CLOUD ACCOUNTING: WHERE WE ARE AS A COUNTRY (KENYA PERSPECTIVE)

Transcription

1 CLOUD ACCOUNTING: WHERE WE ARE AS A COUNTRY (KENYA PERSPECTIVE) Presentation by: CPA Leah Ng ang a

2 Introduction The current business environment is dynamic & competitive Efficiency and effectiveness are key drivers of performance This has resulted to development of new technological domains to aid in business activities. Internet usage by organisation has been on the rise as a result of technological inventions. In accounting, there has been the emergence of cloud accounting which has shaped the accounting profession in most countries across the world.

3 Change Management and Cloud Accounting The concept of cloud accounting can be equated with change management process. In our global economy, adapting to the ever-changing environment is critical. In His Book Origin of Species Charles Darwin said the following: it is not the strongest of the species that survives, or the most intelligent, but the one that is most adaptable to change. Therefore for cloud accounting to succeed, we must acept and embrace change

4 Change Management and Cloud Accounting Cont Businesses that adapt to change are the ones that will survive and embrace the technological changes in this global era. Businesses are compelled to keep pace with digital revolution in the ICT As we move forward into the 21st century, existing technologies will definitely transform or converge, and even if we cannot accurately predict the future, we should realize that all change requires the ability to adapt and to consciously evolve.

5 Cloud Concept The cloud concept involves delivery of computer software and infrastructure which are accessed as a service via the internet. The cloud concept is rapidly taking the business field. Therefore 2020 every business practice / activity will have immigrated into the cloud. Since the world is moving to an online environment. The resources for clouds (computing power, software or data storage) are available in different forms (mobile or fixed devices).

6 Cloud Accounting Concept It is the use of online account softwares where software and data are stored on the internet rather than computer hard drives. Due to existence of various products, it can mainly be accessed anytime at any place by use of any device that has internet access. According to Association of Chartered Certified Accountants [ACCA] (2017), there has been positive reception of cloud accounting and most institutions did start utilising it

7 Reasons for organisation to adopt cloud accounting 1) They are the most complex among many types of business softwares offered through clouds. 2) It has the capability of providing different functionalities for specific areas and markets hence meeting distinct needs and budgets irrespective of organisation size. 3) This system is important for accounting profession because financial managers nowadays demand, affordable, efficient, easy to operate software which will provide accurate reports and which evolve with the current technological dynamics.

8 Reasons for organisation to adopt cloud accounting 4. A systems that will allow accountants to transpose financial information into relevant business data which is helpful in decision making process. These are among of the many reasons that propels organisation to adopt and embrace cloud concept in their business operations.

9 Evolution and Adoption of Cloud Concept There has been a heightened interest in the adoption of cloud computing by business across the world. ACCA (2013) report showed 81% of respondents across the world believed that to some extent IT would reshape the accounting field 60% 50% 40% 30% 20% 10% 0% 32% 53% 13% 1% Perceptions on how Technology would Transform Accounting Business Total transformation To a great extent To some extent Not at all

10 Adoption of Cloud Accounting in Different Countries By 2012, China was using cloud computing in telecommunication companies to handle large amount of data and even by the government in order to deliver online services. By 2015 Japan had developed Kasumigaseki Cloud through Digital Japan Creation Project to produce new ICT markets to strengthen the economy. By 2013, Australian government adopted cloud computing chosen to enhance the government s operation efficiency by improving the countries IT effectiveness

11 Adoption of Cloud Accounting in Different Countries In United Arab Emirates (Dubai), is striving to ensure that cloud services are spread over the country. The country has relatively strong ICT infrastructure and deployed high speed broadband the basis of the migration is already fortified. By July 2015, only 39% of SMEs had adopted cloud services. South Africa is an exceptional case, as the growth of cloud-- computing services is demand side driven through the corporate sector

12 Cloud Presence in Kenya Cloud services in Kenya are mostly supply side driven and competition is emerging between local and international companies. Various companies in Kenya are offering Iaas level services like; Kenya Data Networks, Safaricom and MTN Business (they appear to be leaders) from market research data. A 2017 research by Chemjor and Maru found out that SMEs used I-cloud computing to a high extent in their businesses. The SMEs utilised cloud data storage services.

13 Factors Influencing Adoption of Cloud Accounting in Kenya According to market forecast and research, there exist high potential for the growth of accounting market in Kenya. Internet adoption and penetration rate is at more than 40% (the figure could be up by now based on Communication Authority Statistics and Kenya National Bureau of Statistics Economic Survey) The Global Competitiveness Report ( ) place the country GCI index at 3.98 out of 7 which places it at position 91 of the most competitive nations.

14 Factors Influencing Adoption of Cloud Accounting in Kenya Kenya is ranked higher (37) than South Africa (39) and Nigeria (119) in innovation and technological readiness. Kenya is ranked 41 in technological adoption with a score of 5.0 above South Africa (45 with a score of 4.9) and Nigeria (87 with a 4.3 score). Because of GCI statistics, most business are coming up and this presents an opportunity for the growth of accounting practice in Kenya.

