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How the Cloud Enhances Financial Services

How the financial service industry can benefit from cloud computing and implement various solutions to host servers and accounting programs.

Whether your business has an internal accounting department or is entirely dedicated to financial services, you depend on one or more pieces of software to meet the needs of your employees and customers. Even if you only use a single program—like QuickBooks or Sage—there are a variety of options available to you for hosting the program (you could install it on your desktop computer at work, or on a headless server in the cloud, or somewhere in between). So, how should you decide on the correct solution for your accounting software? 

The importance of prioritizing the privacy of your company data and the quality of your customer experiences is at an all-time high amidst cyber threats that jeopardize millions of peoples’ information. The cloud presents many opportunities for businesses in the financial sector to become more agile, scalable, and resilient. 

How does cloud computing impact financial services? 

Although industries across the board are increasingly seizing opportunities to implement cloud computing in business operations, financial services stand to gain significant benefits. Because businesses in the financial sector often work exclusively with sensitive data, the cloud primarily offers greater security measures and other benefits compared to cloud alternatives. 

Some of the main benefits include: 

  • Increased built-in data privacy and security measures 
  • Reduced capital expenses by switching to cloud servers 
  • Greater accessibility of data from improved organization 
  • More effective compliance monitoring due to increased memory, storage, and processing speeds 
  • Improved customer experience customization 
  • Easier scalability for heightened service times 

The method you choose to host your financial services software directly impacts the ability of your business to function efficiently for your employees and clients. If you choose to host your program and servers in the cloud, your business can harness the power of cloud computing to enhance your employee and customer experiences. 

What are my options for hosting accounting software? 

When using an accounting program for your business, there are typically a few options on where it should live. In most situations, you will either deploy the software to an on-premises client-server solution, subscribe to the software as a service (SaaS), or have the software hosted on an infrastructure as a service (IaaS) offering. 

Here are some factors that commonly determine the optimal format in which a company hosts a program: 

  • Number of employees 
  • Overall budget 
  • IT capabilities 
  • Number of customers 
  • Customization requirements 
  • Future growth plans 

On-premises solution 

An on-premises solution (“on-prem” in the vernacular) is when a company purchases the license for a program to use on a company-owned device. If your company buys a single-user license to use QuickBooks Desktop or a version of Sage for Windows, that’s the on-prem approach to using an accounting program. 

On-prem has the potential to be a relatively cost-effective option for using accounting software for a company. Because the license is usually a one-time purchase with the potential for renewal fees for updates, the cost of operating an on-prem option can avoid the typical monthly subscription costs of using a cloud-based solution. In addition to cost benefits, on-prem programs often offer the widest variety of enhanced features so each business can optimize use of their accounting program of choice for their respective industry.  

In contrast to the benefits of a one-and-done purchase that's customizable, there are significant shortcomings to an on-prem approach. The main downside is that your company is responsible for all the capital expenses (capex) related to purchasing, configuring, remediating, and maintaining the hardware for hosting the on-prem program. Your business is then responsible for updating outdated hardware and software to keep your essential programs working, and those additional expenses can accumulate to substantial amounts over time. Additionally, for your business to maintain a server environment, you must then employ IT personnel knowledgeable about hardware and software maintenance. 

For many business owners who choose on-prem programs, security is a high priority and motivator behind the decision. Although robust physical access control is a significant benefit for a company that uses an on-prem accounting program, the benefit is a double-edged sword. 

“You control complete access to your program, but the downside to this is that you are responsible for ensuring it stays secure,” says Sam Blowes, Director of IT at Bit-Wizards. “Just because you can see a physical piece of equipment in your office doesn’t mean it’s more secure.” 

Software as a Service (SaaS) 

A SaaS solution (pronounced “sass”) is a software program offered as a cloud-based solution accessible through an internet connection. If your business uses QuickBooks Online or Sage Intacct, you depend on that software in a SaaS environment. Still confused? If you’ve ever used Gmail, you’ve utilized a SaaS solution! 

Using a SaaS program offers an ease of scalability, providing a high degree of flexibility. SaaS providers are also better equipped than the average small business to protect against cyberattacks. Importantly, SaaS solutions offer business owners the option to avoid the capital expenses related to purchasing and maintaining their own servers. 

Most providers can quickly accommodate a change in your company size, but the costs associated with scalability for a growing business can create a significant cost impact. A SaaS solution involves repetitive costs since it is typically a subscription-based situation, so your expenses are directly proportional to the size of your business. 

