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ACCA Applied Knowledge · Business and Technology · The impact of advances in technology

A firm uses a cloud-based accounting package accessed through a web browser. The provider hosts, maintains and updates the software, and the firm pays a monthly subscription per user. Which is the main advantage of this arrangement for the firm?

The main advantage is avoiding the capital cost of buying and maintaining software and hardware. With SaaS the provider hosts and updates the application and the firm pays a subscription. Control over data location falls, internet dependence rises and customisation is limited.

  1. AThe firm keeps full control over where its data is physically stored
  2. BThe firm avoids the capital cost of buying and maintaining software and hardwareCorrect
  3. CThe firm no longer depends on internet connectivity to process transactions
  4. DThe firm can customise the underlying source code freely

Explanation

SaaS converts upfront capital expenditure into predictable operating costs and removes the maintenance burden. Control over data location is reduced, not increased, with a third-party provider. Internet access is required, so dependency on connectivity increases, and source code customisation is normally limited.

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