15 Usage of Cloud Accounting in Kenya Research conducted in Kenya show that the level of adoption of cloud computing and cloud accounting is still low while others indicate it to be high among SMEs (cloud computing) in the country. A research by Chemjor and Maru found out that significant number of the SMEs were enjoying server and network service maintenance. The respondents enjoyed server upgrades. SMEs do not have to worry much as the infrastructure is owned by the service provider

16 Usage of Cloud Accounting in Kenya The accounting field has proven to be receptive towards cloud-based solutions and has already begun to exploit them. Others research argue that the concept of cloud accounting is still new in the academic and business world and this could influence its adoption According to Sage Kenya Office, most accountants in Kenya are competent in accounts and finance skills but are technologically not competent therefore influencing adoption of cloud computing.

17 Usage of Cloud Accounting in Kenya Many accounting practitioners are avoiding the transition to Cloud based accounting solutions due to perceived security, privacy and complexity issues in transitioning to the Cloud. These concerns are preventing small businesses from the benefits of increased efficiency and flexibility that are offered by Cloud accounting solutions.

18 Cloud Accounting Service Providers in the Kenyan Market The following are the models of cloud services in Kenya 1. SaaS - Software as a service (Is a virtual, cloud based replacement for physical hardware, such as processors and hard drives) 2. IaaS Infrastructure as a Service (Is a virtual, cloud based replacement for physical hardware, such as processors and hard drives) 3. PaaS Platform as a Service (Involves the deployment of a user s own applications on platform tools, including programming tools that are on infrastructure owned and managed by the cloud provider

19 Major Players in the Country Cloud Computing Business Various companies (national and multinationals) have been established in the country to provide cloud services. 1. Kenya Data Networks, 2. MTN Business 3. Safaricom Limited 4. Sevean Seas Technologoes 5. Pamoja operated by se-acom 6. Xtranet Communications Limited 7. Kenya Cloud Ltd 8. Sofgen

20 Cloud Accounting Products & Services in the Kenyan Market 1. QuickBooks - Through this software, accountants can create invoices, track debtors and sales as well as company expenses. It is one of the most commonly used best accounting software in Kenya. 2. Sage Pastel - is the most ideal software for medium sized businesses. It provides for flexibility innovation, and power. 3. Microsoft Navision It has different functionality modules that include general ledger, accounts payables, receivables, inventory and management of purchase orders

21 Cloud Accounting Products & Services in the Kenyan Market 4. Tally - The software simplifies taxation procedures and helps accountants gain clear visibility of the supply chain and inventories. 5. Zoho Books - It is basically online based accounting software that allows the user to manage with ease money that is flowing in and out of the business. It also provides the option of recording, monitoring and reconciling bank transactions and accounts. 6. Oracle Financials includes aspects like accounts payable, general ledger, accounts receivable, cash management and fixed assets

22 Cloud Accounting Products & Services in the Kenyan Market 7. Wave - - It is a free double-entry cloud-based accounting service, keeps getting better. 8. Freshbooks - is the site to beat when it comes to managing and tracking invoices, time, and expenses for the very small business that doesn t need fullblown double-entry accounting. 9. GoDaddy Book-keeping works direct in integration with Amazon and e-bay which make it a terrific tool for entrepreneurs who sell through those sites. It is mostly used for book keeping purposes.

23 Cloud Accounting Products & Services in the Kenyan Market 10.Microsoft dynamics - provides an integrated business management solution. It automates financial, supply chain and customer relationship processes. 11.Sage One - is a family of online accounts software that helps you manage your business finances and is simple, flexible, effortless and secure online accounting. 12.Xero It s small business accounting software that s simple, smart and occasionally magical.

24 Uhasibu i-cloud accounting Advances have also been made to improve the usage and adoption of cloud accounting products and services. Uhasibu cooperative society developed its own accounting package for use by SMEs. Unique features and services offered by Uhasibu are: Generating aggregated sales per month Monitoring of petty cash Generating of financial reports Assisting in other financial services

25 Factors influencing cloud accounting adoption by in Kenya Factors influencing adoption of cloud accounting in kenya can be categorised into two; Internal - Comprise of business internal characteristics and capabilities that affect its cloud accounting adoption processes External - Consist of factors outside social environment in which the business operates and by which its cloud accounting adoption process is influenced

26 Internal Factors influencing adoption of cloud accounting 1. Willingness to invest 2. Top management 3. Firm size 4. Organizational culture 5. Employees IT skills 6. Prior experience and familiarity with cloud accounting technologies

27 External Factors influencing adoption of cloud accounting 1. Government regulations 2. ICT industry standards organisations like CA, ICT Authority, ICPAK 3. Cloud providers 4. Business partners 5. Competitors 6. Cloud service broker

28 What may affect acquisition of cloud computing services in Kenya 1. Internet 2. Security 3. Cost 4. Software Integration 5. Hardware integration 6. Support 7. Systems lack depth

29 Concluding Remarks 1. Cloud computing has also reached the accounting field. 2. accounting world is gradually shifting towards cloudbased solutions. 3. Accountants need to be receptive and understand current and upcoming digital technologies, so that they could harness their potential benefits 4. The emergence of cloud accounting has proven to be a new way of doing business. 5. Cloud technology can empower accountants and make their work easier and more effective

30 Way Forward 1. I believe you have heard where our county is in terms of adoption of cloud accounting 2. Therefore look at your specific business accounting needs (and operating constraints) and compare with the products and services in the market 3. Be mindful that not all cloud accounting products may suit your organisation 4. You are the gear the country (kenya) needs to ensure achievement of cloud accounting goals in Kenya 5. Let us be active consumers in technological accounting rather than being spectators!

31 The End Thank You