Truly understanding the total costs associated with — well, anything — is never easy. When it comes to cloud computing, online tools and just about any financial accounting software, this struggle is more than apparent.
Just try answering this question: How much does it cost to keep a system running? Don’t forget to calculate electricity costs, security precautions and the time it takes your IT people to fix problems.
Not easy, right? It can be particularly difficult to understand the cost of maintenance and support for cloud-based programs.
Regardless, overcoming this problem and determining the actual cost of cloud software maintenance is critical. Why? For one thing, most companies will realize that by including these costs into the price of managing the finances of an organization, cloud subscription models are actually cheaper than on-premises financial tools. The value of ongoing tax updates and year-end closings is considerable and should never be underestimated.
It’s also important to truly understand these costs because without quality maintenance and similar services, business as the company knows it can end the moment it’s unable to print checks, process payables or accept receivables.
The first step to calculating these costs is to understand what “maintenance” really means. Maintenance is often thought of as annual software license costs to stay current. But it really means much more than this. Maintenance is about keeping your system running smoothly for months and years at a time.
Think about maintenance for your financial accounting software the way you think about maintenance on your car. You’re not just making car payments to keep the vehicle under warranty, you’re paying to complete ongoing tasks such as washing the car, rotating the tires, changing the oil and gassing it up.
With financial accounting software, there are changes to the tax code every year that have to be addressed in order for a company to remain compliant. There are new laws to consider at the start of every fiscal and calendar year. These alterations to the code must be incorporated into the financial workings of a company, or it will fail to stay within the confines of the law. Financial accounting software must have continual updates for specific modules within the programming.
With the real definition of maintenance in mind, here are four factors to consider when calculating such costs.
- Internal IT personnel salaries: Accounting will always need tech support and “how to” application support. This means someone in the organization has to provide education to all employees who need to use the system. How much time does your IT staff or other employees spend trying to fix the accounting system? Remember, if the tools aren’t printing checks or paying vendors, business stops.
- Hardware maintenance and accessibility: This is an important factor that most companies don’t want to think about. Like an airplane engine, you want to be able to just turn on the server and have it run for the remainder of the product’s lifetime. Unfortunately, servers don’t run like that. You have to shut them down or they’ll shut down on their own. Keeping up with the hardware is critical and potentially expensive to do on your own.
- Licensing: Don’t forget the cost to license Windows, your database, applications, third-party add-ons and any other software. Companies often forget that they’re always paying maintenance fees on financial apps (whether on desktop or server), database software and other applications you’re running. Paying these bills and managing the vendors is another cost associated with this.
- Overall infrastructure management: Is the system running well or are there performance issues? Is there enough hard drive space to store data? These are issues often not thought about until something breaks or doesn’t work right. Support is part of that ongoing maintenance.
Can you go a day without paying your bills or receiving payment? Do your printers connect? Is your software up to date with the current tax code? When it comes to maintaining your financial accounting system, there are a lot of factors that can nickel and dime you into the red.