Moving Toward the Virtual Firm (Part 2 of 5)
Digital technology removes barriers and excuses
In this second part of her five-part series, Simone Hoover provides an in-depth explanation of the technical language surrounding online cloud services, contractual conditions and the literal forces of nature that pushed her into the virtual office environment.
Learning the Language
Is your head or business in â€śthe cloudsâ€ť?Â Â Should it be? Â Today, any firm will benefit from adopting â€śthe cloudâ€ť to some degree.Â Firm virtualization offers countless opportunities to shape the business, control costs and expand like never before.Â As with all major trends, it comes with a glossary of lingo that often seems like a foreign language.Â From Glossary of Cloud Computing Terms by the AICPA, as well as Wikipedia, and others, here is primer of some of the most prevalent key words and phrases:Â Â
Application Service Provider: â€śASPâ€ť, sometimes called â€śon demandâ€ť software or SaaS (see below).Â These are specialists, delivering single or limited applications through vertical markets, providing packages for a particular type of customer, enterprise.Â They deliver across a broad spectrum of solutions, often within a niche such as serving small businesses, a particular industry and possibly in a limited geographic area.Â
Back-Office Processes: Supporting business functions such as accounting, finance, payroll, employee benefits, and IT that provide infrastructure for an organizationâ€™s vision.Â Back-office processes are also referred to as â€śnon-coreâ€ť processesÂ
Client Service Delivery Model: This describes the methodology a firm uses to share software and data when performing core functions. There are generally three service delivery models: 1) Where the software resides at the clientâ€™s location and at the firmâ€™s location.Â The software may or may not be the same. Â The firm and client exchange data files. Â Soft copies of the file may be exchanged in various ways; 2) Here, the software and data resides on a third-party Software as a Service (SaaS) cloud-based (or web-based) servers. Â Both the client and firm share this common cloud-based business platform. Client and firm access the software and data via an internet browser.Â 3) A combination of the both options.
Cloud-Based Computing: The term cloud is used as a metaphor for the Internet. Typical cloud computing service providers deliver common business applications/software online, which are accessed from a web browser, while the software and data are stored on third-party servers. Clients can typically purchase access as-needed and increase or reduce services as their needs change. Â The cloud computing service delivery vendor develops and supports the solution and runs all operations.
Core Business Processes: These are the business processes that move an organizationâ€™s vision forward such as sales, marketing, business development, and customer service. Core business processes are also referred to as â€śfront-officeâ€ť processes.
Extranets:Â While intranets are generally restricted to internal users of the organization, extranets may also be accessed by customers, suppliers, or other approved parties. Extranets extend a private network onto the Internet with special provisions for authentication, authorization, and accounting (AAA protocol).Â
Hosting: This is a software deployment where the customer acquires the software and a service provider delivers IT infrastructure.Â The provider â€śhostsâ€ť by creating a single operating environment (virtual or physical) to allow a single customer to access and utilize dedicated computing resources for a software vendorâ€™s product.Â Â A few points to consider:Â Â these applications are traditional single-tenant applications, but hosted by a third party. They are client-server applications with HTML front ends added to allow remote access to the application. Â The applications are not written as net-native applications. Â As a result, the performance and application updates may be no better than self-managed premise-base applications. Even so, ease of access from any location and a range of devices can be a definite improvement in a firm and offer advantages not experienced previously.Â By comparison, cloud-based SaaS applications are multi-tenant applications hosted by a vendor that have been designed as net-native applications that automatically get updated on an on-going basis.
Infrastructure as a Service (IaaS): The adaption of a model in which an organization outsources the equipment used to support operations, including storage, hardware, servers and networking components.Â The service provider owns the equipment and is responsible for housing, running, and maintaining it.Â The client typically pays on a per-use basis.Â Use can be defined as the number of access â€śseatsâ€ť (as low as $80 monthly for MS Office, accounting software and file management applications) and which applications are available.Â Characteristics and components of IaaS include:
- Utility computing service and billing model
- Automation of administrative tasks
- Dynamic scaling
- Desktop virtualization
- Policy-based services
- Internet connectivity
IaaS is one of three main categories of cloud computing service. The other two are software as a service (SaaS) and platform as a service (PaaS). Â Nearly all cloud users begin with infrastructure as a service (IaaS), sometimes referred to as hardware as a service (HaaS).Â Many who run most applications on the same operating system (OS) and middleware later decide that platform as a service (PaaS) would better serve their needs. PaaS cloud offers users of a single OS savings in both operating and licensing costs when making the transition.Â Â Those who have made the transfer say the change requires planning in three key areas:Â operations and management, OS and middleware compatibility/deployment, and integration practices.Â As you plan your virtual move, it is best to work with a knowledgeable advisor to do some front-end brainstorming as to where this might eventually lead.Â Â A further discussion of such planning is beyond the scope of this article, but there are good sources of information and advice available for the practitioner willing to invest some time in educating oneself.Â
Intranet:Â In-house (organizational) network for sharing storage, computing resources and systems using internet protocol. Â Â
Level 3 Security: Refers to the Federal Information Processing Standard (FIPS) Publication 140-2, (FIPS PUB 140-2) , a U.S. government computer security standard used to accredit cryptographic modules. The title is Security Requirements for Cryptographic Modules.
