[caption id="attachment_49615" align="alignright" width="346" caption="Jim Perez, Steve Jannicelli and Rich Waller"][/caption]

NORTH BAY – Companies in the North Bay and beyond are increasingly turning to “the cloud” when upgrading their accounting systems, embracing an Internet-based approach that local accounting professionals said can result in a reduction of information technology and other costs associated with storing and processing that information in-house.

While those professionals said that moving one’s accounting to the Internet is not the only option during an upgrade, the clear cost savings and myriad options have a growing appeal at a time when the recession’s surviving businesses are taking time to improve their efficiency.

“I think all businesses are moving in that direction, regardless of size,” said Jim Perez, an accounting lecturer at Sonoma State University and partner at the Petaluma office of Pisenti & Brinker. “More companies – small and large – are looking to maximize the efficiency of their information systems. Often, a cloud-based system is the best way to do that.”

Unlike the accounting software that a company might buy and install, the data and software of a cloud-based system are stored on remote servers and accessed through an Internet connection. While the look and feel of the Internet systems are similar to installed software, the approach requires no local data storage or software upgrades, doing away with the costs to maintain those systems locally and allowing access from any location.

“You’d have no idea whether it was client-based software or Web based,” said Steve Jannicelli, senior manager in the consulting practice at the North Bay office of Burr Pilger Mayer.

The approach shares attributes with the so-called software-as-a-service or "SaaS" concept in which companies offer a suite of Web-based software for a fee. Increasingly, software companies are also looking to host the data as well, creating an all-in-one system that clients access through the Web.

Many of the biggest players in accounting software are pushing hard to gain a foothold in the growing market. Intuit’s popular Quickbooks Online continues to add features and grew its users by 44 percent in 2010, and companies like Microsoft, Google and Amazon are developing platforms that are already bringing more power to cloud-based computing. Newer names like San Mateo-based Netsuite are also riding the growing trend, touting benefits that include robust integration of different elements of their software.

One of the greatest benefits of the new wave of online services, Mr. Perez said, is the fact that companies can sign up for custom-tailored packages of software as they need it. The “scalability” of these services allows the software to grow with the company, saving money over bundles of software that might offer more or less than the business requires.

At BPM, Mr. Jannicelli said that the firm has created a specialized team to manage the increasing requests to move in-house accounting systems to cloud-based options.

“It’s becoming a significant portion of our practice,” he said. “It’s not as simple as, ‘OK, take the servers on your way out and sign me up.’”

Some companies can find merit in a hybrid system, one where some data and software are cloud-based while other data is kept locally, Mr. Jannicelli said.

The time it takes to migrate that data can vary, and Mr. Perez said that companies could expect a process lasting between one and one-and-a-half years.

Some business owners remain concerned about the security of their financial data in the hands of a third party, a sensibility that Mr. Jannicelli said was not unlike the apprehension present when the technology first appeared to make purchases online.

“The fact is the security in these cloud-based environments is going to be equal or greater than what you can secure in-house,” he said.

To help address those concerns, Mr. Perez recommended that those interested in a cloud-based accounting system look for that company’s most recent "Statement on Auditing Standards 70, service organizations," audit, developed by the American Institute of Certified Public Accountants. An up-to-date SAS 70 would include information pertaining to that company’s security measures, and simply having a recent audit is itself a good sign, he said.

Other concerns include the reliance on an internet connection and the uptime of the remote company’s servers, two worries that Mr. Jannicelli said are often overblown.

“These companies are founded on the issue of accessibility,” he said.

One new company in the field, Santa Rosa-based VisiQuate, began two years ago with a web-based service that provides analytic information for existing accounting systems. With a number of clients in health care and a growing number in financial services, the company has doubled its clients each year, said Chief Technology Officer Rich Waller.

That growth, he said, was due to the inherent merits of a web-based system, offering a flexibility and access that he said would grow to define business accounting and analytic software in the future.

“There’s just so much about it that makes sense. I definitely think that it’s the way of the future,” Mr. Waller said.