Accounting on the Internet

Recently there has been a flurry of promotion regarding moving various small business functions (including accounting) off in-house PC systems and onto the Internet. Advertising and articles have promised numerous benefits, including lower costs and greater ease of use. Although there is an "alphabet soup" of various names for different varieties of these systems, most fall under the general category of ASP (Application Service Providers).

Our current recommendation is that, for most of our clients, web-based accounting is not the best solution at this time. We would strongly recommend that you talk to us, understand the risks and investigate thoroughly before moving your accounting (or other business system) to an Internet-based model.

The ASP model is touted as "revolutionary," yet is little different from the old "time-sharing" model of the 1960's and 70's. Essentially you are using your computer as a dumb terminal to access a centralized computer system where all the programs and all your data reside. This system is shared with other companies who use the same programs. In most cases, there are no programs on your computer, nor are any of your records on your computer. For a more complete explanation of the ASP model link here.

Although this approach does have many advantages, it also has serious disadvantages - particularly at this time. The most important disadvantage is your total dependence on a distant vendor and computer system. Although there is no hard data, estimates are that over the last six months alone 50% to 80% of small business ASPs have gone out of business. In most of these cases, the client businesses have lost all their accounting files - either permanently or temporarily. In either case, it has been extremely costly (and in some cases impossible) for these businesses to rebuild their records.

A second major disadvantage is that once you are on an ASP system, you are essentially "locked in." It is very difficult, time consuming and costly to change to another ASP or to go back to system on your own computers.

In general, we don't believe that the large risk to a small business is worth the possible return. The ASP field is new and even "old-timers" have been in business less than two years. If you think a web-based system is a possible solution for you, give us a call for an unbiased view. For a listing of ASP advantages and disadvantages link here.

© Copyright 2001 Raymond S. Kulzick. All rights reserved. 010528.