MiFi: Mobile hotspot internet connection.Â Â Available as a standalone device or some smart phones will now provide an internet connection for an additional fee.Â Â May be referred to as â€śtetheringâ€ť a device.
Scalability: The measure of a service’s ability to increase or decrease in performance and cost in response to changes in needs or volume. It is important that a service be scalable if an organization anticipates growth and increased needs.
Service Delivery Platform: The software solutions and technology components that will be used in a firmâ€™s client service delivery. Also referred to as platform as a service, it provides a computing platform and a solution stack (series of software subsystems needed to deliver a solution) as a service.Â
Service Organization or Provider:Â Within the context of cloud computing, the service organization or provider is the business that delivers the service of a cloud computing application for a monthly fee.Â
Service Level Agreement (SLA): A contractual agreement where a service provider defines the level of service, responsibilities, priorities, and guarantees regarding timing, availability, performance, and other aspects of the service.
Service Level Requirements (SLR): A document recording the business requirements for outsourced services. The SLR provides a basis for negotiations linked to the formulation of SLAs.
Software as a Service (SaaS): Cloud application services, where applications are delivered over the internet by the software provider, typically for a monthly fee. The applications are not installed nor do they run on the clientâ€™s computers.Â Instead, they are accessed by a web browser. Â Two important characteristics of SaaS are:Â network versus Web-based access to commercial software computing services where the processing is done on a third-party server, rather than at each customer’s location.Â A tenant-based pricing model for hardware, software, administration and consulting services is typical.Â This also known as on-demand service.
My Digital Transition
Why choose to move your office to the cloud? Â There are many reasons to consider.Â Â I was driven to the cloud by hurricanes. Â In 1992, Hurricane Andrew was the first time my family and I actually evacuated our home, leaving behind most of our accumulated possessions as we sought to evade what turned out to be one of the most powerful storms ever to hit the U.S. mainland.Â Â Â In 2004, the search for a virtual solution began in earnest, as south Floridians remained in what seemed like a constant state of readiness as hurricanes Charley, Frances, Jeanne, and Ivan tested the mettle of the populous, not to mention the insurance industry of Florida.Â
We secured our physical office facility, backed up critical files, packed up hardware and software, evacuated the state and set up operations in a remote location for weeks at a time.Â Â Â The effort and tension to put myself, staff, and clients through the exercise multiple times in a year pushed me to find a hardenedÂ Level 3, remote back up for all electronic files, remote access via a laptop and reliable internet connection.Â Â While the home and office avoided serious damage, the interruption in business pushed us further toward a virtual solution.Â Â Â In recent years, I have continued the transition as I convert more historical files to digital form, all while becoming more and more virtual in my business processes. Â
The decision to stay digital resulted from a random and unplanned demonstration of the savings.Â A long-term client needed copies of documents from the previous four years in connection with a legal matter.Â Â I asked my assistant to find the paper files and while she was pulling them from the archives, in a 30-minute span I had already retrieved the PDF version, sent them via email to the client, and responded to further inquiries.Â Given the amount of paper we pushed, the time savings alone was worth it. Since then, it has freed me to enjoy other benefits such as hiring and managing remote employees in a far-off locations, free from the tempestuous weather of south Florida.Â Nevertheless, going virtual is not painless and some of the â€śreal lifeâ€ť considerations follow.
Simone Velasquez Hoover, CPA/CVA is President of Simone Velasquez Hoover, PA.Â The firm provides comprehensive financial, development and management support to nonprofit, membership organizations and high net worth individuals.Â In addition, the firm provides forensic accounting, litigation support and dispute resolution services to individuals, families and business clients.Â Ms. Hoover served as Executive Director, NACVA State Chapter Foundation Chapter President from 2005 through March 2013.Â Currently, she is also Executive Director of Operation Homefront â€“ Florida, a 501(c)(3) that serves the families of deployed and wounded service members throughout the state with emergency financial and other support. Simone can be reached at hoovercocpa.com.