With a niche focus, developers can breed innovations that weren't possible with software that came in boxes, such as integrating the functions of other software by using open developer tools, says Rene Lacerte, CEO of Bill.com, which specializes in billing.
On Bill.com, users can tap into banks' online banking tools and other broader accounting suites, such as Intacct and Quicken. "In the last 10 years, the cloud changed the paradigm about how software is built," Lacerte says.
The cloud also makes it easier for users to collaborate on projects and enables multiple users to get access to the same application at the same time without losing their data or mixing it up. Callers on Speek.com, for example, can upload files to its servers and opt to have them synced with Dropbox accounts.
Michael Hsu, founder of Deep Sky Accounting in Irvine, Calif., says his operation has been mostly turned over to cloud-based applications to eliminate confusion and inefficiency of "too many hands in the jar."
One of Hsu's clients, an interactive marketing agency, previously used a spreadsheet to track invoices and checks, occasionally leading to outdated information and checks that were issued without authorization. Using cloud-based applications -- Intacct, Bill.com and GetHarvest.com -- everyone works from updates that can be seen online by all instantly.
"It's about the whole concept of having one ledger. You have one thing in common, and you're just editing it," he says. "Back in the old days, you sent it back and forth with clients. Now all of us can work together."
Freed from the fear of mismatched information and outdated data, users of cloud-based applications collaborate twice as much as those using similar software in the desktop, says Dan Wernikoff, general manager of Intuit's financial management solutions division, which has released cloud versions of its products, including QuickBooks.
A cloud version of QuickBooks has been around since 2000, but users were not comfortable storing data online. In the first eight years, it landed only 100,000 customers. But with the advent of smartphones and online data-storage products easing such fears, Intuit has seen about 300,000 more customers in the past four years, Wernikoff says. About 40% of first-time customers are trying online products. "Next year, it'll be the bulk of our new users," he says.
The emergence of mobile technology also partially explains the rush to cloud computing by entrepreneurs. Not tied to the office and typically dealing with a workforce that's spread throughout the country, business owners are opting for the any-screen-anywhere strategy.
"Consumers want immediate access to information wherever they want," says Kevin Garton, chief marketing officer of Neat Co., which recently released cloud and mobile versions of its document-filing system -- NeatCloud and NeatMobile. "Cloud acts as the central database and as the synchronization device for desktop and mobile devices."
With so much data stored, cloud companies can also dive deeply into customers' usage patterns for information that may prove useful. For example, FreshBooks offers a feature that compares your business' performance with competitors in several benchmarked areas, including how long it takes you to get paid and the average invoice size.
QuickBooks has a feature that can comb through your transaction data from the customer list and filter information on those who haven't visited in 12 months. Business owners can use the information to, say, offer a special discount.
NOT ALWAYS PERFECT
Cloud computing comes with several caveats. The ability to tap into the cloud is only as good as your Internet connection and the capability of your host's servers.
"Cloud may not be enough. There is a speed problem working with large files," says Vineet Jain, CEO of Egnyte, whose firm develops software that allows companies to integrate the cloud with local area network servers in the office.
Security remains a chief concern. Many security issues from the cloud's early years have dissipated, and much of cloud-stored data is encrypted or in read-only mode for non-owners. But nearly three-quarters of respondents in the Spiceworks survey cited a lack of control and security issues as their biggest concerns.
"It takes a long time for everybody to get comfortable with the idea," says Hallberg of Spiceworks. "It's not in your physical control. Despite what vendors say, (converting to the cloud) is not just drag and drop."
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