July 2001

Putting ASPs to Work in CPA Practices

By Carrie Crockett

Security and manageability concerns, coupled with the ever-increasing pace of technological change, are causing companies to hire application service providers to centralize computer processing. The ASP updates the company’s hardware and software, manages its computer system, and trains its users.

Held in April, the New York State Society of CPAs’ Business and Technology Conference featured a continuing professional education session on the application and viability of ASPs in accounting practices. Speakers included Robert Scott, editor of Accounting Technology; Jodi Maxson, vice president of business development for NetLedger; and David Thomas, CEO of Intacct.

ASPs help firms simplify their computer operations with minimal up-front cost and no administrative cost. Firms that hire ASPs need not be concerned about the version of software being used. According to Scott, firms and their clients can share files seamlessly and, because the data is on the Internet, have access to their files 24 hours a day, seven days a week.

However, while there are clear advantages to ASPs, there are many issues to consider before using them or recommending them to clients. According to both Maxson and Thomas, the two most significant concerns of ASPs are viability and security. The two speakers said that, as the service is relatively new, their clients have expressed concern over relying too heavily on ASPs. Consequently, firms are wary of entrusting too much of their day-to-day operations to an ASP that could shut down with little advance warning.

In fact, several audience members spoke of the difficulties they currently face trying to assure clients that putting data on the Internet is safe.

“I have a client who won’t fax information to me,” Sharon Clements of Grassi & Co. CPAs PC said. “He’s convinced someone can extract the information through the fax line. I have clients who need this kind of support, but until the end users get the initial idea planted in their heads, I can’t use [ASPs].”

Because ASPs lack thorough testing—having been on the market for only a short time—performance is another concern, Thomas said.

While discussing the pros and cons of ASPs, Thomas also spoke of some of the disadvantages of using traditional computer processing systems for accounting. The time and cost involved in in-house computing can be significant. Firms using ASPs can spend more time focusing on accounting and less time worrying about the complexities of their computing system, he said.

Still more problems include the multiple applications and locations of traditional accounting that make integration difficult. And scalability (e.g., moving from one system to another) can be difficult to achieve through traditional accounting computing methods, Thomas said.

Scott said CPAs should invest the same amount of time and thought to selecting an ASP as they would to any other aspect of the practice. Besides NetLedger and Intacct, there are many other ASP players on the field; Peachtree, Intuit, MS Finance Manager, and e-Ledger are just some of the other vendors.