A New Wave in Cloud-Based Accounting Software


As a general rule, I don’t review new entries into the accounting software realm.  While there are several reasons for this, the predominant one is that new start-ups need a certain critical mass of installed customers to ensure they will be around for any length of time – and I’ve been burned in the past after encouraging clients to migrate to a (literally) new system, only to have the company go bankrupt within a few years.

But web-based Wave Accounting caught my eye recently.  I’m going to hold-fast with my “no review” rule – you can check out the product for yourself at www.waveaccounting.com – but the interesting thing about this particular offering is that it’s, well, uh, FREE.  And that’s really the subject of this particular installment – The Google business model.

Back when Mozilla’s Firefox product hit the streets, users wondered how such a good and innovative web browser could be offered for free.  The answer wasn’t immediately forthcoming but, the ticket was that Google paid cash to Mozilla to be the default search engine within this browser – and paid rather handsomely at that.  Google itself uses the same model with many of its services/features – give the basic product away for free and let advertising (or data-mining of the user data) pay for the development.  Wave Accounting appears to follow that same model:  get somebody else to pay for the product, and bring in the small business masses with a deal that’s almost too good to be true.

In Wave Accounting’s case, users of the free web-based accounting product see advertising for various business services – companies such as American Express, Dell, HP, Microsoft, Symantec, RBC and others.  And recently, Wave Accounting introduced web-based Canadian Payroll as well.  The deal there isn’t quite as good:  Businesses have to cough-up C$3.00 per employee.  Not that I think many will complain – there’s very few stand-alone payroll systems that can match that fee structure.  In fact, the only one I can think of is QLab System’s non-web-based PayDirt Lite (http://www.paydirtpayroll.com/).  Oh, and Canada Revenue Agency’s free online payroll calculator but, that’s really not a full-featured payroll system by any stretch of the imagination.

That leads to the usual discussion about web-based/”cloud” services:  what about the following factors – security & privacy (access to data), availability (up-time), and reliability (ability to restore backups, continuity processes)?  The answer is the same – all of these factors need to be evaluated in context of the organization that’s using the service and their sensitivity to the risks associated.  Accounting systems often contain banking information (as in the actual accounts/transit numbers), credit card information, and with payroll, social insurance numbers, dates of birth, and other identity-theft goodies.  Back to Wave Accounting for a moment, what do they say about all of the above?  They do have proper Secure Socket Layer (SSL) encryption of the data to their website (via public/private keys provided by certificate authority VeriSign) and they are registered with the Truste Privacy Seal program.  And, there’s some good narrative about their data storage centre being protected by armed guards, landmines and bear traps (humour intended).  But I couldn’t find any mention of any serious service audit report that would give me any assurance as to the adequacy of their technological controls for security/access/privacy, delivery of service, change management, of disaster recovery/business continuity management processes (such as SAS70/AASE 16/SOC 2 or SOC 3 reports).  I think that for any serious web-based/cloud service that handles financial information, providing some assurance/attestation would be a good thing.  Then again, very few places do have that degree of internal controls assessment.

Web-based accounting systems aren’t new – NetSuite’s been at it for some time, as has SalesForce – but to see one appear using the “Google for Free”-type strategy, well I think Wave Accounting is the first.  Is the model sustainable?  Well, Wave Accounting celebrated its first birthday back in November 2011.  And, they’ve attracted some good talent to the company.  That’s pretty good so far for a company that’s giving away its products/services.  Guess we’ll see in another few years <gggg>.