Data files, filing systems, and ownership: Whose data is it anyway?
Anytime, Anywhere
The online working model addresses quite a number of problems faced when remote and mobile team members need real time access to business applications and data. Further, collaboration with outside professionals, like accountants and lawyers, is easier when the information is centrally stored and managed online. However, this “subscription-based” working model can introduce other challenges that neither the business owner nor the outsourced professionals might have considered. One of these challenges is the division of information assets when the professional engagement is dissolved. Somewhat like a divorce, this dissolution can take on an unfriendly tone if there isn’t a clear plan for distribution of relevant data to all parties involved. The problem often stems from the orientation of online subscriptions and services, and the question of who actually controls the service.
The general rule of thumb for subscription services is “he who pays the bill owns the data”. This may seem like a simple approach, but it’s the most logical one. Whoever subscribes the service and is financially obligated for it is the controlling authority. It’s kind of like having the authorization to use a credit card… you can use yours, but you don’t have the right to use someone else’s. In a subscription service, like an application hosting service, the rule is similarly applied.
When this becomes a problem or issue is when two or more businesses utilize the service, yet only one pays for it. This is a scenario quite common in the online accounting models, where accountants may be purchasing subscription services to facilitate their processing for the client. But accountants don’t just subscribe to process-support systems, they also subscribe to hosting and data management solutions. This is where things get a little dicey.
Consider an accounting firm utilizing Bill.com, for example, to assist with vendor bill processing and approvals for the client. While the Bill.com system may store certain copies of documents or files, the transaction information is integrated to the financial system (QuickBooks perhaps). Source documents or images may be stored in the Bill.com portal, but the actual transaction information ends up in the financial system. If the accountant and the client wish to part ways, the client can generally get all their accounting system data, such as QB data files, from the accountant. Whether or not they can get the documents stored in the Bill.com system is another issue, and that would be up to the accountant, because they were the holders of the subscription. Now, this issue becomes a non-issue when the client is subscribed to the Bill.com solution, and the accounting firm is invited to participate. In this case, the client actually owns the data, even though the accountants are allowed to work with it online.
Taking the discussion a bit further, let’s consider document management solutions, such as SmartVault or eFileCabinet. These solutions do not store just source data for financial transactions, they are designed to be complete document and content management solutions. In the past few years, we have seen a number of these online document systems introduce themselves to the professional accounting and bookkeeping communities as a means to facilitate a better workflow, and to help accounting professionals and their clients work closer together. Truly, these solutions are critical to the enabling model, but concerns relating to data ownership and control appear more frequently as neither the business owners nor their outsourced professionals considered what would happen when the engagement is over. It can be very frustrating for a business owner to have to go through a lot of gyrations in order to obtain their data, and accountants need to protect and preserve their value and the value of the work performed on behalf of the client. Both parties have data possession and retention requirements, which may be many and varied depending on the type of business and regulatory issues involved.
Where this gets really muddy is when the accounting professional or outsourcer uses a tool to facilitate their own processes and business, but also use the same tool (and subscription) to service client needs… and maybe even allows the client to interact directly with the solution. In the event of an end to the relationship, it may or may not be easy or even possible to extract just the client data from the system. And what happens to it after that can be variable. If you provide your client with document management services, for example, you could maybe give your client their documents when they leave you, but you wouldn’t generally allow them to continue to use your subscription service. At this point, the client would have to make their own arrangements for document management, and would have to find a way to bring the data from you into that system. This can be a very complicated process, particularly if there are a lot of data types and the organization of the data is complex. Simply getting the copy of the data could be a challenge, depending on the system in use. And, once you receive your data, does the professional retain copies of that information?
In the spirit of making things a little easier, I’d like to propose that we all think of it this way:
If you subscribe to a service which is integral to your delivery of service to your client, then it is part of YOUR process and you should own/control the solution. This would apply, possibly, to payroll services, application hosting services, Bill.com-type solutions, and other services which assist you in the performance of your work. The work product is for the client, but you’re doing the back office work and using tools to make that more efficient.
If the client leaves you, then it’s up to them to “tool up” to handle their processes.
You may find that, with clients having more complicated requirements, it makes sense for the client to subscribe to the solution and simply invite you to participate. In these situations, it becomes extremely clear where the lines are drawn in terms of data access and ownership. It’s theirs to control. If the professional needs to retain copies of data or perform other work, it’s done on their own subscribed systems, and not on the clients.
Make sense?
J
