Computer Networking or Cloud Hosting for QuickBooks: Which Option Is Best for You?

In the early days of QuickBooks, installing the software called for little in the way of decisions. You picked the computer where it would run, installed it, and that’s the machine you used for accounting. Those days are far behind us, though a simple single-computer installation is certainly still an option for the very small business.

As QuickBooks became more powerful and capable of hosting multiple users, it required a networked environment in which QuickBooks was either installed on one computer and also used on that machine but accessed from other computers, or installed on a server with the company file or files accessed from workstations. The latter configuration—a server-based installation—became far more common that the first one, especially for packages like QuickBooks Enterprise that could support up to 30 simultaneous users. The latest option, which has been available for several years now, is cloud-based hosting. If you are trying to select the best choice for a multi-user QuickBooks installation, we can offer some advice on which option is best for you.

To save you the suspense, we’ll disclose right up front that we consider cloud hosting to be by far the best solution. We’ve used all three of the installation configurations we described above, including multiple cloud hosting services, and frankly we would be hard-pressed to find advantages that computer networking has over cloud hosting. Let’s look at why.

Network Or Cloud – Which Is Better? 

The most common argument we hear is that cloud hosting incurs a monthly fee, whereas a network installation requires only the initial hardware and software costs. We don’t want to offend anyone, but that line of thinking is short-sighted and demonstrates a marked lack of familiarity with IT (and we’ve managed IT over the years, too, so please trust what we’re saying). We’ll ignore the cost of the workstations in a networked environment, because with cloud hosting each user will still need a computer. The server you purchase will probably last three to five years. Sure, you might be able to stretch its useful life a bit, but the fact of the matter is that as the operating system is inevitably upgraded, eventually the hardware will no longer support it—at least not well enough to function with reasonable efficiency. Clinging to the old OS won’t help, either, because eventually the manufacturers stop supporting old products.

The upshot is that you’re looking at replacing the server every—we’ll be generous—five years. That doesn’t include the cost of QuickBooks. QuickBooks Enterprise, which since it is the most powerful version is the one most often used in a network environment and therefore the one we’ll use for our examples, is now provided by Intuit on a subscription basis. If we assume a business with five users, the basic (silver) subscription level is $234 per month (ignoring any promotional discounts). That’s in addition to your hardware costs, mind you, but it includes free technical support and automatic upgrades to every new version.

To price a server, we’re going to be extremely generous. A modest, low-end tower server like a Dell PowerEdge with minimal bells and whistles, capable of supporting our five hypothetical users, is about $3,700. With a service life of five years, that’s a cost of $740 a year. If you add cloud hosting to the silver QuickBooks Enterprise subscription, the cost goes to $453.99 per month. That’s a difference of $2,640 (in round numbers) per year for hosting.

At this point it looks as if the network configuration wins by $1,900 per year. Buying a server every five years isn’t the end of it, though.

Now, Let’s Add In The Miscellaneous Expenses

First, you’ve got to protect your data, because losing your accounting records would devastate your business. You’ll need to buy a hardware option to back up the server’s hard drive, because that $3,700 didn’t cover a digital tape drive or even a second hard drive. The most basic model of DT drive that Dell offers with that server we picked will set you back about $2,900—and by the way, the tapes it uses range from $135 to $280 each; normal practice is to have one for each day of the week.

That expensive DT drive won’t help you, though, if the building burns down or gets leveled by a tornado or hurricane or earthquake (depending on the specific risks from Mother Nature that you face in your area). To protect your data, you need offsite backup. A popular service starts at $600 per year.

So factoring in data backup, our server hardware cost just jumped to $7,275. (We bought the least expensive digital tape and assumed five, for Monday through Friday.) That’s $1,455 a year; with the offsite backup, we’re at $2,055 per year. The difference between a networked and a hosted solution is now at $585 a year.

Unless you have an affinity for IT, or your company already has an IT specialist, you’re going to have to hire someone to manage that server. Your needs will be minimal, but even if you contract the service on an as-needed basis, we guarantee you’ll exceed $585 annually.

Who Is The Winner?  You Decide…

We’ve brought the costs even, then. But what if you didn’t have to worry about buying a new server periodically or offsite backup or remembering to change the backup tape every evening before you leave? What if your data was secure (from both disaster and hackers) without any effort on your part? What if maintenance updates to QuickBooks were handled for you? What is that worth?

Finally, we come to the single greatest advantage of cloud hosting for QuickBooks: access from anywhere with an internet connection at any time, for any of your employees. What if the accounting staff member who has to stay home with a sick child could work from the house? What if you could access your accounting data even while on the road for business or on vacation? What if you could outsource some or all of your accounting work? What if you could give your accountant direct access to your books at audit or tax preparation time?

It’s really these intangibles that make the difference between a network installation and a hosted solution. Don’t underestimate the value of simplicity, access, protection, and above all the ability to focus on your business rather than the underlying mechanics of its operation.

We think for all around features and estimating the value of your time, there’s just no comparison but at the end of the day, you know your business best so you be the judge!

Have questions?  Need help? 

Looking for QuickBooks answers and help but not sure where to start?  We can help!  With over 20 years’ experience in the industry, we can help guide you into the best solution in just a couple minutes time.  Best of all, if what we offer is not the best solution, we will let you know.  To see if we can help, just give us a call at 866-949-7267 or click here to send us an email.  We look forward to helping you!

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