and a different way
for professionals to use them. Instead of receiving a program CD or downloading
system files and installing them on a computer or server, the programs are essentially
installed on a secure server run by the software company, with professionals
logging into the program either through a web browser or through a web-synched
interface. For payment, instead of paying up front for the current version of
the software, users essentially rent the programs, usually for a monthly fee
based on the number of users.

Another acronym that’s been around for a couple of decades is ASP, or
application service provider. It is a form of SaaS, but one through which traditional,
non-web-based programs are offered through a secure hosted network.

Web 2.0 is a much more modern phenomenon, but with a less specific definition.
Where basic (or Web 1.0) websites offer information, news and other resources,
Web 2.0 sites offer some form of interactivity and collaboration. Facebook and
Twitter are often pointed to as examples, but Web 2.0 extends to online banking,
blogs, wikis, RSS feeds, GoogleDocs and many other personal and professional
applications. They can also be tools, gadgets or widgets that are add-ons to
an otherwise static website, creating a more dynamic and useful environment.

The Benefits
The SaaS model holds many benefits for both users and vendors. These usually
include anytime/anywhere access, client collaboration tools, and relief from
having to install the programs and keep up with updates, since all of this is
handled on the back end by the software vendor. Firms can also ramp up very
quickly, adding more users or system functions and modules, usually within a
few minutes. For the technology vendors, there is no longer a need for shipping,
printing and CD costs.

Chicago CPA Jody Padar says the benefits she gets the most value from come
in the following order: Client collaboration, anytime/anywhere access, no IT
headache, and the savings of her professional time.

• Client Collaboration
  With a web-based or remotely-hosted program, options such as client portals
  are often available that let the professional firm share documents and other
  information with their clients. This is a great productivity boost for tax
  engagements, but also to other client services.
• Anytime/Anywhere Access
  Because the bulk of most SaaS systems are hosted on the technology developer’s
  secure servers, users are usually able to log in and work with their programs
  and client data from work, home or other computers. However, some programs
  require small parts or “applets” to be installed on the computer,
  while a few don’t have this benefit because their locally installed
  components are too large.
• Less IT
  Large professional practices often have technology staff on their payroll,
  but for small and mid-sized firms, installing, reinstalling, updating and
  generally keeping up with detailed technological issues and other IT stuff
  is not an expertise they have in-house. So they either waste time troubleshooting
  it themselves or hire an outside consultant. But with SaaS, almost the entire
  program is on the vendor’s secure servers, so there’s little if
  anything to install, and users can access many SaaS programs through their
  web browser.
• Time Is Money
  The lessened IT responsibility is probably a greater benefit to small and
  mid-sized practices like Jody’s, because every hour spent working on
  IT stuff is an hour that can’t be billed.

The SaaS model offers many more potential benefits, depending on the particular
program and the firm. For accounting programs, one of the emerging areas is
increased integration with other online systems and data, such as linking live
banking account data into the financials for more automated reconciliation.
And for web-based professional tax systems, direct integration with advanced
online research tools is now standard.

Web-based programs for small business accounting is also a fast area of technology
adoption, providing business owners and managers with many of the same benefits
above, while allowing their professional accountant to access live client accounting
data, which can greatly ease write-up tasks and remove the need for data synching
or transfer. Look for our 2010 review of SaaS small business accounting products
at www.CPATechAdvisor.com/go/2784 and in our June issue 2010.

Web-based programs are also more likely to offer mobile applications for smartphones
like the iPhone and BlackBerry, allowing users to access some, or even all,
of their program data while visiting a client’s office, eating lunch,
waiting on a flight or riding in a taxi.

The Benefits of Web 2.0 & Social Media
Client portals are somewhat of a bridge between the concepts of SaaS and Web
2.0, allowing the professional firm to extend collaboration capabilities and
sometimes even program features to their clients remotely. Interactive social
websites have become marketing tools for the Facebook and Twitter-inclined,
as well as a method for professionals to establish themselves as an expert on
particular accounting, taxation or small business management specialties. Our
own Scott Cytron has been helping tax and accounting firms use social media
strategically, and writes frequently on the topic. (See Social Media in Accounting
Firms: www.CPATechAdvisor.com/go/2609;
and Leveraging Social Media to Build Your Business: www.CPATechAdvisor.com/go/2335.)

Looking to the Future
As technology invariably marches onward, the SaaS model will gradually become
the predominant way we use computer programs for our professional and social
lives. From there, it will be just a very short step to the full cloud-based
infrastructure, where all of our data and programs are hosted. Yes, it can seem
a little scary, but reliance on technology is not necessarily risk-prone, so
long as proper security and rules are maintained. The benefits will far outweigh
the risks, especially in terms of professional productivity.

SaaS Programs Available for the Professional Tax & Accounting
Practice

Many traditional programs can also be used as a hosted SaaS program by using
an application service provier (ASP), including professional tax and accounting
programs not on the list above, plus general business and productivity tools
like Microsoft Office.

If you know of other programs that belong on any of the above lists, please
send an email to my attention at editor@cpata.com
so I can add it right away.