"The downside to SaaS is that you're going to be paying for this forever," says Blowes. "And if the size of your company quadruples, your expenses for that software also quadruple." 

Although SaaS offers a significant benefit in that your company offloads the responsibility of capital expenses, it creates a situation where you depend on a single failure point. If you lose internet access, you can't do anything with your SaaS program until your connection is restored. 

Infrastructure as a Service (IaaS) 

If you're looking for a cloud-based solution that is situated between hosting an on-prem program and using a SaaS solution, look no further than Infrastructure as a Service (IaaS – pronounced “eye-azz”). In an IaaS solution, the on-prem version of the software is either as a hosted application that is offered by a dedicated third party or it is “lifted and shifted” to a public cloud by a Managed Service Provider (MSP). These IaaS options provide some of the benefits related to both on-prem and SaaS environments without some of the significant drawbacks. 

Hosted program 

A hosted program enables business owners to enjoy the benefits of a private cloud without purchasing and maintaining servers and other equipment. For those looking to use programs like QuickBooks or Sage without the hassle that on-prem options offer, certain companies specialize in providing hosted versions of those programs in their own private clouds and then selling access to businesses.  

Compared to other options, using a hosted program is typically more expensive than on-prem programs but potentially less expensive than using a SaaS version. By opting to use a company's hosted program through their server, your business avoids the stacking costs related to owning and maintaining your own servers. 

"If a hosted program needs updates, that company is going to keep their servers updated so their customers can still access the program," Blowes says. "You get the bells and whistles of an on-prem version without the expenses of buying a server room." 

The potential downside to going through a hosted program is that your business entirely depends on that single company's security measures to protect your information. If that company's private cloud is subject to a ransomware attack and does not have the proper precautions or backups, your business information could easily be stolen or wiped out completely. 

"Compared to public cloud options, hosted programs potentially lack the resiliency and expertise needed to maintain them," says Brian Schlechter, Managed IT Services (MITS) Technical Team Manager at Bit-Wizards. "Even though many reputable companies offer hosted programs, some private clouds can be hit or miss in terms of security." 

Public cloud 

Using a public cloud for IaaS could be considered the sweet spot between on-prem, SaaS, and hosted programs. Public cloud solutions involve an MSP or IT partner migrating your business' programs, like Sage or QuickBooks—and a virtualized copy of the servers they run on—to a public cloud, giving users the same experience as a hosted program on a private cloud with expanded support and reduced expenses

With a Managed IT Service Provider like Bit-Wizards, your server and its programs are migrated in a lift-and-shift approach and deployed to a reputable public cloud, like Microsoft’s Azure. Since your business then depends on the public cloud provider's servers, your company can rest assured that your customer and employee data are stored safely, backed up in different locations, and prepared to failover in the event that a cloud server fails. Additionally, operational expenses for a public cloud can level out compared to those of a SaaS solution depending on the size of your business. Either way, public cloud solutions essentially offer the same user experience as an on-prem solution. 

"There's no difference to your business besides your office being less noisy and slightly less warm," Blowes says. "Once your employees remote into the program on the public cloud, it looks just as it did before and can even perform better than it used to." 

One of the greatest strengths of connecting to a public cloud infrastructure by partnering with a Managed IT Services Provider like Bit-Wizards is the reassurance of security in a time of heightened cyberattacks. Major public cloud providers like Microsoft have significantly greater security measures and higher security budgets when compared to even the most security-conscious typical business. In the event of an attempted cyberattack, that provider will have the resources needed to protect itself and its clients. 

"If someone somehow hacked all of Azure and executed a ransomware attack, Microsoft would deal with it," says Schlechter. "Microsoft has the legal and cybersecurity personnel and resources needed to determine what happened and who's responsible without any client involvement or funding." 

Connecting to the cloud with Bit-Wizards 

Switching to a secure public cloud solution offers a variety of benefits for any business, whether you specialize in financial services or just require accounting programs for your business' finance department. With Bit-Wizards, your business is in the hands of experts who have extensive experience in cloud migrations and managed IT services (MITS) for all sorts of businesses. 

Within the financial services industry, our work includes cloud migrations for: 

Regardless of whether your business is in financial services, we understand the importance of data security for your company, employees, and clients. If you're on the fence about how to host your accounting program or server, we can help you find the right solution for your business


Natalie Ewing, Content Writer
Natalie C. Ewing

Content Writer