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ACCA Applied Knowledge · Business and Technology · Technological factors

A company adopts cloud computing for its accounting and sales systems instead of owning servers. Which statement about the effect on its business risk and operations is most accurate?

Cloud computing mostly replaces capital spending on servers with operating subscription costs, but it increases dependence on the provider and on internet access. Risks such as security and availability remain the company's concern, so they are not eliminated.

  1. AIt converts much capital expenditure into operating expenditure but increases dependence on the provider and on internet connectivityCorrect
  2. BIt removes all data security and availability risks because the provider is responsible
  3. CIt increases capital expenditure because the company must buy more hardware to access the cloud

Explanation

Cloud services are typically paid for by subscription, an operating expense, avoiding hardware purchases, but the firm relies on the provider and connectivity. Responsibility for data and risk cannot be fully transferred, and hardware spending generally falls.

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