This article originally appeared on Forbes.com here. By Brenda Bouw February 5, 2016
Before Mike McDerment co-founded the cloud-based accounting software service FreshBooks, he ran a website design firm catering to small-business clients. It was there that McDerment kept bumping up against a problem that eventually drove him to start his current company.
“I was spending way too much time creating invoices, sending them to clients, following up and trying to figure out who owed me money,” said McDerment, the CEO of Toronto-based FreshBooks.
Like many small-business owners, McDerment preferred working on client projects to sifting through piles of paper receipts and invoices. He also wanted a system that was easy to use, even if he was outside the office, and that he wouldn’t risk losing if his computer malfunctioned. He decided to create a solution using cloud technology to help other small businesses facing similar challenges.
The cloud is a network of remote servers managed by third-party providers and hosted on the Internet that stores, manages and processes data. Companies like FreshBooks provide accounting software services in the cloud that enable small businesses to track information, manage expenses, create invoices and get paid online. Other cloud-based services allow businesses to store data online, instead of on local servers or computer hard drives.
For years, many companies have relied on internal servers or local computer hard drives to store and digitize their information, which can be costly to maintain. In addition, many small companies lack the internal expertise to manage and troubleshoot the technology.
A growing number of small businesses are moving to cloud-based systems to better organize their operations and to improve productivity.
Dan Demaree, founder and president of Frederick, Md.-based public relations and marketing firm DPR Group, said he made the switch in 2011 and hasn’t looked back.
The beautiful thing about being on the cloud is that, wherever you go, you can connect to the Internet, and all your files are there, said Demaree, who uses Cetrom to manage his company’s IT infrastructure. “Before the cloud, you had to copy files on a thumb drive and transfer them,” he said.
In addition to IT infrastructure services, DPR Group uses other cloud-based software for its financial and billing needs and to hold the database for its clients and contacts.
Previously, DPR Group used virtual private networks (VPNs), which Demaree says had latency and connectivity issues that caused delays in everything from file uploads to basic emailing.
Making The Switch
Of course, there is work involved in moving data or operations to the cloud. Employees need to learn a new way of working on files and projects hosted remotely. Demaree said his company spent about a day categorizing and organizing data before it could be moved to the cloud, and archived any client data that was more than four years old.
“The biggest issue was trying to set standards for what should be kept in the cloud versus what should be archived,” Demaree said.
Most cloud companies charge you a monthly fee based on how much data you store in the cloud, he added, so companies need to either have a strategy for moving older data into an archive, or be willing to pay extra for larger amounts of data in the cloud.
Suzette Flemming, an accountant and small-business expert in Great Falls, Mont., said it can still be a challenge to persuade some businesses to move to the cloud—in part because of security concerns.
“It’s the trust factor,” said Flemming. “When you’re talking finances, that’s a huge deal.”
A 2014 report by KPMG showed that security and data privacy are major concerns among businesses converting to cloud-based services. High-profile security breaches in recent years at companies such as Target and Home Depot are examples that businesses often point to when raising concerns, Flemming said.
Another big hurdle is letting go of old systems, especially for businesses that have been around for decades and are comfortable with their current ways of working.
“It’s a whole different mindset,” Flemming said. “I have clients who complain that their dinner table is covered in paper. But why? Today you can scan it and make a PDF file. It’s all digital.” You should be eating dinner on your dinner table, not storing paperwork, she added.
The cloud is the natural next step, she said, with the key advantage being easier access to data—whether you are sitting in your living room using a laptop or in a cab with your smartphone on your way to a meeting.
For many small businesses, change is the most challenging part of moving to the cloud, said McDerment of FreshBooks.
“Small-business owners can become attached to the processes and systems they’ve built up,” he said. “If you let go of that … you’ll start working in a much better way, which is going to return a lot of time.”